Former FTX CEO Sam Bankman-Fried and his allies lost their defense in Washington, as the company took off.
Lobbyists who work for both FTX and Guarding Against the Pandemic, a nonprofit partially funded by Bankman-Fried and run by his brother, Gabe Bankman-Fried, told CNBC that they have cut ties with the cryptocurrency exchange after its collapse. FTX announced last week that it filing for Chapter 11 bankruptcy and that Bankman-Fried is stepping down as CEO after the revelation of the liquidity crisis in the company.
FTX’s spectacular fall has led Washington lawmakers, including the White House’s Biden, to examine more carefully companies and industries in general. The move by some in Washington to distance themselves from FTX follows a broader push by companies and key executives to ingratiate themselves with policymakers.
Bankman-Fried became known as the “darling” of crypto in Washington when he gave more than $39 million to candidates and committees in the 2022 midterm elections, according to data from OpenSecrets. Ryan Salame, 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 foothold in Washington appear to have crashed. After Bankman-Fried donated $2,900 to Sen. Dick Durbin, D-Ill., this year, an aide to the No. 2 Senate Democrat told CNBC on Monday that the contribution “will be donated to the appropriate charity.”
Eliora Katz, a former aide to Republican Sen. Pat Toomey who was listed in the disclosure report as FTX’s only in-house lobbyist, no longer works for the company, according to a person familiar with the matter. It’s unclear when exactly he left, or if he resigned or was fired from the job. The lobbying disclosure report shows 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 in its third-quarter lobbying disclosure, which covers July through September.
Some people in this story refused to be named to speak about personal 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 on 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 other trade groups represent FTX. The Progress Chamber, 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 lobbying group run by industry supporter Michelle Bond, has removed all traces of the notorious FTX from its website. Bond, who? reported close with Salame, running a failed Republican primary campaign for a New York House seat.
It was announced in February that FTX and FTX USA join 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 regulatory policy and strategy, once listed among the trade group’s board members.
Wetjen was a commissioner of the Commodity Futures Trading Commission under former President Barack Obama. A spokesperson for the crypto trading group told CNBC that “on Thursday, ADAM removed FTX.com and FTX.US from its membership.” The group added that “the removal stems from recently discovered fraudulent behavior by FTX.”
Coindesk reported that FTX surrender from the Crypto Council for Innovation, a separate crypto industry trade group.
The health nonprofit partially bankrolled by Bankman-Fried and run by her brother has also lost some ties to Washington.
Guarding Against Pandemics, a 501(c)(4) that advocates for public investment to prevent the next Covid-19 pandemic, has lost Ridge Policy Group as one of its lobbyists, the firm told CNBC. The lobbying group is led by the former Secretary 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 the decision was made or why the two ended their relationship.
But the announcement came after the nonprofit appeared to distance itself from Bankman-Friend and her brother.
As of Monday afternoon, Guarding Against Pandemics has removed the “about” section of its website. The Wayback Machine internet archive shows that the “about” section once listed Bankman-Fried as a donor, and listed Gabe Bankman-Fried as a founder and director. The nonprofit did not return repeated requests for comment.
Even before FTX crashed, the nonprofit lost another lobbying firm, Ogilvy Government Relations. Gordon Taylor, principal at the firm, told CNBC in a brief interview that its contract with Guarding Against Pandemics ended at the end of October and was not renewed.
It is unclear why the company did not renew the contract.
— CNBC’s Mary Catherine Wellons contributed to this report