Sam Bankman-Fried worked for several years to become the most recognizable face in Washington, DC. Recent events regarding his company, FTX, may put an end to this work.
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SBF, which suddenly lost most of its state ($32 billion), became an example for regulators of why the crypto environment needs regulation from the state.
“I'm sure that, for many policymakers, he was the one crypto CEO they had met and spent time with,” clarified Miller Whitehouse-Levine. “Obviously, it's not a good look when that one person ends up being, you know, a pretty big disaster.”
FTX, an exchange based in the Bahamas, was one of the largest companies in the field. Thanks to SBF’s lobbying, political figures associated this firm with accountability, so when the crunch happened, for politicians, this was the embodiment of the collapse of the entire crypto environment. Sadly, it was not the first big crypto-collapse in 2022, but it was certainly more significant from the standpoint of the relationship between politicians and the crypto-community. According to the policy director of the crypto lobbying group DeFi Education Fund, Whitehouse-Levine, that made crypto regulation more concerning.
In addition to the amount of time the SBF has spent lobbying key figures in Washington, his $40 million donations to congressional candidates have added more weight to his personality beyond words. Due to this, we can see the residual traces of his presence through such an act as the Digital Commodities Consumer Protection Act (DCCPA).
According to Whitehouse-Levine, FTX’s collapse “will have a profound influence on the course of policy over the next year or two.” A time that SBF has spent amongst politicians gained him an “outsized profile in Washington”.
Sheila Warren, CEO of the Crypto Council for Innovation (CCI) shared her opinion, “Because of the nature of what Sam did, and who he was, I think this is very much being perceived as the actions of an individual who had individual intentions and was operating as an individual, as opposed to the actions of an industry that was lining up behind a guy,”
FTX US, despite being called a “completely distinct entity” from FTX by the words of SBF, filed for bankruptcy along with other companies under FTX’s control.
The statements of several politicians have already become examples of the influence of the collapse of FTX. Senator Elizabeth Warren labeled the whole industry “smoke and mirrors." Later, Gary Gensler, SEC Chair, used the example of FTX as an indicator of noncompliance for the entire crypto space.
Sheila Warren does not share their gloomy views on the system and does not believe that Washington seeks to punish other crypto companies. She clarified that things may change only “if this does end up spreading wider market contagion.” She also points to the isolation of his actions, there are few such public people in the industry.
BlockFi, previously saved by FTX in June, also paused all withdrawals. Because of the FTX exposure and FTT fall, Crypto.com halted USDC and USDT withdrawals on Solana, as well as CoinShare, Galaxy, Gemini, MultiCoin Capital, and Paradigm.
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