Billionaire supporters of Balint’s core offering find themselves at the heart of the cryptocurrency industry crash

Cryptocurrency giant FTX went bankrupt after lending billions of dollars of clients to an affiliated hedge fund. Several FTX executives at the center of the scandal previously supported Becca Balint’s main campaign, elected by the Rep. Of the United States. Photo by Glenn Russell / VTDigger

Months ago, executives at cryptocurrency exchange FTX voiced their support behind then-candidate Becca Balint’s Democratic primary bid for Vermont’s only seat in the US House.

Now, their cryptocurrency empire is collapsing and threatening to take down the rest of the trillion dollar industry with it.

Within days, FTX fell from a $ 32 billion giant into bankruptcy. Its collapse is largely attributed to the decision by top executives to lend billions of dollars of clients to an affiliated hedge fund, Alameda Research, without the cash available to cover the loan. On its outskirts is a reported criminal investigation into the company in the Bahamas, a possible hack that stole hundreds of millions of assets and allegations by insiders that the financial giant was run “by a gang of boys” in the nation. Caribbean.

At the center of the controversy is Sam Bankman-Fried, a 30-year-old billionaire who founded both FTX and Alameda Research. Also in the mix is ​​Nishad Singh, an FTX executive who was reportedly aware of the loan scheme and whose donation of $ 1.1 million to a political action committee, or PAC, helped fund a wave of pro-Balint publicity ahead of her primary victory.

Bankman-Fried became a celebrity of the cryptocurrency world and gained further fame thanks to his alleged belief in the charitable philosophy known as “effective altruism”. He also said earlier this year that he would be willing to pay up to $ 1 billion in political campaigns before 2024, even though he reneged on that commitment last month.

Before his donations ran out, Bankman-Fried and his brother, Gabe Bankman-Fried, each donated the maximum of $ 2,900 to Balint’s main offering in June. Balint has also received approval from each of the brothers’ PACs, who say they focus on electing officials who will invest in preventing future pandemics.

In the last few weeks before Balint’s disputed primary race against Lt. Governor Molly Gray, progressive and LGBTQ + PACs poured $ 1.6 million into Vermont, flooding the airwaves and filling mailboxes with pro-Balint campaign announcements. .

In late July, when Gray’s campaign criticized outside spending, Balint’s campaign manager Natalie Silver told VTDigger: “‘Molly Gray is very close to saying, you know,’ We don’t want a gay agenda. ‘”.

“You call these ‘special interests’. These are not special interests. These are gay people. This is the LGBTQ community. These are not beet growers. This is not great. This is not oil. These are people who are afraid for their lives right now, “Silver said at the time.

Only after the primary on August 9 was it revealed that one such group, LGBTQ Victory Fund, was largely funded by a single large donor. Singh, a former MIT classmate of Bankman-Fried, donated $ 1.1 million to the Victory Fund during the final period of Balint’s campaign primaries, almost all of which went to electoral efforts to help Balint.

According to Reuters, Singh and other senior FTX executives were aware of the move to lend billions of customer assets to Alameda.

Silver told VTDigger on Monday that Balint was not available for an interview to discuss the fallout from the FTX failure and the company’s executive support for Balint during its main campaign.

“I have been saying for a long time that this industry needed regulation,” Balint said in a written statement Monday. “He clearly does it desperately.”

Balint is not alone in calling for more regulation in the sector. US Treasury Secretary Janet Yellen told Bloomberg News on Saturday that the FTX implosion “shows the weaknesses of the entire industry.”

Silver told VTDigger on Monday that Balint has never met Sam Bankman-Fried, nor any member of Balint’s campaign team. Balint, however, met Gabe Bankman-Fried at an event in Washington, DC, prior to the primary. She and her team also attended a separate approval meeting with a team from Gabe Bankman-Fried’s PAC, conducted electronically on Zoom, according to Silver. Gray also met with the PAC, her campaign claimed in June.

“I really want to assure Vermonters that I absolutely didn’t know who was donating money to the Victory Fund, which is an LGBTQ organization,” Balint said in a congressional debate in September. “I didn’t want that investment in my campaign. I had no control over it. The thing I had control over was how I ran my campaign, which was with many, many small dollar donors, the largest number of Vermont donors of all candidates. ”

The LGBTQ Victory Fund declined to comment on Monday.

While Sam Bankman-Fried said his political efforts aimed at preventing future pandemics, skeptics wondered if the ultimate goal was to push officials towards a light-hearted approach to regulating the cryptocurrency industry.

At the September debate, hosted by VTDigger, moderators asked Balint which government agency should regulate the cryptocurrency market: the industry-favored Commodity Futures Trading Commission, or the more stringent Securities and Exchange Commission.

“I don’t think we should follow the industry lead in this case,” Balint said at the time. “I think we really want to have a rigorous investigation into what it really means for our economy.”

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