Dem 50
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Ties 1
GOP 49
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There's One Mystery Solved

A few weeks ago, we wrote an item about megadonors who gave generously during primary season and then slammed their wallets shut during the general election. One of those was Peter Thiel, whose motivations are hard to discern, but who appears to be a few bricks shy of a load. And another was Sam Bankman-Fried, who pledged to donate $1 billion to Democrats this cycle, and then came up about $950 million or so short of that promise.

When Bankman-Fried hit the brakes, he explained that the $1 billion promise was just "a dumb quote." That did not sound like an especially good explanation, and we presumed that the volatility in the crypto market, which is the source of all of his wealth, was the real explanation. Hoo boy, were we right about that, and then some.

In fact, maybe we should have said "which WAS the source of all his wealth." Bankman-Fried founded the crypto exchange FTX, where people can buy and sell imaginary assets like bitcoins. It turned out to be, in effect, a Ponzi scheme. In early 2022, FTX was valued at $32 billion and Bankman-Fried's personal fortune (which was mostly in shares of FTX) was estimated to be $16 billion. However, it turned out that FTX had assets of around $1 billion and liabilities of around $9 billion. When its clients heard about this, they began withdrawing their money and FTX couldn't cover the withdrawals. It is now bankrupt and Bankman-Fried lost most of his money in the collapse. Most cryptocoins also nosedived. If you had bought one bitcoin just a year ago, you would have paid about $64,000 for it. It is now worth $17,000 and falling.

At best, Bankman-Fried is broke, or nearly so. At worst, he is a criminal. He's reportedly taking a long look at which countries have no extradition treaty with the United States. In any event, the Democrats just lost their second-biggest donor from this cycle. They still have their #1 donor, George Soros, but he is 92. Counting on him indefinitely is not a good long-term strategy.

Meanwhile, we shall see if the Democrats' relationship with Bankman-Fried becomes a scandal. In addition to taking $40 million of his money, several high-profile Democrats were in bed with him, most obviously Sen. Kirsten Gillibrand (D-NY). On the other hand, several high-profile Republicans were also in bed with him, most obviously Sen. Cynthia Lummis (R-KY). We shall see, but the Republican outrage machine has not generally shown itself to be a model of consistency in terms of holding Democrats and Republicans to the same standards of behavior. Incidentally, Lummis' net worth jumped from $12 million to more than $15 million after she invested heavily in Bitcoin, making her the first U.S. Senator to buy cryptocurrency. Our guess is she'll be back down to $12 million on next year's disclosure forms. (V & Z)

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