Months before FTX founder and crypto tycoon Sam Bankman-Fried lost his $15.6 billion fortune and his company, he was palling around with former President Bill Clinton at a swanky cryptocurrency conference in the Bahamas.
Clinton was a paid speaker at the April 2022 Crypto Bahamas event hosted by now-bankrupt crypto exchange FTX, where Democratic mega donor Bankman-Fried moderated a panel featuring the former president and former British Prime Minister Tony Blair. Clinton's comments were off the record, but a recording was leaked in which he advocated for a "do no harm" approach to regulating cryptocurrency, according to industry outlet Trust Nodes.
Clinton also said there was a "temptation to abuse" digital currencies, but he praised the emerging technology as "obviously serious" in his remarks, Politico reported in April.
"You want to do right by it in the regulatory space," he reportedly said, referencing his administration's efforts to deregulate financial markets in the 1990s.
The April conference was a pricey, exclusive party for the who's who of big-name crypto investors, celebrities and world leaders. Katy Perry and Orlando Bloom were pictured in attendance, as was NFL great Tom Brady and his then-wife Giselle Bündchen, while DJ Steve Aoki and former One Direction singer Liam Payne provided entertainment for conference attendees, who paid upwards of $3,000 for their tickets.
FTX hosted the event in partnership with the SALT thought leadership forum, which was founded by Anthony Scaramucci, who briefly served as White House communications director for former President Donald Trump.
It was a celebration of the enormous potential for wealth that makes cryptocurrency so enticing. But now, seven months later, the inherent risks of the loosely regulated market are apparent. The incredible collapse of FTX from the world's third-largest cryptocurrency exchange to bankruptcy in the span of one week has left investors stunned, clients fleeing and lawmakers calling for new regulations on the crypto industry.
"I f---ed up, and should have done better," Bankman-Fried tweeted Thursday, grossly understating how his mismanagement left FTX with an $8 billion hole in its budget.
After Bankman-Fried resigned in disgrace, his successor John Ray III — the attorney who previously oversaw the $23 billion bankruptcy of energy firm Enron — accused the former CEO of permitting "a complete failure of corporate controls."
"Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here," Ray said in a filing with the U.S. Bankruptcy Court for the District of Delaware. "From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented."
FTX attorneys said Thursday that Bankman-Fried's "unconventional leadership style," "his incessant and disruptive tweeting" and "the almost complete lack of dependable corporate records" have complicated efforts to restructure the company. In court filings, they accused the embattled crypto mogul of attempting to move assets out of the U.S. and to the Bahamas, where they would be under the control of the Bahamanian government, in an apparent effort to circumvent U.S. regulators.
Adding to the intrigue is the fact that Bankman-Fried, who has donated approximately $38 million to Democrats and left-wing causes in the past two years, has lobbied for regulations that would have been favorable to FTX.
"I'm optimistic that over the next year or so, we'll see some really substantial steps forward in the global regulatory environment and the U.S. regulatory environment for cryptocurrencies. You know, it's been a pretty tough struggle back and forth, I think, for a while. And I think [the] industry is as much to blame for that as anyone else in terms of the relationships that have been developed between, you know, the industry and regulators," Bankman-Fried told FOX Business Network 10 months before his downfall.
"But I think that there's a light at the end of the tunnel there. And I think there are some straightforward policy proposals that could solve for what regulators want, while also allowing cryptocurrencies to really grow a lot as an asset class moving liquidity and volume onshore," he added.
U.S. lawmakers have called the FTX crisis a "debacle," and the House of Representatives will hold hearings in December to probe the collapse of FTX and "the broader consequences for the digital asset ecosystem."
FOX Business' Megan Henney contributed to this report.