The November 2024 US presidential election is approaching and one industry in particular has spent millions of dollars trying to influence the outcome: crypto.
A recent study by the government transparency advocacy group Public Citizen revealed that corporations from the crypto sector have spent $119 million on candidates and initiatives that are considered supportive of the industry.
This amount represents nearly half the political donations made toward the presidential election. One organization in particular appears to be centralizing most of this money: a super PAC called Fairshake. It’s backed by some of the most influential players in the space like the crypto exchange Coinbase and the blockchain company Ripple.
“The biggest of the Big Crypto corporate money donors are Coinbase and Ripple, which together have dumped about $99 million into buying influence over the 2024 elections,” said Rick Claypool, research director at Public Citizen.
To put this into context, this level of spending is nearly four times higher than the $25 million contributed by the second top spender, Koch Industries, the large American conglomerate owned by the Koch family.
Moreover, the amount outpaces the $176 million spent by companies from the fossil fuel industry in a period of 14 years. These crypto companies know very well that their contributions could make or break their bottom lines.
“Money moves the needle,” Coinbase CEO Brian Armstrong told Axios. “For better or worse, that’s how our system works.”
Candidates Backed by Crypto Lobbyists Have Won Most Primaries
The industry’s strategy to influence the election has two sides. First, they are trying to build a large war chest that they can rapidly deploy to oppose candidates who are skeptical of the potential of blockchain technology or who are negatively affecting the sector’s growth and advancement in the United States.
The other side of its playbook is to provide funding to lawmakers who have supportive views for the crypto industry regardless of which party they belong to. This bipartisan network would help the industry move forward in its efforts to get pro-crypto regulations approved in the country.
The effectiveness of this approach is already significant as candidates who have been backed by these crypto-backed super PACs have won in 36 out of 42 primary elections already.
Money can make a whole lot of difference when political races are highly competitive. This kind of money in particular can (and does) certainly change the outcomes in favor of candidates whose agenda matches with that of the crypto sector.
Another piece of evidence of the vast influence that crypto PACs are having on America’s political landscape was provided in May this year when a surprising number of 71 Democratic representatives supported a bill that helped regulate the crypto space despite the White House’s reluctance to support any of these efforts.
The Financial Innovation and Technology for the 21st Century Act (FIT21), which was initially supported and endorsed by Republicans only, was passed in the House of Representatives with a vote of 279-136 and was considered a defeat for the Biden administration and his anti-crypto agenda.
The bill aims to give the Commodity Futures Trading Commission (CFTC) a higher degree of responsibility in overseeing the crypto industry and effectively undermines the influence of the Securities and Exchange Commission (SEC) as the latter has been hostile to the sector for years.
Moreover, former President Donald Trump, who previously expressed skepticism toward the crypto sector, has rebranded himself as a pro-crypto candidate, vowing to make the US the “crypto capital of the planet.” His decision to select a crypto-friendly running mate, J.D. Vance, was also considered a signal of the industry’s growing influence in the US political arena.
On the Democratic side, Kamala Harris’ advisers have reportedly reached out to crypto corporations in an effort to “reset” the party’s relationship with the industry. Senate Majority Leader Chuck Schumer (D-N.Y.) has also spoken at a “Crypto4Harris” virtual fundraiser, declaring that “Crypto is here to stay no matter what. So Congress must get it right.”
Democrats Who Oppose Crypto Are Being Targeted by Fairshake
The Fairshake PAC’s bipartisan approach and lack of clear partisan affiliation mean its spending could be deployed against either Republicans or Democrats. This creates an implicit threat to lawmakers who are now being forced to appease the industry’s demands or risk their political careers.
“We’ll have the resources to affect races and the makeup of institutions at every level. And we’ll leverage those assets strategically to maximize their impact in order to build a sustainable, bipartisan crypto and blockchain coalition,” said Fairshake spokesman Josh Vlasto.
This strategy of using massive campaign contributions to discipline lawmakers is already beginning to reshape the political landscape. In Ohio, the Democratic Senator Sherrod Brown, a vocal critic of the industry, is facing a $12 million onslaught from Fairshake.
Similarly, the super PAC has pledged $3 million each to support Democratic Senate candidates Ruben Gallego in Arizona and Elisa Slotkin in Michigan – both of whom voted against the Biden administration’s position on the crypto-friendly legislation. Unfortunately for Fairshake, all 3 candidates are up in the polls at the moment.
Also read: XRP Spikes After Longstanding SEC Case Ends With $125M Fine
The crypto industry’s campaign contributions have become a “corporate Death Star hovering over elections, poised to annihilate individual candidates in order to instill a discipline – acquiescence to corporate demands – among all candidates,” the Public Citizen report notes.
It’s important to note that this isn’t a new strategy. For example, AIPAC, The American Israel Public Affairs Committee, and similar organizations use this tactic often. When one or two progressive candidates like Jamaal Bowman and Cori Bush criticize Israel, they often donate millions of dollars to their opponents.
The fear instilled by moves like this is part of why most Democrat congresspeople are fervent supporters of Israel, despite the fact that most Americans let alone Democrats disapprove of Israel’s brutal assault on Gaza.
Public Citizen Highlights the Sector’s Questionable Motives
Critics argue that the crypto industry’s massive political spending is not driven by a genuine grassroots constituency but rather by a desire to maximize corporate profits and avoid the approval of harmful regulation.
A survey by the Federal Reserve found that only about 7% of Americans held or used crypto in 2023, casting doubt on the industry’s claims that they represent the interests of most Americans. Moreover, the sector’s advertising campaigns rarely mention crypto at all. They mainly focus on attacking candidates based on unrelated issues.
“If the hype was no more consequential than a handful of hobbyists collecting digital coins the way others might collect postage stamps or baseball cards, there would be little harm in letting crypto fans have their fun,” the Public Citizen report states.
“However, crypto enthusiasts treat cryptocurrencies as speculative assets – a use that is encouraged by crypto corporations and an ecosystem of crypto media.”
The industry’s track record has also raised concerns. Both Coinbase and Ripple have been embroiled in legal battles with the SEC over alleged securities fraud. Moreover, the collapse of FTX exposed the risks of allowing companies in the unregulated crypto ecosystem to grow without boundaries as their influence in key areas of the country’s democracy grows alongside their finances.
“Crypto has been found to be particularly useful for criminal enterprises that exploit the blockchain as an alternative to the regulated financial system, where sophisticated systems are in place for detecting tax evasion, money laundering, ransom payments, and the like,” the report notes.
Are Crypto Industry Donations A Threat to America’s Democracy?
The crypto industry’s outsized influence in the 2024 election cycle raises broader concerns about the questionable influence of deep pockets in American politics and the threat that this trend represents to democratic institutions.
“If crypto corporations are successful in directly leveraging their financial power into political power, more corporations and business sectors may follow the same playbook,” the Public Citizen report warns.
The surge in independent political spending by super PACs and other outside groups since the Supreme Court’s Citizens United decision in 2010 has already led to a significant increase in corporate influence over the political process (and it was already an existential problem).
Crypto’s record-breaking contributions now threaten to exacerbate this trend, potentially tilting the balance of power in Congress and the White House in favor of the industry’s narrow and primarily profit-centered interests.
“Attacking crypto means risking your seat,” former Coinbase CTO Balaji Srinivasan warned in a post on X (formerly Twitter) that emphasized the industry’s aggressive approach to securing its political objectives.