Economic News
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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