Former FTX CEO Sam Bankman-Fried and his allies are losing advocates in Washington, as the company hits rock bottom.
Lobbyists who worked for FTX and Guarding Against Pandemics, a nonprofit partially funded by Bankman-Fried and run by his brother, Gabe Bankman-Fried, told CNBC that they have severed ties with the cryptocurrency exchange after its collapse.
FTX announced Friday that it was filing for Chapter 11 bankruptcy and that Bankman-Fried was stepping down as CEO after revelations of a liquidity crisis at the company.
FTX’s stunning downfall has prompted Washington lawmakers, including the Biden White House, to more closely scrutinize the company and the industry at large. The moves by some in Washington to distance themselves from FTX followed a broader push by the company and key executives to ingratiate themselves with policymakers.
Bankman-Fried became known as a crypto “darling” in Washington as he gave more than $39 million to candidates and committees in the 2022 midterm elections, according to data from OpenSecrets. Ryan Salame, the co-CEO of FTX Digital Markets, gave more than $23 million during the same election cycle, according to the data.
But many of FTX’s efforts to gain a toehold in Washington appear to be crashing to a halt. After Bankman-Fried donated $2,900 to the campaign of Sen. Dick Durbin, D-Ill., this year, an aide for the No. 2 Senate Democrat told CNBC on Monday that the contribution “will be donated to an appropriate charity.”
Sen. Kirsten Gillibrand, D-N.Y., who saw a combined $16,600 from Bankman-Fried go to her campaign and joint fundraising committee this year, is planning to donate “the funds to Ariva, Inc., a Bronx-based nonprofit that aims to promote individual wealth and economic development in low-to-moderate income communities,” according to a spokesman. Gillibrand is a co-sponsor of the Responsible Financial Innovation Act, which, if passed, would classify digital assets as commodities like wheat or oil and empower the Commodity Futures Trading Commission to rein in the industry. Sen. Cynthia Lummis, R-Wyo., is another co-sponsor of that legislation.
Eliora Katz, a former aide to Republican Sen. Pat Toomey who was listed on disclosure reports as FTX’s sole in-house lobbyist, no longer works at the company, according to a person familiar with the matter. It is unclear when exactly she left, or if she resigned or was fired from the job. Lobbying disclosure reports show that FTX spent $540,000 on in-house lobbying in the second and third quarters of this year combined. FTX lists Katz as working for the company on its third-quarter lobbying disclosure, which includes July through September.
Some of the people in this story declined to be named to speak about private matters. An email to Katz’s FTX address bounced back.
Conaway Graves Group, a lobbying shop run by ex-GOP Rep. Mike Conaway of Texas and his former chief of staff Scott Graves, also stopped working for FTX last week as the company neared its bankruptcy announcement.
“Our relationship with FTX was terminated early last week and we will not be representing FTX in any capacity moving forward,” Graves said in an email.
At least three trade groups are no longer representing FTX. The Chamber of Progress, which lists crypto partners such as Blockchain.com and Ripple on its website, is no longer working with FTX, according to a person briefed on the matter.
The Association for Digital Asset Markets, a crypto advocacy group run by industry advocate Michelle Bond, has removed all notable traces of FTX from its website. Bond, who is reportedly close with Salame, ran a failed Republican primary campaign for a New York House seat.
It was announced in February that FTX and FTX US were joining the group’s board of directors. An archived version of the group’s website shows Ryne Miller, FTX US’ general counsel, and Mark Wetjen, the company’s head of policy and regulatory strategy, were once listed among the trade group’s board members.
Wetjen was a Commodity Futures Trading Commission commissioner under former President Barack Obama. A spokesman for the crypto trade group told CNBC that “on Thursday, ADAM removed FTX.com and FTX.US from its membership.” The group added that “the removal stemmed from the recently discovered fraudulent behavior by FTX.”
Coindesk reported that FTX resigned from the Crypto Council for Innovation, a separate crypto industry trade group.
The health nonprofit partially bankrolled by Bankman-Fried and run by his brother has also lost some ties to Washington.
Guarding Against Pandemics, a 501(c)(4) that advocates for public investments to prevent the next Covid-19 pandemic, lost the Ridge Policy Group as one of its lobbyists, the firm told CNBC. The lobbying group is led by former Secretary of Homeland Security Tom Ridge.
“Ridge Policy Group no longer represents Guarding Against Pandemics,” Pamela Curtis Sherman, the firm’s chief administrative officer, told CNBC in an email. Sherman did not say when that decision was made or why the two severed ties.
But the announcement comes after the nonprofit appeared to distance itself from Bankman-Fried and his brother.
As of Monday afternoon, Guarding Against Pandemics had wiped its website’s “about” section. The internet archive Wayback Machine shows that the “about” section once noted Bankman-Fried as a donor and listed Gabe Bankman-Fried as a founder and director. The nonprofit did not respond to repeated requests for comment.
Even before FTX crashed, the nonprofit lost another lobbying firm, Ogilvy Government Relations. Gordon Taylor, a principal at that firm, told CNBC in a brief interview that its contract with Guarding Against Pandemics ended in late October and was not renewed.
It is unclear why the firm did not renew the contract.
— CNBC’s Mary Catherine Wellons contributed to this report.