The world of philanthropy and politics is fighting a five-alarm fire right now. Because billions of dollars that were theoretically going to flow to lobbying operations, super PACs, scientists, newsrooms and data forecasters just went poof as Sam Bankman-Fried’s global crypto exchange, FTX, declares bankruptcy. The man who once said, only a little hyperbolically if you talk to the right people, that he could spend $1 billion on the 2024 election, who was dispensing hundreds of millions of dollars a year on his philanthropic giving, who seemed to hire the entire industry of donor-advisers, has gone up in flames. All that money, all those promises, have evaporated in what is possibly the fastest personal wealth extinction event in history.
To understand the jaw-dropping developments of the last week, you first have to understand the gravitational pull that S.B.F. has exerted for the last two years, ever since he was shot out of a cannon into the world of Democratic big money. The son of Stanford professors—his mother founded the hot donor network Mind the Gap; his dad, ironically, taught tax law—Sam and his younger brother Gabe hired aggressively for their sprawling empire of influence, creating a Bahamas-shuttling network of consultants and lobbyists and donor-advisers who tried to help the 30-year-old create his dream world in media, pandemic-prevention policy, and nuclear nonproliferation alike. More important than the hundreds of millions a year that he appeared ready to spend to achieve his vision, S.B.F. epitomized something at a symbolic level—a new, younger generation of “effective altruism”-inspired donors intent on blending politics, philanthropy and data science, with little genuflection to the political or philanthropic establishment and a larger-than-normal appetite for risk.
This week, the S.B.F. industrial complex began to totally unravel. What looked at first like a liquidity crunch at FTX was soon revealed to be something shadier, as it emerged that the crypto platform had lent more than half of its customer deposits—some $10 billion—to an investment affiliate to make “risky bets.” On Thursday night, in an extraordinary statement, Bankman-Fried’s philanthropic aides, including his longtime mentor Will MacAskill, all resigned. “We are now unable to perform our work or process grants, and we have fundamental questions about the legitimacy and integrity of the business operations that were funding the FTX Foundation and the Future Fund. As a result, we resigned earlier today,” wrote the group, all of whom were hired earlier this year to turn S.B.F.’s dreams into reality. In what was the most cutting line in the letter, the group floated the idea that “the leadership of FTX may have engaged in deception or dishonesty.”