The media has done a good job highlighting the cryptocurrency industry’s continued attempts to influence elections but crypto’s hiring of political insiders continues to go unnoticed.
When FTX collapsed in November of 2022 it seemed as if the crypto industry’s influence in Washington would quickly become a thing of the past. Sam Bankman-Fried and his co-CEO Ryan Salame had been massive political donors, with Salame donating primarily to Republicans and SBF donating publicly to Democrats while surreptitiously funding Republicans as well. In the course of the 2022 election cycle they had propelled the crypto industry to prominence in DC through massive lobbying and fundraising efforts. After November 2022, with their company dead and SBF in jail, it seemed as if the industry’s influence would once again fade to irrelevance. Unfortunately for anyone not engaged in the fraud-riddled industry, that is not the case. The industry has continued to worm their way into power without their hoodie-sporting (30 year old) wunderkind.
Without the excitement of a massive fraud case, news stories about crypto campaign spending have failed to break through the constant churn of today’s news cycles, despite many of the companies funding these efforts facing charges from the Securities and Exchange Commission. Similarly, the political insiders who, just a year and a half ago, would’ve faced serious pushback for their role in the industry, have managed to fly under the radar. In short, the industry may have been stripped of its veneer, but that doesn’t mean that their money is any less influential.
The Campaign Trail
The permissiveness of the post-Citizens United election system makes campaign finance the logical choice for any shady industry looking to spread its tentacles, and the crypto world’s push into campaign finance has not relented post-FTX. A recent report by Rolling Stone uncovered that not only have crypto-tied SuperPACs Fairshake and Protect Progress implicitly threatened crypto-skeptical Senate Democrats Jon Tester and Sherrod Brown with millions in independent expenditures — a particularly dire threat to the fragile Democratic Senate Majority — but they have wormed their way into Democratic politics by working with Democratic campaign consulting firms, giving hundreds of thousands of dollars to Democratic operatives assisting the crypto PACs in executing their goals. Remarkably, some of these firms are not only Democratic firms ostensibly committed to supporting the party, but they have been working for the very Senate campaigns the crypto industry hopes to influence or destroy.
Politico also reported that those same PACs, in addition to Defend American Jobs, another SuperPAC, are also working to influence the Democratic Senate candidates in Maryland and Michigan. Or take down the Democratic nominees if they fail to change their approach to crypto to one that would better suit the industry. These three PACs, funded by major crypto industry players like Coinbase, Ripple and venture capital firm Andreessen Horowitz have, according to Politico, forced Democratic candidates to bend to crypto industry priorities like never before. Despite signing on to a letter led by noted crypto opponent Sen. Elizabeth Warren last year, and never having been an open crypto proponent previously, Rep. David Trone, a democratic candidate for Senate in Maryland recently began echoing the industry’s calls for federal regulations to legitimate the industry. His opponent in the Democratic primary, Angela Alsobrooks, has also been promoting crypto. Rather than just echoing the industry calls for new (read: weakened) regulation, Alsobrooks has been promoting it as an opportunity for “underserved communities” — a callback to the language crypto was using in Spike Lee’s Cloud Coin advertisement just a couple years ago. This is, of course, bullshit. Nobody was hurt more by previous crypto crashes than Black and Latino communities and the pattern seems unlikely to change anytime soon.
But crypto’s influence doesn’t stop there. The same PACs had major wins in Super Tuesday primaries across the country, and even got a (failed) Democratic Presidential Candidate to appear at an event hosted by the “Stand with Crypto Alliance.” In December, the one-time gelato magnate and then-impotent Biden primary challenger Dean Phillips attended a crypto event hosted by the “Stand with Crypto Alliance” where he regurgitated the same tired calls for “clearer” regulation of crypto. Phillips even implied that the industry could somehow alleviate inflation woes, saying the crypto industry “eliminates so many hands in the pot that take little bits [of peoples’ money] … at a time when life is already so unaffordable” according to Coindesk. Fortunately, Phillips’ flailing attempts to gain traction through crypto failed like all of his other electoral ventures, but the willingness to be associated with an industry rife with fraud, money laundering and that has been flouting securities law for years should be beyond the pale for any Democratic contender – no matter how unserious. Unfortunately, it appears that Phillips’ fate was not shared by crypto’s other candidates, and it seems likely the next congress will have a spate of newfound crypto proponents.
Lobbying
Coinbase has seen fit to fill SBF’s void, with a report by Politico in December revealing that the company retains the services of seven separate lobbying firms in DC, having spent December added two firms to their existing pool of five. Among these firms is one that employs former Biden staffers.
Other Crypto Sellouts
Lobbying and campaign cash aren’t the only ways that crypto has gained a foothold in DC. As we’ve written about at length, hiring former government officials can bring organizations significant legitimacy in the realm of public opinion, and many are more than willing to sell their reputation to the highest bidder. Obviously our favorite target, Larry Summers, has been for a longtime crypto proponent, but other prominent insiders also deserve a closer examination.
As the crypto world seeks to influence the Democratic Party, they have snatched up a number of prominent figures outside of government. I wrote about former DCCC chair Sean Patrick Maloney’s troubling ties to Coinbase in January as he was awaiting confirmation to be OECD ambassador, and he agreed to recuse himself from any cryptocurrency related decision making after being pressed by Senator Warren on the issue. But other former Democratic House Reps are on the same “global advisory council” that Maloney recently sat on: Former Florida Rep. Stephanie Murphy and Former Ohio Rep. Tim Ryan. Ryan has remained busy in his post government career, starting an organization aimed at reaching voters who are “tired” by partisan politics, and (naturally!) joining a natural gas trade group.
Along with former House Reps., one-time Obama deputy chief of staff and campaign manager (his own website describes him with more grandiose language, calling him “The Obama White House’s Fixer” and the “mastermind behind President Obama’s 2012 re-election campaign”) Jim Messina is also working for crypto. Messina, who Axios recently reported is regularly consulted by both Biden’s White House and campaign team, has been on Blockchain.com’s board of directors for some time, and has been a key advisor on the company’s lobbying efforts in the US and in the UK (Messina has repeatedly worked for the Tories, including working for David Cameron and Theresa May’s campaigns).
Republicans
The Republican embrace of cryptocurrency was always understandable, afterall, a party ideologically committed to opposing financial regulation and headed by a fraudster is the logical home for crypto pyramid schemers. But since the displacement of perceived-liberal Sam Banman-Fried atop the crypto heap, the party has redoubled their commitment to the industry.
Up and coming Republicans like Byron Donalds (who has been floated as a potential Trump VP-pick) and established party insiders like House Majority Whip Tom Emmer have not only embraced the crypto regulatory agenda, but have begun to promote conspiracies that benefit the industry. Their main preoccupation seems to be discussing the idea that the Biden administration is seeking to unveil a Central Bank Digital Currency in an attempt to invade the privacy of ordinary Americans. While the possibility of a CBDC does appear a long way off, their railing against the idea has one important benefit; it is building public opposition to a threat to the crypto industry’s profits.
The wholesale embrace of cryptocurrencies by the Republican Party has somehow allowed the industry talking points to even pierce the media bubble of Donald Trump, who has recently begun rambling about his support for the industry and his pledge to not crack down on it. While disjointed and clearly not capable of understanding what the industry is, Donald Trump still stands a real chance of winning the election and enacting a crypto regulatory regime.
Crypto has secured a major win by locking up Republican support for their deregulatory agenda to go along with their supporters in Congress and their purchased party insiders. Without major pushback, the crypto industry could see their preferred regulatory agenda enacted without so much as a whimper.