The man who has cast himself as one of the Democratic Party’s emergent power players found his company in shambles—forced to sell to its biggest rival—on Election Day.
Suffering from a liquidity crunch after a run in which users pulled nearly $6 billion from the company, according to Reuters, Sam Bankman-Fried was forced into an emergency sale to a rival company, Binance. The announcement of FTX’s acquisition prompted Bitcoin to plummet to two-year lows.
It's a stunning reversal for the 30-year-old who donated over $5 million to Joe Biden's campaign in 2020 and who just three months ago was vaunted as a potential savior for Democrats in the midterm elections. "Some Democrats see Bankman-Fried’s investments and engagement as the thing that could help them hold back a red midterm wave," Politico reported in August.
Bankman-Fried had suggested he might donate as much as $1 billion in the midterms and 2024 election, a figure that would have made him the largest political donor in American history. While he started the 2022 election season doling out $37 million to liberal groups and candidates—he was the second-largest Democratic donor of the midterm elections behind liberal financier George Soros—he closed his wallet in October, telling reporters that his plan to spend $1 billion was "a dumb quote on my part."
Tech reporter Eric Newcomer referred to the sale as a "dot-com bust level event."
Sequoia invested in a $420m round in FTX at a $25B valuation in October 2021 and a consortium with Paradigm invested $400M at $32B in January 2022.
And now it's selling in a fire sale?
This is a truly crazy event in startup world. Dot-com bust level event
— Eric Newcomer (@EricNewcomer) November 8, 2022
"Crypto has a way of humbling people who swagger too heavily," said Yaël Ossowski, a crypto currency watchdog at the Consumer Choice Center. "The days of Sam Bankman-Fried being a heavyweight Democratic fundraiser and political influencer to the benefit of his own exchange and his connected companies, are basically over."
Now Democrats who put faith in Bankman-Fried’s donations to save the House and Senate may have an answer why he left them in the lurch. Bankman-Fried’s net worth plummeted from $15.6 billion in the early hours of Tuesday morning to just $1 billion by Tuesday afternoon, according to Bloomberg. His 94 percent one-day wipeout is the largest ever recorded among billionaires tracked by the outlet.
This post was originally published Nov. 8 at 7 p.m.