FTX managed effect pedaling scheme

New document FTX’s bankruptcy proceedings are shedding light on the true scale of the cryptocurrency trading giant’s influence-peddling operations. Last week, FTX filed its creditor matrix, a document that lists former suppliers and investors in the company.

The list includes about a dozen public relations specialists — professionals who generate positive media buzz on behalf of clients — as well as political consultants, think tank and trade groups.

Sometimes money goes directly to political operations. Majority Forward, an anonymous grant funding group created to elect Democrats to the Senate, received the money. In some cases, contracted professionals, such as public relations firms, are paid directly for their services. Among others, groups that received grants claim to be independent but affiliated with FTX.

For example, the document indicates a grant to the Center for a New American Security (CNAS), an important think tank Associated with national security issues from Washington, who worked on the definition of regulatory policies for the crypto market.

The document offers a glimpse of what was going on behind the scenes of the complex maze of effects of FTX. On the way to its meteoric rise as a cryptocurrency exchange, FTX soon began spending prodigious amounts of money buying up prestige and allies in positions of power. Now that the company is accused of embezzling billions of dollars from its investors — and its founder, Sam Bankman-Fried, faces fraud charges — eyes turn to other powerhouses involved in negotiations with FTX.

The relationship between the bankruptcy filing and many of the entities listed on FTX was already known – the company disclosed lobbying activities with some of its advisers – but the list of creditors shows that the crypto market giant maintains several hitherto undisclosed professional influencers.

A previously undisclosed senior political hand linked to FTX is former New York City Council President Corey Johnson. His company, Kojo Strategies, appears on the FTX vendor list. Another is Susan McCue, a former aide to Democratic Senator Harry Reid of Nevada, who has consulted with several Senate Democrats and held leadership roles in various Democratic Political Action Committees (PACs), among other organizations that receive donations from hidden financiers. His firm, Message Global, is listed in the document.

Other consulting firms linked to Power are scattered throughout the list, which is more than 116 pages long. Another lender, Patomac Global Partners, a firm that specializes in influencing financial regulators, is headed by Paul Atkins, a former member of the Securities and Exchange Commission. Atkins’ company views its list of former government officials as “a telescope to anticipate trends on the horizon and help position our clients for long-term success.” (Johnson, McCue and Patomac did not respond to requests for comment.)

Crypto market regulation

Donations to CNAS – a powerful team think tank Both are affiliated with political parties, but are known for nominating a national security role in a Democratic administration — which came at a time when the agency was advocating for lighter regulation of the crypto market.

“To compete with China in the digital economy race, the United States must foster a more innovative environment for fintech,” CNAS representative Yaya J. Fanusi said in testimony before the Senate Finance Committee on July 14, 2021. “If securities regulation does not evolve to take into account the new technical and business capabilities afforded by technology Blockchain And data transmission, the United States may be limited in the data revolution that has just begun.”

CNAS also maintains a Crypto Task Force, of which FTX serves as a member. The task force interacts with government officials concerned with national security, making policy recommendations that reflect the arguments of the crypto industry. Token Fingerprint on Blockchain Represents low risk for terrorist financing.

Minutes of a CNAS meeting with Brian Nelson, the Treasury Department’s undersecretary for counterterrorism and financial intelligence, include a summary of the discussion and indicate that the official “recognized the efforts of many in the industry to engage in constructive dialogue and supported the government’s efforts.” Relieve.” According to Nelson “the use of cryptocurrencies for illegal activities remains below the scale of traditional money”.

The CNAS task force is co-chaired by Sigal Mandelkar, who filled Nelson’s position at Treasury before resigning in 2019 to enter the private sector. Mandelker now serves as a partner at Rebit Capital, which invests in FTX. He spoke at SALT’s Crypto Bahamas conference last summer. The exclusive conference for “leaders in crypto and traditional finance” also featured keynotes from Bankman-Fried, former President Bill Clinton and former British Prime Minister Tony Blair.

Mandelker’s speech at the event was about maintaining permissive rules for the crypto market.

“The government’s instinct is often to focus on risk and not as much emphasis on opportunity,” he said. The real risks that regulators should be aware of, according to Mandelker, was “killing innovation. [das cripto](Mandelker did not respond to requests for comment.)

“CNAS received a $25,000 grant from FTX in 2022 for its national security research,” CNAS director of communications Shai Korman told The Intercept. “FTX was also a member of the Task Force on FinTech, Crypto and Homeland Security. FTX is no longer part of the task force and CNAS has returned the full grant.”

Public relations, law firms and video games

FTX once enjoyed an almost mythical status in the press, featured in cover stories and appearing in reports that praised the crypto giant and its young leader, Bankmann-Fried. Such coverage rarely happens organically, and FTX has hired an army of public relations firms to improve its image.

Among them was the M Group, a large New York-based public relations firm known for its contacts with prominent journalists. Other companies employed by FTX include TSD Communications and Full Court Press Communications.

Creditors include Rational 360, a public relations firm led in part by former White House press secretary Joe Lockhart. Emails obtained by Matt Stoller, director of research at the American Economic Liberties Project, show that Rational 360 pressed activists and political influencers to advocate for a bill that would pass crypto regulatory authority to the Commodities Futures Trading Commission (CFTC). While the Securities and Exchange Commission conducts many oversight actions against crypto companies, the Commodity Futures Trading Commission is seen as more interest-friendly in this market, and has fewer requirements regarding transparency.

Big law firms are also an important presence in the latest revelations of the bankruptcy process. One of the companies listed is Cleary Gottlieb Steen & Hamilton, which represented Russia in a $3 billion bond dispute against Ukraine before closing its Moscow office last year. Buckley LLP, another large Washington-based law firm that appears on FTX’s list of creditors, announced earlier this month that it would merge with San Francisco-based Auric to form a combined company valued at a total of $100 million. and Enforcement Consulting” in finance and technology.

The list of FTX lenders includes some countries – although details of financial relationships remain unknown. However, the list of countries reads like a catalog of countries with lax financial regulations: British Virgin Islands, Bermuda, Cayman Islands, Isle of Man, Liechtenstein, Luxembourg, United Arab Emirates, Seychelles and Switzerland are present in the document.

In addition to national banks and powerhouses in the world of corporate public relations, the list of lenders includes luxury restaurants such as Carbone in Miami and the luxury resort Margaritaville in Nassau.

The North American League of Legends Championship Series, owned by a video game event franchise, is also listed among the creditors. Bankman-Fried, known for playing the game “League of Legends” during investor meetings, agreed to a $96 million sponsorship with Riot Games. In December, as the extent of FTX’s problems became apparent, Riot announced it would sever ties with Bankman-Fried.

In some cases, ties to the entertainment world offer another channel of political access. Creditors include talent agency WME, with a memo citing actor Larry David, a celebrity endorser of FTX, who appeared in a Super Bowl commercial promoting the crypto company.

WME is owned by Endeavor, an FTX investor who owns 38,000 shares of the company. The Endeavor is also led by Ari Emanuel, brother of Ambassador to Japan Rahm Emanuel, appointed by President Joe Biden.

Editor’s note: In September 2022, The Intercept received $500,000 from Sam Bankman-Fried’s Foundation Building a Stronger Future, as part of a total of $4 million in grants for our biosecurity and disease prevention coverage. This grant has been suspended. According to our methods, The Intercept disclosed the funding in a subsequent report on Bankman-Fried’s political activities.