New FTX Dossier Pulls Back Curtain on SBF’s Massive Influence Peddling Operation

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A filing in FTX’s bankruptcy proceedings sheds light on the true extent of crypto-trading powerhouses’ influence over the peddling operation. Last week, FTX filed its Matrix of Creditors, a document that lists the company’s former sellers and investors.

The list includes nearly a dozen public relations experts who generate positive media coverage on behalf of clients as well as political consultants, think tanks and trade groups.

Sometimes the money went directly to political operations; Majority Forward, a black money group designed to elect Senate Democrats, received money. In some cases, mercenaries, such as public relations firms, were paid directly for their services. In others, the groups that received donations maintain that they are independent, but had interests aligned with FTX.

The filing, for example, mentioned a donation to the Center for a New American Security, a leading think tank focused on national security in Washington, DC, which has worked to shape crypto regulations.

The dossier offered an under-the-hood insight into the complex maze of FTX influence. On the heels of its meteoric rise as a crypto exchange, FTX quickly began spending extraordinary sums to buy prestige and friends in high places. Now that the firm is accused of siphoning off billions of dollars from its investors with its disgraced founder Sam Bankman-Fried accused of fraud in the case, increased scrutiny is mounting on the power brokers’ dealings with FTX.

Relationships between many of the entities listed in the bankruptcy filing and FTX were already known, the company complied with lobbying disclosures for some of its consultants, but the creditors’ matrix shows the crypto giant has also retained several previously undisclosed professional influencer peddlers.

Corey Johnson, former New York City Council Speaker, is a seasoned political hand tied to FTX without any disclosure. His company, Cojo Strategies, is listed as an FTX provider. Another is Susan McCue, a former aide to Sen. Harry Reid, D-Nev., who advised many Senate Democrats and played a role in leading several Democratic super PACs and black money outfits. His company, Message Global, is in the case.

Other consultancies with a finger on the pulse of power are sprawled across the creditors’ matrix, which spans 116 pages. Another creditor, Patomak Global Partners, a firm specializing in influencing financial regulators, is run by Paul Atkins, a former securities and trading commissioner. The Atkins Company touts its roster of former government officials as providing a telescope to anticipate trends on the horizon to help position our clients for long-term success. (Neither Johnson, McCue, nor Patomak responded to requests for comment.)

Crypto Think Tank Regulation

The donation to CNAS, a powerful think tank tied to both political parties but known for its national security duties in Democratic administrations, came at a time when the organization was advocating crypto regulation with a light touch.

To compete with China in the race for the digital economy, the United States must foster a more innovative fintech environment, CNAS member Yaya J. Fanusie said in testimony before the Senate Finance Committee on Tuesday. July 14, 2021. If U.S. securities regulation does not evolve toward Given the new technical and entrepreneurial capabilities offered by blockchain technology and broadcast data transmission, the United States could be crippled in a data revolution that is just beginning.

CNAS also maintains a Cryptography Working Group, of which FTX was previously a member. The task force corresponded with national security-focused government officials, offering policy advice that mirrored the crypto industry’s assertion that digital tokens on the blockchain pose a low terrorist financing risk.

A reading of a CNAS meeting with Treasury Departments Brian Nelson, the Undersecretary for Terrorism and Financial Intelligence, included a summary of the discussion and noted that the official acknowledged the work of many actors in the industry to engage in constructive dialogue and support government efforts to mitigate the misuse of virtual assets for money laundering purposes. The use of crypto for illicit activities remains below the scale of traditional finance, Nelson said.

The CNAS task force is co-chaired by Sigal Mandelker, who served as Nelson in the Treasury before resigning in 2019 to enter the private sector. Mandelker is now a general partner at Ribbit Capital, an investor in FTX. Mandelker spoke at SALTs Crypto Bahamas conference last summer. The invitation-only conference for key players in the crypto and traditional finance industry also featured presentations from Bankman-Fried, former President Bill Clinton and former UK Prime Minister Tony Blair.

Mandelkers’ discussion at Crypto Bahamas was about keeping crypto regulations permissive.

“The instinct of government is often to focus on risk and not focus so much on opportunity,” she said. Real risk regulators should beware, Mandelker continued, was “to close [crypto] innovation.” (Mandelker did not respond to a request for comment.)

CNAS received a $25,000 donation from FTX in 2022 in general support of CNAS’s independent national security research, Shai Korman, director of communications for CNAS, told The Intercept. FTX was also a member of the Fintech, Crypto and National Security Working Group. FTX is no longer a member of the working group and CNAS has reimbursed the entire donation.

Public relations, law firms and video games

FTX once enjoyed near-legendary status in the media, with splashy coverage and gushing news articles praising the crypto powerhouse and Bankman-Fried, its young leader. Such coverage rarely emerges organically, and FTX has hired an army of PR firms to polish its image.

Among them was M Group, a New York-based PR powerhouse known for its rolodex of elite journalists. Others under FTX’s employ included TSD Communications and Full Court Press Communications.

The list of creditors includes Rational 360, a public relations firm run in part by former White House press secretary Joe Lockhart. Emails obtained by Matt Stoller, the research director of the American Economic Liberties Project, show that Rational 360 lobbied activists and political influencers to speak out in favor of a bill that would move crypto regulatory authority to the Commodity Futures Trading Commission. While the Securities and Exchange Commission handles numerous enforcement actions against crypto firms, the CFTC is considered more favorable to crypto interests and has fewer disclosure requirements.

Powerhouse law firms also feature prominently in the latest bankruptcy filing. One of the listed companies is Cleary Gottlieb Steen & Hamilton, which represented Russia in a $3 billion bond dispute against Ukraine before its Moscow office closed last year. Buckley LLP, another large Washington-based law firm that was listed as an FTX creditor, announced earlier this month that it would merge with San Francisco-based Orrick to create a combined firm with a total of nearly $1.5 billion focused on the future. regulatory and enforcement advice in the fields of finance and technology.

Among FTX’s listed creditors were a handful of nations, although the contours of financial relationships remain unknown. Nevertheless, the list of countries reads like a whos who of nations with lax financial regulations: British Virgin Islands, Bermuda, Cayman Islands, Isle of Man, Liechtenstein, Luxembourg, United Arab Emirates, Seychelles and Switzerland are all in the repository.

Along with national banks and powerful corporations in the corporate PR world, the Creditor Matrix also details luxury restaurants like Carbone in Miami and the luxury resort Margaritaville in Nassau.

The North America League of Legends Championship Series, a property of a leading video game event franchise, is also listed in the creditor matrix. Bankman-Fried, known for playing the League of Legends video game in pitch meetings with investors, has struck a $96 million sponsorship deal with Riot Games. In December, as the scale of the FTX deception unfolded, Riot announced that it would attempt to cut ties with Bankman-Fried.

Entertainment relations provided, in some cases, an additional channel of political access. The list of creditors includes talent agency WME, with a memo mentioning actor Larry David, a famous FTX endorser who appeared in a now infamous Super Bowl ad promoting the crypto exchange. .

WME itself is owned by Endeavour, an investor in FTX that owns 38,000 shares of the company. Endeavor is also led by Ari Emanuel, the brother of Rahm Emanuel, President Joe Bidens’ ambassador to Japan.

Editor’s Note: In September 2022, The Intercept received $500,000 from the Sam Bankman-Frieds Foundation, Building a Stronger Future, as part of a $4 million grant to fund our pandemic prevention coverage and of biosecurity. This grant has been suspended. Consistent with our general practice, The Intercept has disclosed the funding in subsequent reports of Bankman-Frieds political activities.

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