Ex-crypto mogul Sam Bankman-Fried didn’t spend wisely in the midterms

Sam Bankman-Fried, the disgraced former CEO of the collapsed cryptocurrency exchange FTX, has another claim to fame: He was Democrats’ second-largest individual donor in 2022 after George Soros, according to data from OpenSecrets. Despite that, Democrats may not miss his philanthropy much now that his fortune is gone.

Back in May, Bankman-Fried committed to donating up to $1 billion to Democrats through 2024, but he later walked back those comments, telling Politico they were “dumb.” Now, amid recent revelations about FTX’s incredibly troubling balance sheet and as it files for Chapter 11 bankruptcy, it’s unclear whether he gave that statement because he couldn’t afford to donate more, despite the fact that he was once thought to be worth $16 billion.

Bankman-Fried’s actual contributions to Democrats in the 2022 cycle totaled about $36 million, a fraction of what was initially promised, according to data from OpenSecrets. Those donations were primarily made during the primaries, with his contributions appearing to stop around June. While he’s said that his reason for donating was to advance pandemic prevention, he’s also donated to conservative-leaning PACs that support crypto interests.

That includes the Alabama Conservatives Fund — which backed Republican Katie Britt, whose campaign accepted donations in crypto — and Heartland Resurgence, which backed Republican Sen. John Boozman of Arkansas. Boozman co-wrote legislation that aims to put crypto markets under the purview of the Commodity Futures Trading Commission, which is widely regarded in the industry as being a more favorable regulator than the better-funded Securities and Exchange Commission. (In the aftermath of FTX’s collapse, the senator said he would need to revisit the language of the bill.)

The bulk of Bankman-Fried’s donations, however, went to the Protect Our Future PAC, which supported 25 candidates focused on pandemic prevention this year. So far, most have won their races. Among those candidates were Rep. Abigail Spanberger (D-VA), who won a tough reelection campaign in a bellwether district, and Maxwell Frost, who will represent Florida as the first Gen Z member of Congress.

But much of those Protect Our Future funds were spent on a single Democratic primary in a competitive House district in Oregon, and in a way that may have actually disadvantaged the Democrat who narrowly won a hard-fought battle for the seat. That means Bankman-Fried didn’t have much sway over Democrats’ overall strong midterms performance, despite the many millions he invested.

Bankman-Fried’s fall from grace isn’t a tragedy for Democrats

Bankman-Fried was the primary donor to Protect Our Future, and the PAC spent much of its money, more than $11 million, to advance Democrat Carrick Flynn and squash his primary opponent, State Rep. Andrea Salinas, in Oregon’s 6th district. That’s more than the $5.2 million Bankman-Fried spent in 2020 to support Joe Biden, making him the president’s second-largest individual donor after former New York City mayor Michael Bloomberg.

Other Democratic groups that Bankman-Fried donated to, including House Majority PAC, also backed Flynn in the primary. That prompted outrage from the whole slate of Democratic candidates in the race, who issued a joint statement in April calling it a “slap in the face to every Democratic voter and volunteer in Oregon.”

Flynn’s resume provides a clue as to why Bankman-Fried sought to invest in him so heavily. For years, Flynn worked for an organization that is trying to prevent potential threats posed by artificial intelligence, a key focus of “effective altruism” — a movement focused on optimizing charitable giving. Bankman-Fried is one of the movement’s most high-profile acolytes, now to its detriment. Flynn later worked on crafting policy to fight Covid-19. and when he spoke with Vox about his candidacy, Flynn said, “my first priority is pandemic prevention,” one of Bankman-Fried’s top issues. (Disclosure: Future Perfect, Vox’s effective altruism-inspired vertical, received a grant in 2022 from Building a Stronger Future, the Bankman-Frieds’ family foundation.)

Ultimately, Flynn lost his primary by a double-digit margin, despite the fact that Protect Our Future’s investment in him made it the fifth most expensive House race this year. Ahead of Election Day, the Cook Political Report rated the seat, which was newly created during redistricting, a toss-up. It took almost a week for the Associated Press to call the race, and Salinas ultimately prevailed by a little over 2 percentage points over the Republican nominee Mike Erickson.

That raises the question as to whether Bankman-Fried, despite being obsessed with the effectiveness of his donations, misspent his money. Those funds could have helped, for example, struggling candidates in New York, where Democratic losses arguably may have cost the party control of the House.

In fact, the nearly $1 million that Protect Our Future spent attacking Salinas during the primary may have made the general election more competitive than it would have been otherwise. The PAC ran a Facebook ad in May that called Salinas “a lobbyist for a corporation accused of driving up drug prices,” even though she voted for legislation to lower drug prices in the state house.

Perhaps in future cycles, Bankman-Fried would have donated differently. But based on the results this cycle, it may be that Democrats won’t necessarily miss Bankman-Fried’s fortune, which has gone to zero in a manner of days. And some of them — including Sens. Kirsten Gillibrand (D-NY) and Dick Durbin (D-IL) as well as Rep. Chuy Garcia (D-IL) — have already committed to donating any unspent campaign funds they received from Bankman-Fried to charity.