Former FTX CEO faces lawmakers at the FTX collapse hearings
JUANA SUMMERS, HOST:
Just one month ago, cryptocurrency exchange FTX went from a $32 billion behemoth to bankrupt. And its founder and now former CEO will hear some tough talk on Tuesday when he testifies before Congress about how it all collapsed so spectacularly. And that will be a change for Sam Bankman-Fried, who spent a good chunk of FTX's short life meeting with lawmakers, building up the brand and crypto's credibility. NPR's David Gura reports.
DAVID GURA, BYLINE: When I interviewed Sam Bankman-Fried in June, he happened to be in Washington.
SAM BANKMAN-FRIED: I got here - got here Tuesday, staying till Friday.
GURA: And there were a lot of meetings. Bankman-Fried kept pushing back the start time for my interview.
BANKMAN-FRIED: I'm in D.C. bouncing around, and my schedule went to s*** like always.
GURA: Known for wearing shorts and a T-shirt, Bankman-Fried had this casual demeanor, but his frequent trips to Washington were very strategic. Paul Argenti is an expert on corporate communication at the Tuck School of Business at Dartmouth, and he says they were part of an ambitious effort to build and burnish FTX's brand. And that set Bankman-Fried apart from other crypto executives.
PAUL ARGENTI: A lot of these people don't think about the Washington angle in the way that he did.
GURA: As Bitcoin and other cryptocurrencies became more popular, Bankman-Fried recognized a couple things - one, the likelihood there'd be more rules and regulations and, two, the opportunity he had to shape them. Bankman-Fried met with powerful people on Capitol Hill, including the chair and the ranking member of the Senate Banking Committee. He got a lot of face time with Republican Pat Toomey, who's sponsored crypto legislation.
PAT TOOMEY: He came to speak with me several times; so I'd say, I don't know, three or four times over the course of the last two years.
GURA: Bankman-Fried hired a former member of Toomey's staff to be a lobbyist. He met with key regulators, and Bankman-Fried donated millions to political candidates. Last summer, he told me FTX's focus was not on marketing on, say, Facebook ads or Google ads. Instead, there was this multifaceted effort to get its name out there, and its outreach to Washington was a critical part of that. Here's what Bankman-Fried told ABC News just days after FTX fell apart.
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BANKMAN-FRIED: We did a lot of things to try to - to try and bolster our reputation, to try and, you know, help our brand.
GURA: Bankman-Fried wanted FTX to stand out in the world of crypto, which the chair of the SEC has said is like the Wild West. And according to Paul Argenti at Dartmouth, Bankman-Fried seemed almost cunning. He was trying to attain credibility in this careful, calculated way.
ARGENTI: You know, if we were studying this from a corporate communication perspective in my class, he actually did it about as perfectly as you could possibly expect.
GURA: Step 1 was Washington. Step 2 was Wall Street and Silicon Valley. Bankman-Fried lined up hundreds of millions of dollars from well-known venture capital firms and asset managers like BlackRock. And then there was Step 3, to appeal aggressively to everyday Americans to make FTX as recognizable as Visa or MasterCard. FTX made a Super Bowl ad. It bought naming rights and paid for endorsement deals. It even gave Major League Baseball millions to put its logo on umpires' uniforms. Kenneth Shropshire, who teaches sports law at Penn, marvels at that last one.
KENNETH SHROPSHIRE: The idea that you put a patch with this company on the arbiter of truth in your game, that is something to pause and think about.
GURA: Which many of the people Bankman-Fried courted are now doing as they push for answers to understand how FTX crumbled so completely in the course of one week. And we're seeing Bankman-Fried deploy a new strategy puzzling to corporate branding experts and to lawyers alike. Even in disgrace, he hasn't stopped trying to manage his reputation. Bankman-Fried will explain himself at a virtual appearance before a House committee on Tuesday. That comes on the heels of an appearance at a big business conference, a long string of interviews, and he's faced his critics in several Twitter spaces. At a moment when most people in his position would keep quiet, Bankman-Fried just keeps talking.
David Gura, NPR News, New York.
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