It should be noted that there were quite a few donations to politicians. The investigation believes that former FTX chief Sam Bankman-Fried discreetly withdrew funds from exchange users to the accounts of the trading company Alameda Research, and then used them for his own purposes. The latter not only included donations, but also investments on behalf of the company and the purchase of real estate.

The money is now being demanded back, and in an ultimatum. This week lawyers for the bankrupt stock exchange said that otherwise the funds would be returned through the courts.

How Sam Bunkman-Fried hurt the cryptocurrency world

Smith was a guest on another edition of the gm podcast from news outlet Decrypt. During the broadcast, she revealed that Bankman-Fried’s involvement in discussions with officials was simply unprecedented. Here is the relevant rejoinder from the expert.

He spent a lot of time strolling the halls of Congress, meeting with members of Congress, management, staff – he would invite them for a drink. In my more than two decades of career in Washington, I have never seen an executive spend so much time lobbying personally on Capitol Hill.

Blockchain Association head Christine Smith

Sam used to make formal speeches to congressmen about the current state of the crypto industry. This was even before the collapse of his “crypto empire” consisting of the FTX exchange, trading company Alameda Research and dozens of smaller firms under their umbrella.

Overall, before the collapse, Bankman-Fried gave the impression of being a promising opinion leader in crypto, and he also appeared repeatedly in various rankings of young billionaires under 30.

Bankman-Fried on the cover of Forbes

However, the situation changed dramatically in early November 2022. First, Alameda’s leaked balance sheet surfaced online, showing clear signs of the company’s financial insolvency and incredible reliance on a native FTX token called FTT.

Against this backdrop, Binance exchange chief Changpen Zhao announced the sale of all FTTs from the exchange’s reserves. In an attempt to save Bancman-Fried was even willing to make a deal to buy FTX from Binance. However, Zhao rejected the deal, putting a stop to any bailout options for the exchange. He cited FTX’s financial problems and unclear reporting, as well as increased scrutiny of the situation by the US Securities and Exchange Commission and other regulators.

Sam Bankman-Fried in the US Congress

There are now numerous allegations of fraud against Sam, a fact that has become “very unpleasant” for many politicians, says Smith. She continues.

They feel cheated because they all thought Sam was so thoughtful and appreciated his thoughts on regulating crypto. Frankly, from my point of view, it made our job very difficult. Because, you know, we had some disagreements about the strategy he was pushing.

Bankman-Fried “showed his real face” when he publicly stated the need to adopt regulation of decentralised finance on the same principles as the control of traditional assets. He then faced criticism from the community and even had to apologise on Twitter.

Smith’s message is that Sam was trying to make things as good as possible just for his business, not for the industry. Recall, according to the US Attorney’s Office, senior management at FTX and Alameda were aware that their clients’ funds were being misused. However, they did not prevent it, as they wanted to save the companies by any means first.

In the context of dealing with regulators, the collapse of FTX also did serious damage to the image of cryptocurrencies. The US Securities and Exchange Commission has begun to put more pressure on the industry. This is also reflected in the SEC’s recent decision to prosecute celebrities, editors and so-called opinion leaders who actively promote crypto projects.

Elon Musk is also actively promoting crypto

Overall, the SEC plans to inspect broker-dealers and investment advisers who use emerging financial technologies, including cryptocurrencies. They will investigate whether these intermediaries comply with expected “standards of care” for investors and whether they regularly review and update their risk management procedures.


Also the day before, SEC chief Gary Gensler took to commenting on the topic of cryptocurrencies, and not in the best context. Particularly, at the end of January, during a conversation with the US Army, he spoke about how to distinguish a fraudulent crypto project from a real one. The official's point of view is described in more detail here.


Former FTX executive Sam Bankman-Fried


We believe FTX founder Sam Bunkman-Fried has done some serious damage to the cryptocurrency industry. Still, many of the politicians he interacted with may consider themselves duped after the collapse of the exchange, so they will now treat the crypto sphere much more cautiously. On top of that, Sam has promoted the idea of regulating decentralised platforms - which is also a dangerous venture. So here's hoping that officials will not associate the crypto sphere with Bachmann-Fried's personality, but will be able to see the positives and strong fundamentals in it.