Good morning, it’s Jeff writing today’s Proof of State column for Leo, who is in Hawaii on a well-deserved break. As Sam Bankman-Fried’s trial continues in New York City, the denizens of another town are watching the events with barely concealed relief.
I’m referring to the crowd in Washington, D.C., where nearly 200 elected officials took campaign contributions from the alleged fraudster prior to the collapse of his FTX exchange a year ago. At the time, Bankman-Fried’s D.C. spending spree looked like a legitimate attempt to promote enlightened crypto policy. Today, it looks more like a blatant attempt to buy off the U.S. government for the benefit of his shady operation.
In any case, the millions of dollars that Bankman-Fried sprayed around the capital turned out to be an embarrassment for many politicians, most of them Democrats, who have since had to return the money. And while there was the possibility of the news media making hay of all this dirty laundry during Bankman-Fried’s trial, the political aspects of the FTX debacle have so far received little attention.
One reason for this is that prosecutors have focused most of their attention on Bankman-Fried’s activities in the Bahamas, not in Washington. This is reflected in the witness list, which has consisted of his onetime friends and lieutenants, and in victims of the fraud. There is a possibility that Bankman-Fried’s brother—who helped direct FTX money to a variety of politicians and nonprofits—could appear, but otherwise the D.C. elements are likely to amount to little more than a footnote by the time the trial concludes.
Meanwhile, the politicians who might otherwise be in the spotlight over the course of Bankman-Fried’s trial caught a second break in that two major events—the GOP speakership mess and Hamas’s barbaric invasion of Israel—are consuming all the attention in the capital. While Republican members of Congress and presidential aspirants may have originally planned to use this week to holler about crypto corruption on the part of Democrats, those other events have rightfully taken precedence.
The upshot, according to one D.C. insider I spoke with this week, is that the Bankman-Fried trial is likely to amount to no more than minor cringe for the crypto industry as it continues on the long path of rebuilding its tattered reputation in the halls of power. And speaking of the trial, my colleague Ben Weiss has been arriving at 6 a.m. to get a seat: Here’s his report on FTX’s cofounder receiving loans of up to $300 million backed by customer money, and on how the executive pay structure at the exchange very much reflected an old boys’ club.
Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts
