If you have ever wondered how outsiders like Jesse Ventura or Donald Trump were elected to high office, then you remain unaware of the gulf that separates the elites of American society from the masses.
The latest example of how tone deaf the elites are can be seen in the developing scandal involving the collapse of the cryptocurrency exchange, FTX. On Tuesday, former FTX CEO Sam Bankman-Fried pled not guilty to several charges of fraud that resulted in the evaporation of somewhere between $30 billion and $70 billion of cryptocurrency assets owned not by Bankman-Fried, but by FTX customers.
While Bankman-Fried is innocent until proven guilty, his prospects are not good, given that two of his closest associates have already pled guilty and are said to be ready to help the government prove its case. The essentials of the case are that people bought digital assets through FTX, and Bankman-Fried and a few close associates, including co-CEO of FTX, Ryan Salame, allegedly used the assets as their personal piggy banks. While crypto assets kept increasing in value, nobody noticed or cared. When customers wanted out of the exchange, they received their money back, usually at a healthy profit.
However, when the value of those assets declined a year ago, almost overnight more people wanted out and the money to pay them was gone. FTX suddenly could no longer pay its creditors, and ended up filing for bankruptcy in November. Where did the assets go? Three places: to disfavor with the investing crowd, to lavish personal lifestyles of FTX executives and to political candidates.
Reports to the Federal Election Commission show that Bankman-Fried and Salame contributed millions of dollars to politicians. The list of vote-getters who benefited is long. Of the 10-member Minnesota congressional delegation, four of their campaigns received money from either Bankman-Fried or Salame: Reps. Brad Finstad, Angie Craig and Tom Emmer and Sen. Tina Smith. The amounts were not huge: $2,900 for Finstad and $5,800 for the other three. The Minnesota DFL also received $9,756.20 from Bankman-Fried.
On Dec. 13, John Ray, who has been appointed the caretaker CEO of FTX as it moves through bankruptcy, told a congressional committee to forget about new terms like “Block chain,” “crypto exchange” and “digital assets.” He said, “This is really old-fashioned embezzlement,” adding, “This is just taking money from customers and using it for your own purpose, not sophisticated at all.”
Perhaps legally they can keep the money, but how each politician handled this ethical dilemma was different. Finstad, the 1st District Republican first elected to Congress only last summer, immediately returned the donation as soon as he became aware that the money may be tainted. Craig, the 2nd District DFLer, did not return the money as quickly, and a spokesman said in late November said she had no plans to do so. However, she has since changed her mind and sent the money back. Emmer, the veteran 6th District congressman who is now the third-highest ranked House Republican, has been a big promoter and defender of cryptocurrency. He has made no indication that he intends to send the contribution back to Salame or to the bankruptcy court.
Meanwhile, Smith, a DFLer who is not even up for re-election until 2026, recognized that the contribution was tainted, but, instead of sending it to the bankruptcy court or back to Bankman-Fried, decided to give it to Planned Parenthood.
However, if the allegations against Bankman-Fried and Salame are true, the money is not hers to donate. As in the case of Emmer, the money was allegedly taken illegally from FTX customers, who are now in bankruptcy court hoping that at least some of their assets will be returned to them. Even Planned Parenthood should think twice about trafficking in stolen goods.
The cryptocurrency industry, being new, is largely unregulated. One can say let the buyer beware. Unlike a bank, where your assets are protected, anyone who invests in crypto needs to understand that there is considerable risk, not much different than laying down a bet at the horse track or a casino. If you are certain that the operators of the fund are scrupulously honest and know what they are doing, you might want to take a chance, but even then, the value of crypto rises and falls on the whims of the crowd.
On Dec. 12, Bankman-Fried was arrested in the Bahamas, the day before he was to testify before a congressional committee. Emmer told the website Crypto Potato that he believes there is a connection between the two. He said, “The speed with which this indictment apparently moved at, … it’s an unusual speed that it moved at by any account.”
The suggestion is that powerful people among the elites did not want to draw attention to their connection to Bankman-Fried. If Emmer thinks that Bankman-Fried is guilty, then why is he holding onto the money?
The elites will do what they will, but the disconnect that assumes a special status, allowing them to take tainted money, is what drove a significant portion of the electorate to Ventura and Trump in the first place. Most Minnesotans would rather have a congressional delegation that steers clear of any alleged criminal activity. All politicians should give the FTX contributions back.
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