The curious timing of ‘scammy’ Sam Bankman-Fried’s crypto-bust

When alleged crypto-fraudster Sam Bankman-Fried finished testifying at a congressional hearing last December, Democrat Maxine Waters, chair of the House Financial Services Committee, blew him a kiss as he walked by.

And why not, since the shambolic 30-year-old former multibillionaire is acknowledged to be the second-biggest donor to the Democrats, after George Soros. 

He helped bankroll Joe Biden into the White House and had promised to donate $1 billion to help the party win the 2024 presidential election. 

There are those, such as Elon Musk, who allege that SBF, as he is called, already has funneled $1 billion of stolen customer funds to Dem causes via various dark money PACs. Others on Wall Street put the number lower, at maybe $500 million. 

Perhaps that was the entire point of FTX, at least in the end.

Now the jittery video-game addict faces federal charges in Manhattan of money laundering, and campaign finance violations along with wire and securities fraud. 

So it probably should have been no surprise that SBF was a no-show Tuesday for what should have been hostile questioning at a hearing of the House Financial Services Committee, presided over by his fairy godmother Waters.

Sam Bankman-Fried testifies on Feb. 9, 2022.
Bankman-Fried faces eight criminal charges over FTX.
AFP via Getty Images

Some members were said to be looking forward to a good grilling of the alleged fraudster, about what happened to the $8 billion that’s gone missing from his collapsed cryptocurrency exchange FTX. 

And it is fair to say, some weren’t.

As it turned out, Democrats — and perhaps Republicans — were spared the embarrassment. SBF was conveniently arrested in the Bahamas, just hours before his Zoom testimony before Chairman Waters’ hearing. 

She was oh so disappointed that SBF couldn’t appear, but the hearing would struggle on, hearing from FTX’s new bankruptcy CEO John Ray III about the extraordinarily lax record keeping in what he called a “paperless bankruptcy.” “Never in my career have I seen such a complete failure of corporate controls.”

Rep. Maxine Waters speaks during a House Committee on Financial Services hearing on April 6, 2022 in Washington, DC.
Rep. Maxine Waters blew Bankman-Fried a kiss at a congressional hearing last December.

That’s quite something coming from the former Enron liquidator.

But wouldn’t you think, if you were a prosecutor, that you would be bitterly disappointed to have missed the opportunity of seeing garrulous young Sam testify under oath for hours, before you arrested him? What difference would a few more hours have made?

The excuse floated in the media is that he was a “flight risk.” But his mother, Stanford University law professor Barbara Fried, reportedly laughed out loud at her son’s extradition hearing Tuesday in a Nassau court when he was called a “fugitive.”

Former prosecutors smelled a rat. Republican Rep. William Timmons, of South Carolina, a member of Waters’ committee, called the timing of SBF’s arrest “bizarre.”

“I’ve prosecuted complex white-collar cases. The thought of getting six hours of congressional grilling for the target of an investigation, or a defendant, that would be great for my case.”

Timmons pointed out that the Manhattan grand jury returned SBF’s indictment last Friday, Dec. 9. “Technically, you could delay weeks if you want to. So, this was a decision made by somebody at the DOJ to prevent Sam Bankman-Fried from coming here.”

It wasn’t just Republicans who thought the timing of SBF’s arrest was suspicious.

Gary Gensler testifies on Sept. 15, 2022.
Securities and Exchange Commission Chairman Gary Gensler met with Sam Bankman-Fried twice over the past year.

Democrat Jake Auchincloss of Massachusetts asked Ray: “Do we have your commitment that . . . if you find any evidence of improper collusion between Mr. Bankman-Fried and any authorities, in the Bahamas and elsewhere, you make that known to us?”

“Absolutely,” said Ray, but honestly, how will he ever know? He has his hands full looking at the financials, such as they are, of the company. Figuring out why the arrest was timed to suit SBF’s defense counsel is not in his remit.

Republican John Rose of Tennessee drily described the timing as “interesting” and took a well-deserved swipe at Securities and Exchange Commission Chairman Gary Gensler.

“As a recovering attorney, it makes me wonder why a prosecutor would not want to potentially add lying to Congress to accompany the list of charges against Mr. Bankman-Fried,” Rose said.

“It also makes me wonder why the SEC waited until today to file its own charges . . .

“Chairman Gensler has failed at his job, and worst of all, he has failed to protect investors. . .

“While he has been asleep at the wheel, the Democratic majority has failed to have him testify to this committee for over 14 months, which I believe is a disservice to investors.”

Lee Zeldin speaks onstage.
Lee Zeldin suggested Bankman-Fried’s Monday arrest occurred to prevent the ex-CEO from testifying about his relationship with Gensler.
Matthew McDermott

Gensler, the former finance chief of Hillary Clinton’s 2016 presidential campaign, has a lot to explain about FTX’s collapse.

Why, for instance, did he meet with SBF twice over the past year, unprecedented access for the target of a major fraud, according to Post contributing business commentator Charlie Gasparino.

And why did Gensler scrub from his public calendar details of meetings with his old boss Hillary Clinton, House Speaker Nancy Pelosi, and SBF’s fellow billionaire Democratic donor George Soros, as reported this week by Fox News?

Republican New York gubernatorial candidate Lee Zeldin, a former prosecutor who has served on the House Financial Services Committee, had his own theories about why SBF was nabbed before he could sing. 

“It seems like you’re trying to protect someone,” he said, surmising the motive may have been to prevent SBF from testifying about his relationship with Gensler. 

Former prosecutor Andy McCarthy, once an SDNY assistant US attorney, is similarly perplexed, saying the only explanation that makes sense, apart from incompetence by prosecutors, “is they didn’t like the prospect of what was going to come out at the hearings . . .

“So, the Democrats who run the Justice Department accommodate the Democrats who run the committee,” he told Fox News.

No one believes SBF’s claim that he donated just as much money to Republicans as he did to Democrats, and there is no evidence to back him up. But FTX did funnel several million to chosen Republicans, which seems to have worked out as an insurance policy for Democrats at Waters’ hearing Tuesday. Cheap protection if it is.

According to a keyword search of the CSPAN transcript, in four hours of testimony by Ray, not one question was asked about campaign donations by either side. 

The closest was Republican Bill Huizenga of Michigan. “Mr. Bankman-Fried has, let’s say, wooed many in New York and Silicon Valley, [and] here in DC . . . Everybody loved the exciting idea of a politically progressive, smart entrepreneur, who was going to reimagine capitalism and change the world, feeling better about themselves, all while making them gobs of money.”

The gobs of money went almost entirely to Democrats. Are Republicans really going to give them a free pass because of the embarrassment of admitting they took some ill-gotten crumbs off the table? They should pay it all back so they can work with clean hands, because you can bet there will be another scam for 2024.

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