
Good morning, Jeff is writing today's Proof of State column for Leo, who is in Hawaii on a well-deserved break. As the trial of Sam Bankman-Fried continues in New York City, the denizens of another town are watching the events with barely-concealed relief.
I mean, hundreds of elected officials in Washington, D.C., took campaign contributions from the alleged fraudster before the collapse of his FTX exchange a year ago. At the time, Bankman-Fried's spending spree in DC looked like a legitimate attempt to promote enlightened crypto policy. Today, it looks more like a blatant attempt to buy off the U.S. government for the benefit of his shady operation.
In any case, the millions of dollars that Bankman-Fried sprayed around the capital turned out to be an embarrassment for many politicians, most of them Democrats, who have since had to return the money. While there was the possibility of the news media making hay of all this dirty laundry during Bankman-Fried's trial, the political aspects of the FTX debacle have so far received little attention.
One reason for that is that prosecutors have focused their attention most of their attention on Bankman-Fried's activities in the Bahamas, not in Washington. This is reflected in the witness list, which has included his one-time friends and lieutenants and victims of the fraud. It is possible that Bankman-Fried's brother, who helped direct FTX money to a variety of politicians and nonprofits, could appear, but otherwise the DC elements are likely to amount to little more than a footnote by the time the trial ends.
The politicians, who might otherwise be in the spotlight over the course of Bankman-Fried's trial, caught a second break in that two major events-the GOP speakership mess and Hama's barbaric invasion of Israel-are consuming all the attention in the capital. While Republican members of Congress and presidential aspirants may originally have planned to use this week to holler about crypto corruption on the part of Democrats, those other events have rightfully taken precedence.
The upshot, according to one D.C. insider I spoke with this week, is that the Bankman-Fried trial will likely amount to no more than minor cringe for the crypto industry as it continues on the long path of rebuilding its tattered reputation in the halls of power. And speaking of the trial, my colleague Ben Weiss has been arriving at 6am to get a seat-here's his report on FTX's cofounder receiving loans of up to $300 million backed by customer money, and on how the executive pay structure at the exchange very much reflected an old boys' club.
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