What Justifies The Allegation That Joe Biden Used FTX to “Launder” Billions In Ukraine Aid?
FTX, one of the world’s largest exchanges, filed for U.S. bankruptcy protection, putting billions in investments at risk.
Sam Bankman-$16 Fried’s billion net worth was wiped out in days after an asset scandal that may leave one million creditors unable to reclaim cash.
The cryptocurrency market has fallen from $3 trillion a year ago to $827 billion at the time of publication. While others, including politicians, face inquiry for their financial ties to Bankman-Fried, one conspiracy theory links U.S. funding for Ukraine to the exchange’s failure. Multiple tweets from November 12-15, 2022 indicate Ukraine supplied foreign aid to FTX, which was then sent to the Democratic party. Madison Cawthorn, James Woods, Calvin Robinson, Seth Dillon, and Jack Posobiec have disseminated the claim.
Conspiracy theory subreddits, 4Chan, and other online fringes spread the story. The collapse of FTX has shaken the cryptocurrency market, causing a domino-like collapse of popular cryptos like Bitcoin, whose value plunged to a two-year low. A reporting agency has analyzed FTX’s issues and the online allegation to determine if and how they are related to U.S. political parties and Ukraine. The situation arose after Coindesk reported on November 2, 2022, that Bankman-hedge Fried’s firm possessed a large quantity of FTT tokens. Coindesk stated the fund had tight financial ties to FTX.
Binance, FTX’s biggest competitor, stated it would sell FTT tokens. FTX tried to process $6 billion in FTT withdrawals in three days as panic spread.
This created liquidity fears—that FTX wouldn’t be able to pay clients—and spurred Binance to release a non-binding letter of intent to buy the platform (which it later walked away from). Bankman-Fried indicated he would close Alameda Research, while FTX filed for bankruptcy.
At least $1 billion in consumer funds are gone, according to Reuters. Many watchers have pointed out FTX’s ties to U.S. political parties, especially the Democrats.
Bankman-contributions Fried’s to Democrats are well-known, and he was called the “newest megadonor” by Politico in 2022, but he has also given to Republicans. On November 5, 2022, he tweeted that he was “a substantial donor in both D and R primaries. Supporting constructive candidates across the aisle to prevent pandemics and bring a bipartisan climate to DC. And working with them to encourage permissionless financing.”
FTX Executive Ryan Salame and I signed up campaigns to accept bitcoin and provided millions to Senate and House Republicans.
Open Secrets says FTX spent over $70 million on lobbying in 2022. These include payments to Democratic and liberal PACs like Protect Our Future and House Majority.
The Intercept reported earlier this year that FTX executive Ryan Salame created his own super PAC focused entirely on electing Republicans. Salame also donated to the GOP Senate and Congressional Leadership Funds. The Intercept reported these gifts before FTX’s collapse.
The argument that FTX money only benefited the Democratic Party is untrue.
Bankman-Fried is interested in U.S. digital currency laws that may benefit the bitcoin business.
Before FTX’s collapse, he told the Washington Post he was “very enthused” by pending legislation that would give the CFTC primary supervision over crypto markets, which are presently overseen by the SEC (SEC). The SEC has been at the core of cryptocurrency regulation talks and actions in recent years, especially in its legal struggle with Ripple, developer of XRP, another cryptocurrency.
Since Russia’s invasion, FTX has helped Ukraine accept cryptocurrency donations.
Aid for Ukraine, backed by FTX, debuted in March 2022 to send crypto donations to the National Bank of Ukraine. Aid for Ukraine has received 611 Bitcoin, 10,723 Ethereum, and 15,048,821 USDT, according to its website (which is at least on paper supposed to be pegged to the U.S. dollar, though that may be no longer tenable).
Everstake, a crypto firm involved in setting up the donations, responded on Twitter to claims these funds were illegally transferred to the Democrats, stating Aid for Ukraine had used FTX “only a few times in March 2022 exclusively to convert crypto donations into fiat” which The National Bank of Ukraine had confirmed receipt of. It claimed that of the $60 million received through Aid For Ukraine, $54 million was spent on “Ukraine’s humanitarian and military requirements.” Ukraine’s Vice Prime Minister Fedorov Mykhailo made the same claim on Twitter and provided a breakdown.
Everstake emphasized that funds were not held on FTX and may be “converted into fiat elsewhere”
Its CEO Sergey Vasylchuk accused Russia of disinformation on Twitter.
“Every time Russia loses on the battlefield, it spreads bogus news based on made-up assumptions,” Vasylchuk added. “This time, they used the FTX bankruptcy to create yet another money laundering story. It’s apparent that Western support of UA affects Russia’s battlefield losses.
We know every donation benefited Ukraine.
As well as the official crypto wallets of Ukraine, several large exchanges (like Binance) have set up relief funds, as have NGOs and philanthropic groups.
FTX’s collapse has revealed its business and government connections, but there has been no recent investigation into whether other donation wallets sent crypto or fiat back to the U.S. Contrary to conspiracy claims, we have seen no evidence that Ukraine invested billions of dollars in FTX to begin with. No such statements or announcements have been made by the Ukrainian government, its Central Bank, or FTX.
The idea that cash were “laundered” from Ukraine via FTX back into the U.S., less so to the Democratic party coffers or Biden, is unproven.
A recent analysis found no transaction IDs, statements, or other physical evidence that U.S. funding or crypto donations were washed back to the Democratic Party through a Ukrainian investment in FTX or otherwise.
The assertion ignores the auditing and vetting of U.S. foreign aid to guarantee it’s spent properly on Ukrainian aid.
In the package that provided $40 billion in emergency aid to Ukraine, $5 million was spent on oversight alone, including by the Department of State Inspector General and the USAID Inspector General.
DOD OIG and USAID OIG evaluate the use of funding in Ukraine and investigate complaints and suspicions of misuse or attempted misuse.
The USAID OIG examines fraud and corruption in U.S.-funded foreign aid programs and provides preventive measures, such as verifying financial assistance, employing regulated money transfer agents, and security-locking beneficiary lists before distribution.
The DOD OIG recently published a congressional report on the use of this funding, broken down by recipient such as the army, air force, and navy, with details on the amount of money due to be spent and what was actually spent. This report is informed by third-party reporting by analytics firm Advana and includes recommendations regarding any accountability concerns noted by the DOD OIG.
For the Ukrainian government to invest in a cryptocurrency exchange using U.S. government funding—under the nose of a multi-million dollar oversight process—would require a major lapse in oversight from those auditing Ukraine and a breakdown of protections in place to ensure funds could not be re-appropriated.
In response to these claims, Alex Bornyakov, Deputy Minister of Digital Transformation of Ukraine on IT industry development, tweeted: “A fundraising crypto foundation used @FTX Official to convert crypto donations into fiat in March. Ukraine’s government never backed FTX. Newsweek spoke with Dr. Anna Bradshaw, a partner at U.K. law firm Peters & Peters and expert on financial crime and anti-money laundering, about the claim.
Bradshaw said the claim resembled fraud more than money laundering (which Interpol defines as “concealing or obscuring the origins of illegally obtained proceeds”).
“You’re trying to make the money look like it’s coming into the political party, if that’s where it ends up, as a valid, unrelated donation,” Bradshaw said.
Sending it back to its own nation is an interesting twist. It wouldn’t be the first time, but it wouldn’t happen without US and Ukrainian help, she claimed.
Money laundering is the easiest accusation to make. It’s telling that the accusation was made without solid evidence.
This erroneous tale has a murky origin: “Money laundering may include such a wide range of things.” The first instance occurred on the Hal Turner Radio Show website on November 11, 2022. It was presented without evidence alongside what appeared to be antisemitic stereotypes involving Bankman-Fried (who is Jewish).
Hal Turner, a right-wing conspiracy theorist condemned to 33 months in jail for threatening three federal appeals court judges, spreads bogus allegations on his website.
Hal Turner Radio Show received one of NewsGuard’s lowest scores for publishing fake content and not carefully gathering and presenting information. The FBI and Cybersecurity Infrastructure Security Agency said in October 2022 that “foreign actors” will likely utilize “information manipulation strategies for 2022 Midterm Elections.”
Foreign actors may try to influence the 2022 midterm elections by disseminating or exaggerating reports of hostile cyber activity on election infrastructure, the research said.
“These foreign actors may also manufacture and spread false claims and narratives about voter suppression, voter or ballot fraud, and other misleading information to erode faith in election procedures and alter public view of the elections’ legitimacy.
Foreign actors continue to distribute false narratives about electoral infrastructure to foment societal unrest and suspicion in U.S. democratic processes and institutions, and may try to inspire violence.
Absence of evidence does not mean we can yet rate the social media narrative as false, but its verifiably false and misleading elements, dubious origin, lack of internal cohesion, and lack of reliable sources and accounts involved in its initial proliferation dent its credibility. As such, it should be viewed with heavy skepticism.
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Globalization is a Critical Issue in Davos
Days long forgot.
A decade ago, political power brokers and corporate titans convened in the Swiss Alps under an optimistic banner, globalization. It was a time for “resilient dynamism,” declared the World Economic Forum‘s 2013 summit organizers. They argued that the globe has entered a “post-crisis” period following the travails of the global financial crisis. It was incumbent on the Davos elites to bring in additional reforms in the service of economic “sustainability” and “competitiveness,” recurrent WEF watchwords that tap into the liberal ethos that has long underpinned its proceedings, where doing good need not conflict with profit margins.
After ten years, there appears to be less optimism. Instead of a “post-crisis” time, it’s more usual to speak of a “permacrisis,” of a world teeming with calamity — war, climate catastrophe, energy price mayhem, inflation, epidemics of hunger and illness, political instability, and growing economic injustice. This year’s WEF theme, an impassioned plea for “cooperation in a fractured globe,” seemed to be more obsessed with the ruptures that have already occurred. Last week, WEF President Borge Brende told reporters that the meeting “will take place against the most complicated geopolitical and geoeconomic backdrop in decades.”
Issues that are still hounding the WEF.
Concerns about a probable global recession are high on the agenda. There’s also the perplexing issue of climate change, as well as the ongoing conflict in Ukraine and its ramifications, such as the snarling of the global grain trade, which contributed to the development of famine conditions in large parts of Sub-Saharan Africa. Underneath it all is a deeper Davos anxiety: few institutions are more inextricably linked to neoliberalism and the globalization movement than the conference. Where does globalization go in an age of rising nationalism and great power competition, when the United States itself is launching trade wars?
The Economist’s recent cover story, which attempts to describe the Davos zeitgeist each year, criticized the “new logic that threatens globalization.” It criticized the Biden administration’s “abandonment of free-market standards in favor of an aggressive industrial policy,” citing subsidy-laden programs to support the country’s green transition as well as new efforts to make the country a semiconductor manufacturing hotspot.
All of this, according to the historically liberal Economist, has “kicked off a perilous spiral into protectionism worldwide,” fraying the global order that the US spent decades constructing and securing in the aftermath of World War II. It may potentially jeopardize “liberal democracy and market capitalism’s causes.”
The Davos hosts want to maintain the status quo.
Tuesday’s launch panel, comprising economic historians Adam Tooze and Niall Ferguson, will debate “de-globalization or re-globalization.” The latter approach mirrors current developments, with governments and multinational corporations redirecting supply chains away from conflict zones and unfriendly states. It is visible with the exit of a large number of Western corporations from Russia and China.
“I would say we are in a re-globalizing moment,” Malaysian Trade and Industry Minister Tengku Zafrul Aziz told me at his country’s pavilion along Davos’ snow-lined central promenade. He believes that while companies and enterprises may benefit in the near term from shifting away from China and into Southeast Asian markets, the larger picture is more concerning.
“People are getting more compartmentalized,” he remarked. “In the long run, we are concerned about rising trade expenses.”
According to the forum, this year’s attendance includes more than 50 heads of state or government, 56 finance ministers, 19 governors of central banks, 30 trade ministries, and 35 foreign ministers, making it the largest gathering of political and business leaders ever.
The majority of the world’s leading economic leaders, though, are conspicuously absent. German Chancellor Olaf Scholz will be the only Group of Seven leaders to attend, with his European peers presumably keen to avoid the optics of rubbing shoulders with the global elite while their own populations deal with cost-of-living difficulties. The key officials from the Biden administration are US climate envoy John F. Kerry and US Trade Representative Katherine Tai, who, given the current state of affairs, may find herself in some heated discussions over the week.
Following a pause caused by the pandemic, China has dispatched its own high-level delegation, led by Vice Premier Liu He, who is scheduled to deliver one of the event’s major keynote addresses on Tuesday. It is a revival of Beijing’s engagement with the forum, albeit not at the level seen in 2017 when Chinese President Xi Jinping keynoted events with a speech championing globalization that portrayed China as an upholder of the liberal system. It was interpreted at the time as a declaration of intent by a leader eager to take the mantle of global leadership, as well as a thinly veiled jibe at the recently appointed ultranationalist Trump government bent on populist disruption.
That occasion at Davos was perhaps a watershed moment for Xi on the global scene.
His dictatorial hand has tightened at home in the years afterward, while many nations worldwide regard China under his leadership as a threat, if not necessarily a foe. Whatever the World Economic Forum’s pleas for discussion and collaboration, there is a growing consensus in the West that Xi’s ambitions for Taiwan must be checked. There is now an emerging consensus that China’s admittance to the World Trade Organization two decades ago — possibly the single most momentous event in the history of globalization — was a mistake.
In 2013, WEF organizers praised Russian Prime Minister Dmitry Medvedev’s participation as a national leader who grasped “global obligations.” Of course, Medvedev and Russian President Vladimir Putin, as well as the entourage of Russian billionaires and business leaders who used to throw some of the most expensive parties on the fringes of the forum, are now all persona non grata in Davos. The conflict in Ukraine will cast a shadow over the talks, with a large delegation from Kyiv, including Ukrainian First Lady Olena Zelenska, in attendance.
Looking into the future.
A large portion of the discussion has little to do with politicians’ or pundits’ doom-mongering. There will be hundreds of lectures and events highlighting various examples of private-sector innovation and collaboration on topics ranging from food security to youth education to forestry (WEF has pledged to restore and plant a trillion trees around the world). WEF organizers describe the forum’s attendees as enabling “systems positive change” and guiding the globe toward a better, more sustainable future in rosy technocratic language.
“There’s skepticism around Davos; they can say it’s a talk shop,” Penjani Mkambula, who works at the Global Alliance for Improved Nutrition on fortifying grains with minerals and vitamins in the developing world, told me. “However, there are numerous advantages that emerge. A lot of alliances are formed, a lot of work is done, and the effects are sometimes visible years later.”
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Population in China Declines for the First Time in Decades, Alarms Starting to Ring
China’s population decreased for the first time in six decades last year, a historic reversal that is believed to signal the start of a long era of fall in its citizen numbers with far-reaching ramifications for the country’s economy and the rest of the world.
The dip, the worst since 1961, the final year of China’s Great Famine, adds credence to forecasts that India would overtake China as the world’s most populous country this year.
According to the National Bureau of Statistics, China’s population would have decreased by approximately 850,000 to 1.41175 billion by the end of 2022.
Long-term, UN scientists predict that China’s population would fall by 109 million by 2050, more than double the decline predicted in 2019.
Domestic demographers are worried that China may become old before it becomes rich, stalling the economy as revenues fall and government debt rises due to rising health and welfare bills.
“China’s demographic and economic prospects are far worse than anticipated. China’s social, economic, defense, and diplomatic policies will all need to be adjusted” Yi Fuxian, a demographer, stated.
He went on to say that the country’s declining labor force and manufacturing slump would worsen high pricing and rising inflation in the United States and Europe.
Birthrate keeps on falling
Last year, China’s birth rate was 6.77 births per 1,000 people, down from 7.52 births in 2021 and the lowest rate on record.
The death rate was 7.37 fatalities per 1,000 people, the highest since 1974 during the Cultural Revolution, compared to 7.18 deaths in 2021.
Much of the demographic collapse is the result of China’s one-child policy, which was implemented between 1980 and 2015, as well as sky-high education expenditures, which have discouraged many Chinese from having more than one child if any at all, and had long-term effects on the population.
Following the release of the results on Tuesday, the data became the top trending subject on Chinese social media. One hashtag, “#Is it really necessary to have children?” received hundreds of millions of views.
“The primary reason why women do not want to have children is due to society’s and men’s unwillingness to take on the task of parenting children. Women who give birth have a significant drop in their quality of life and spiritual life ” Joyful Ned, a netizen, shared his thoughts.
Impact of regulations
According to population experts, China’s strict zero-COVID regulations, which have been in effect for three years, have harmed the country’s demographic outlook.
Since 2021, local governments have implemented policies to encourage families to have more children, such as tax breaks, extended maternity leave, and housing subsidies. President Xi Jinping also stated in October that the government would implement additional helpful policies.
However, thus far, measures have done little to halt the long-term trend.
Searches for baby strollers on China’s Baidu search engine fell 17% in 2022 and are down 41% since 2018, while searches for baby bottles have declined by more than a third since 2018. Searches for aged care facilities, on the other hand, increased eightfold last year.
In India, Google Trends reveals a 15% year-on-year growth in searches for baby bottles in 2022, while searches for cribs increased nearly fivefold.
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China’s Quick Reopening Pace Brings a Mixed Bag of Emotions Globally
The quick reopening of China’s economy from COVID lockdowns brightens the outlook for global investors eager to leave behind one of the worst years on record, but it may also exacerbate the inflationary pressures policymakers think are subsiding.
The impact of the world’s second-largest economy reopening on financial markets, which suffered double-digit losses last year as inflation and interest rates rose, is critical.
Emerging markets, commodity currencies, oil, travel, and European luxury companies are among the top buying bets on recovery optimism.
It will undoubtedly be a rocky voyage. COVID instances, deaths, and the economic impact on China from epidemic infections have yet to be seen, but commodities prices are already rising, raising the likelihood of inflation.
For the time being, investors are focused on the positives, anticipating additional stimulus measures from Beijing with the health crisis and economic impact on China peaking in the first quarter.
“The reopening story is looking fairly positive, and… China is pouring a lot of credit and fiscal stimulus into the economy,” said Edward Al Hussainy, senior interest rate and currency strategist at Columbia Threadneedle, which oversees $546 billion in assets.
“That boost is permeating global asset values.”
The reopening of China also alleviates the sting of recessionary threats. Goldman Sachs forecasts the eurozone economy to grow by 0.6% this year, up from a previous projection of a decline.
According to Chris Iggo, chief investment officer for core investments at AXA Investment Managers, “Chinese demand will offset the story in the West…” as consumer demand and company spending have decreased, while interest rates have risen.
Emerging markets, which are expected to profit from tourism and trade with China, were at the top of the buy list.
The Thai baht was a favorite of Hussainy and other investors. It has risen to its highest level since March and is up about 5% since the beginning of December.
Prior to the pandemic, Chinese tourists accounted for a quarter of all annual visitors to Thailand.
Amundi, Europe’s largest investor, believes the reopening may signal a “turning moment” for emerging market shares, a trade also supported by BlackRock’s investment institute.
According to Goldman Sachs, company earnings in Malaysia, Singapore, and Thailand should increase.
Chile, the world’s largest copper producer, is another investment favorite. Its peso has risen 7% since early December, as copper prices have risen near $9,000 for the first time since June.
According to BlueBay Asset Management fund manager Zhenbo Hou, the commodity-driven Australian dollar could appreciate further.
Prior to the pandemic, China was the world’s largest outbound travel market.
Chinese customers “will rush to Beijing International Capital Airport and flee the country as quickly as they can because they want to travel,” according to Alison Shimada, head of overall developing markets at Allspring Global Investments.
Travel may also boost European luxury stocks, as Chinese demand has dropped since the outbreak began, according to UBS, accounting for approximately 17% of industry sales vs 33% in 2019. This should increase valuations.
LVMH shares (LVMH) reached a new high this week.
The reopening of China was expected to weaken the safe-haven currency while benefiting the euro. China is the European Union’s most important trading partner, accounting for around 16% of total goods trade.
According to Barclays analysts, China’s slowing was responsible for more than half of the euro’s loss against the dollar last year.
According to them, the reopening boosts the outperformance of European stocks and calls into question the consensus underweight strategy. UBS is also bullish on European materials, industrials, and consumer discretionary stocks.
CAUTION ON INFLATION
However, the boost from China’s reopening raises fears about inflation.
China is the world’s largest importer of oil and other commodities; oil prices have jumped 10% since mid-December to almost $84 per barrel.
“One thing we need to keep an eye on is if China’s resurgence adds to global inflationary pressures,” AXA’s Iggo added.
The aim is that the global economic slowdown will offset China’s increased commodity consumption, reducing the inflationary impact.
According to Goldman Sachs, a return to regular travel and transportation behavior in China might increase oil demand by 1.5-2 million barrels per day. Still, slower global growth implies oil prices won’t reach $140 highs until 2022.
“At this point in time, the rate hike is really starting to have the anticipated impact on inflation, which I think should play out over the course of the year, even with China reopening,” said Jason Pride, Glenmede’s chief investment officer of private wealth.
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