FTX's partnership with Ukraine is the latest chapter in the shady Western aid saga
KIT
KLARENBERG·NOVEMBER 15, 2022
https://thegrayzone.com/2022/11/15/ftx-ukraine-western-aid/
The Ukrainian government mysteriously disappeared
online records of its fundraising arrangement with the FTX crypto scam just
days before the scandal erupted. The initiative claims to have raised $60
million for Ukraine, but where did the money go?
The demise of FTX, the fifth-biggest cryptocurrency
exchange by trade volume in 2022, and the second-largest by
holdings have sent a wave of chaos through global financial markets.
As the turbulence grows, the government of Ukraine is
conducting an ongoing cleanup and whitewashing operation to rid any and all
references to a high-level cryptocurrency fundraising arrangement it struck
with FTX from the web. Eerily, it seems to have commenced just days before the
scandal erupted.
Online records unearthed by The
Grayzone claim tens of millions were raised by FTX for the Ukrainian government and put to a variety of belligerent uses. But with the company now exposed as a
Potemkin village lacking underlying assets, and major question marks hanging
over whether its operations were from day one fraudulent top to bottom, where
does that leave the supposedly successful donation scheme? Were those sums
truly raised, and if so, to what purposes were they actually put?
FTX’s destruction resulted from a mass sell-off of
the company’s native bitcoin token, FTT, by the rival exchange, Binance. Its
value plummeted, prompting a three-day “run” on billions of dollars worth of
cryptocurrency, which in turn created – or exposed – a “liquidity crisis”
within FTX, as it did not have the available assets required to redeem client
withdrawals. FTX filed for bankruptcy on
November 11th.
FTX founder and top Democrat Party donor Sam
Bankman-Fried now faces criminal investigations in the Bahamas, where the
exchange was headquartered, and calls for official investigations into
the largely unregulated cryptocurrency industry are reverberating across the
globe.
The sudden death of FTX has been compared to the 2008 disintegration
of Lehman Brothers that precipitated the financial crisis.
Massive customer holdings have apparently gone missing thanks
to a secret “back door” in the FTX bookkeeping system that allowed
Bankman-Fried to make changes to the company’s financial records without any
accountability. This connivance may have been used to hide at least $10 billion
in client funds Bankman-Fried transferred from the exchange to another company he
founded, digital asset trader Alameda Research.
While mainstream media pores over the details of
Bankman-Fried’s gargantuan crypto scam, not one single major outlet has
investigated or even acknowledged FTX’s relationship with the government of
Ukraine.
Were client holdings unaccountably and illegally
funneled into the West’s proxy war? Or did the supposed aid FTX sent to Kiev
find its way into the hands of Ukrainian scammers, corrupt warlords, and illicit
actors?
The corporate media’s failure to explore these
questions appears all the more perverse given Bankman-Fried’s flamboyant
promotion of his intimate financial relationship with the government of
Ukrainian President Volodymyr Zelensky.
FTX pledges to “turn bitcoin into bullets,
bandages and another war materiel” for Ukraine
The partnership between FTX and the Ukrainian
government was first publicized on March 14th when
the leading cryptocurrency website CoinDesk announced Kiev had launched a
dedicated webpage for cryptocurrency donations dubbed Aid for Ukraine.
Under its auspices, FTX pledged to “convert crypto
contributions to Ukraine’s war effort into fiat for deposit” at the National
Bank of Kiev, allowing the embattled government to “turn bitcoin into bullets,
bandages and another war materiel.” CoinDesk stated the initiative “deepens an
unprecedented tie-up between public and private sector forces in crypto.”
Oleksandr Bornyakov, an official at Ukraine’s Ministry
of Digital Transformation, hinted to CoinDesk about an “upcoming NFT
collection” auction to “give the next boost to the crypto fundraising process.”
(Bornyakov’s Ministry of Digital Transformation played
a key role in
the successful, Zelensky-led campaign to cancel The Grayzone’s Max Blumenthal
and Aaron Mate’s appearance at Web Summit, a major international gathering of
the tech industry in Lisbon, Portugal).
In a press release accompanying
the announcement of the FTX partnership with Ukraine, Bankman-Fried explained
that “at the onset of the conflict in Ukraine, FTX felt the need to provide
assistance in any way it could.” He promised that the arrangement provided “the
ability to deliver aid and resources to the people who need it most.”
Kiev disappears Aid for Ukraine site days before
FTX scandal goes public
The Aid for Ukraine webpage has
now been deleted, but can still be accessed via
the Internet Archive. Until very recently, it encouraged visitors to “help
Ukraine with crypto” and pleaded, “don’t leave us alone with the enemy.”
The site featured promotional quotes from an
assortment of Ukrainian government officials and bitcoin bros – among them,
FTX’s founder.
Mykhailo Fedorov, Ukraine’s deputy Prime Minister, and
Minister of Digital Transformation of Ukraine thanked “the crypto community”
for funding the purchase of helmets, bulletproof vests, and night vision
devices. For his part, Bankman-Fried declared himself “incredibly excited and
humbled” to “support crypto donations to Ukraine.”
The last available Internet Archive capture of Aid for
Ukraine” took place on the afternoon of October 26th.
Throughout the web page's existence, the Internet Archive captured multiple snapshots
of it weekly. This clearly indicates the page was purged by Kiev in late
October, several days before the FTX crisis initially broke out.
Once it was deleted, the Ukrainian government created
a standalone website on November 1st to
promote the endeavor. The page was identical, and quotes from Bankman-Fried,
and references to FTX’s involvement and its logo, remained in place until
the morning of November 15th.
Was the original webpage’s dumping and erasure, and
the shift to a totally new interface, at that time merely a spooky coincidence,
or were the Ukrainians warned of what was coming? What did Kiev know, and when
did it know it?
Bankman-Fried channeled millions to Biden through
“stealth” PAC
Though FTX has been accused of
serving as a money laundering vehicle for the US Democratic Party, concrete
evidence supporting this claim has yet to materialize. But given
Bankman-Fried’s background as one of the most prolific donors to the Democrats,
and the role he played as a nexus between party power-brokers and the
cryptocurrency sphere, the allegations are understandable.
Bankman-Fried is the son of Stanford law professor
Barbara Friedman, founder of a shadowy Super PAC called Mind the Gap which quietly channeled millions
to Democratic party candidates, primarily from nameless Silicon Valley
investors.
The organization has no website or social media
footprint, and its founders do not advertise their involvement publicly. Chosen through complex
data analysis, beneficiaries of the Super PAC often have no idea themselves who
or what has donated to their campaigns.
“The raison d’être is stealth,” an individual “with
ties to the organization,” told Vox back in 2020.
Bankman-Fried establishment of FTX in
April 2019 – the same month Joe Biden announced his
2020 Presidential run – has added to the intrigue surrounding the scandal. Once
vast sums started flowing into and through the FTX exchange, its founder
channeled profits into Biden’s campaign coffers. Oddly, Bankman-Fried had no
prior history of political giving.
Throughout the 2020 campaign, Bankman-Fried gifted over $5
million to Biden and groups supporting him. This reportedly helped
fuel a potentially decisive “nine-figure, an eleventh-hour blitz of TV
advertising” targeting swing states, and made the crypto bro the second-largest
donor to the president, right behind Michael Bloomberg.
Bankman-Fried claimed this wellspring of generosity
was “motivated less by specific issues than by the Biden team’s ‘generic
stability and decision-making process.’” Such an apparent lack of enthusiasm
for the President stands at odds with the staggering sums he has pumped into
Democratic party coffers ever since.
In 2022 alone, Bankman-Fried lavished almost $40
million on Democratic candidates, campaigns, and PACs. The giving spree made
him the second-largest individual donor to Democratic causes, behind liberal
venture capitalist George Soros.
More recently, Bankman-Fried pledged to donate a
staggering $1 billion between this year and 2024 to ensure a Democratic victory
in the next presidential vote. On October 14th, however, he completely backtracked,
branding the investment a “dumb” move. Something scandalous was brewing behind
the scenes.
One week later, the Texas State Securities Board
announced it was investigating FTX on suspicion of selling unregistered
securities. The development went largely unnoticed by the media. To the extent
it generated any interest at all, it was framed as
just one of several examples of financial authorities scrutinizing crypto
players.
What happened to the $60 million raised by Aid
for Ukraine?
If FTX was indeed laundering funds for the proxy
war in Ukraine, the slightest indication that regulators were investigating its
operations would have triggered alarm bells throughout Washington – and by
extension, Kiev. This may be why the Ukrainian government switched the Aid for
Ukraine webpage with a dedicated website and scrubbed the original entirely
from the internet just days after the announcement.
Also curious are the Internet Archive captures of the
Aid for Ukraine website that shows records of
funds purportedly flowing to Kiev via Bitcoin had not been updated since July.
At the time, the webpage reported that over $60 million had been raised by the
“community.” This figure is reflected on the updated standalone Aid for Ukraine
fundraising site.
A breakdown of spending on the new Aid for Ukraine
website states Kiev had spent a total of $54,573,622 in cryptocurrency
donations by July 7th on a wide variety of equipment, vehicles, drones, “lethal
equipment” and other resources. One of the biggest single expenditures was
$5,250,519 on a “worldwide anti-war media campaign,” the details of which would
only “be published after our victory” due to “security reasons.”
Ukrainian government officials and private sector
actors involved in the operation of Aid for Ukraine have scoffed at suggestions
of impropriety regarding its use, but have only raised further questions with
their denials.
Oleksandr Bornyakov of Ukraine’s Ministry of Digital
Transformation declared that Aid
for Ukraine simply used FTX to “convert donations into fiat in March.” The CEO
of Everstake, the “validator” company that in theory guaranteed crypto funds
donated via Aid for Ukraine reached Kiev’s Ministry of Defense, also thanked “every
crypto holder for donating…in that early day [sic], when every cent and every
minute was crucial.”
Taken in tandem, these comments suggest Aid for
Ukraine was set up purely to receive donations in the initial stages of the
war, and the $60 million figure represents sums received and converted in the weeks
immediately following the launch of the initiative. This interpretation is
reinforced by an Everstake staffer’s presentation at
a cryptocurrency conference at Web Summit on November 1st, on the subject of
“raising [over] $60m in crypto for Ukraine.”
But an Internet Archive capture of Aid for
Ukraine on April 1st adds
to the confusion, showing that two-and-a-half-weeks after the initiative
launched, the webpage was updated to claim “over $70 million” had been raised
from crypto donors. This was revised down
to “over $60 million” five days later.
More strangely, Aid for Ukraine records shows that from
the time of the initiative’s launch to April 14th, a total of $45,103,538 was
spent. This means just $9,470,084 was spent between April 14 and July
7th, a period in
which the war developed into a “bloody war of attrition” according to The
Guardian.
This leaves a gap of at least $5.5 million in the
money Aid for Ukraine claimed to have raised in its initial weeks, and the
funds it says it distributed in Ukraine.
The disparity was confirmed in a tweet by
the official Aid for Ukraine Twitter account, posted on the evening of November
15th, which stated that “out of $60 million received, $54 million have already
been spent on Ukraine’s humanitarian and military needs.”
This implies that no further funds of any size were
received after early April, and the total has remained static ever since,
despite the resource is open for donations. Which would be highly unusual.
The government of Ukraine, FTX, and Everstake all now
have serious questions to answer. Namely, why the funds purportedly raised
appear to have decreased in a span of a few days, why no donations have been
received since then on the Aid for Ukraine webpage or its new website, how much
has been donated since the alleged initial influx, and where did the rest of
the money go?
Ukraine: a black hole for Western aid
Stories of potential financial impropriety by
Ukrainian officials and the country’s military are invariably ignored or
outright buried by the Western media. An August exposé by
the Kyiv Independent documented wide-ranging abuses by the leadership of a wing
of the International Legion, including sexual harassment, looting, threatening
soldiers at gunpoint, and sending them unprepared on reckless missions. Though
the Kyiv Independent often influences Western media’s coverage of the Ukraine
conflict, this story was completely ignored in mainstream quarters.
That same month, CBS broadcast an investigative feature revealing
that only 30 percent of Western arms shipments to Ukraine ever reach the
frontline. Due to intense backlash from the Pentagon and other powerful
sources, CBS temporarily pulled its
own documentary and an accompanying promotional trailer and article from the
web. The feature has since been “updated” to claim that “the situation has
significantly improved” since filming, and “a much larger quantity now gets
where it’s supposed to go.”
When it comes to Ukraine, Democrats at the highest
levels are also immensely skilled at burying embarrassing stories. In December
2015, Joe Biden coerced Kiev’s then-leader Petro Poroshenko into firing prosecutor
general Viktor Shokin as a condition for the US underwriting a $1 billion IMF
loan to Ukraine.
“I’m going to be leaving here in six hours. If
[Shokin] is not fired, you’re not getting the money,” Biden threatened.
With Shokin’s firing, the experienced lawyer’s ongoing probe into
the energy giant Burisma ended as well. This meant that Burisma’s most famous
board member, Hunter Biden, the son of the then-US Vice President’s son, eluded
official scrutiny.
Now, a politically connected crypto-billionaire who
used a secret financial “back door” to fleece customers of ungodly sums of
money has become the latest character in the saga of shady US aid to Ukraine.
And though the collapse of his FTX firm is front-page news, mainstream outlets
are studiously avoiding the Ukraine angle.
