A young crypto billionaire’s political agenda goes well beyond pandemic

In May, an eccentric 30-year-old cryptocurrency billionaire named Sam Bankman-Fried made a startling proclamation. In a podcast interview, BankmanFried said he would spend as much as $1 billion of his estimated $12.8-billion fortune on American politics by the 2024 election, joining the ranks of megadonors such as George Soros and the Koch brothers.

At the time, BankmanFried, raised in the Bay Area by two Stanford law professors, was far from a household name. FTX, the crypto exchange he founded and runs, makes most of its money overseas, and was perhaps best known in America for buying the naming rights for the Miami Heat’s arena.

In Washington, though, Bankman-Fried — known as SBF online — has become a familiar sight on Capitol Hill, meeting with lawmakers, chatting with aides and testifying before congressional committees.

This week, an FTX ad featuring a giant image of the mop-topped billionaire graced a billboard in D.C.’s Union Station, towering over Hill staffers on their way to work. (Bankman-Fried’s famous hair, which makes him look even younger than his years, is available for purchase as an NFT.) And he has opened his pockets as promised, giving at least $34 million to political candidates and causes since January.

Bankman-Fried has offered a simple explanation for his political spending to all who ask, saying that he wants to encourage lawmakers to better prepare for the next pandemic. But on the Hill this year, many of his activities have focused on regulation of his company and of the industry that made him rich.

In a video interview from his office in the Bahamas, Bankman-Fried maintained that his priority is pandemic preparedness and said “many” of his donations “had nothing really, specifically, to do with anything related to FTX.” But he acknowledged a broader agenda.

“I am spending a lot of time talking with members about what constructive things would be on crypto policies and about what can be done to provide federal oversight of it. And so when I go to D.C., that is often what I’m doing,” Bankman-Fried told The Times. “I think that it is really important that there’s federal oversight of the crypto industry.”

Bankman-Fried’s lobbying efforts focus on two arcane but significant regulatory changes.

First, Bankman-Fried wants the Commodity Futures Trading Commission, rather than the better-funded Securities and Exchange Commission, to oversee crypto markets.

Bankman-Fried has already made significant progress toward that goal. Last week, Sens. Debbie Stabenow (D-Mich.) and John Boozman (R-Ark.), the chair and ranking member of the Senate agriculture committee, introduced the Digital Commodities Consumer Protection Act of 2022, which aims to define cryptocurrencies such as Bitcoin and Ether as “digital commodities” rather than securities, bringing their oversight under the CFTC.

Second, Bankman-Fried and his firm are seeking dramatic changes to how commodity futures markets operate in the U.S. A proposal FTX has pending before the CFTC would allow FTX’s American customers to borrow money directly from the firm to bet on the future prices of commodities and digital assets, including cryptocurrencies. Under the current framework, American retail investors work with brokers to make such bets.

The change would open the door for FTX to grab a chunk of the American derivatives market. Competing exchanges, including CME Group and Coinbase, work with brokers to facilitate similar trades. CME Group opposes FTX’s proposed change.

Boozman and Stabenow, like other members of the House and Senate agriculture committees that oversee the CFTC, have been among the beneficiaries of Bankman-Fried’s political spending. The billionaire donated $26,600 to Stabenow and her allied fundraising committee and $5,800 to Boozman just weeks before he testified in front of them in February. In the weeks after his testimony, Bankman-Fried also donated to Senate agriculture committee members Tina Smith (D-Minn.) and Richard J. Durbin (D-Ill.). Durbin is the second-ranking Senate Democrat.

Bankman-Fried’s co-CEO at FTX, Ryan Salame, has donated large sums to political action committees that have aided members of the agriculture committees. Salame is the largest donor to American Dream Federal Action, a Republican-focused super PAC that has spent over $12 million this cycle. In April and May, ADFA spent $1.2 million on ads and mailers to aid Boozman ahead of his primary.

The FTX proposal pending before the CFTC would restructure the commodities trading industry in three ways, Bankman-Fried said. First, it would allow users to directly access commodity trading venues rather than going through brokerage firms, cutting out a number of middlemen that some in the industry see as vital to its stability.