Crypto is back! And it’s not just in the markets.
The burgeoning cryptocurrency industry is jumping into the 2024 U.S. election, spending millions of dollars in Super Tuesday primary contests in California, Alabama and Texas to boost crypto-friendly candidates and defeat those pushing for more regulation.
How these candidates perform on Tuesday, when dozens of races across America are whittled down to two contestants, will indicate how much influence the increasingly wealthy crypto executives may wield in November.
Brand-new industry super PACs, or independent fundraising groups, Fairshake, Protect Progress and Defend American Jobs, backed by funds from Coinbase and the Winklevoss twins have spent at least US$13-million in Tuesday’s primary races, according to a Reuters analysis of data from OpenSecrets, a research group that tracks money in U.S. politics and its influence on elections and policy.
And that’s just the beginning, officials say.
“The crypto community is playing politics to win,” said Fairshake spokesperson Josh Vlasto. “We will have influence and impact in races behind candidates who align with our agenda and our vision.”
In total, the three super PACs have raised nearly US$102-million from January, 2023, to January, 2024, data from the Federal Election Commission showed.
The cryptocurrency industry has surged in recent months, and bitcoin hit a new high last week, after the collapse of several big players in 2022 crushed prices and prompted a regulatory crackdown.
The industry, including its employees and political action committees, has so far contributed about US$59.2-million toward the 2024 election cycle, up from US$26.8-million in the 2022 midterm cycle and US$1.6-million in the 2020 cycle, OpenSecrets data showed.
California progressive Democrat Katie Porter, who is running for Senate, is a key target. Fairshake has spent over US$10-million to try to convince voters not to back Ms. Porter, including launching a statewide TV and digital-media buy.
Ms. Porter joined U.S. Senator Elizabeth Warren in 2022, seeking information from Texas’s electric-grid operator on cryptomining operations in the state and how the power the industry uses affects climate change and the energy grid.
“This shady super PAC is spending more than $10 million to kick Katie out of Washington because they know she will stand up for Californians and take on powerful special interests like them in the Senate,” said Ms. Porter’s campaign spokesperson Lindsay Reilly.
Protect Progress has also spent about US$1.7-million to back Shomari Figures, a Democrat and former deputy chief of staff to U.S. Attorney-General Merrick Garland running in Alabama’s 2nd Congressional District race. A Democrat is expected to win the hotly contested race, which was sparked after a federal court ordered Alabama to draw a new congressional map.
Mr. Figures, if elected, has pledged to “embrace the new landscape around digital assets, like Cryptocurrency, to stimulate innovation and technological advancement,” his website says.
In Texas, Protect Progress has put up about US$962,000 in support of Representative Julie Johnson, a Democrat running in the state’s 32nd Congressional District race.
Meanwhile, Defend American Jobs has allocated over US$1-million to back representatives John Bradford III and Tim Moore, both Republicans in North Carolina, OpenSecrets data showed. Mr. Moore is the Speaker of the state’s House.
Democrats are favoured to take control of the House of Representatives in the 2024 election, perhaps by a slim margin, meaning individual members of Congress could play pivotal roles in passing legislation.
“You have candidates in all of those races who have demonstrated not only an openness to learning and thinking more about digital assets, but actually calling on Congress and on policy makers to take action there,” said Kara Calvert, head of U.S. policy at Coinbase.
Coinbase, an online platform for buying and selling crypto, is also behind a non-profit group, Stand With Crypto Alliance, which now counts 315,000 members, and which aims to organize voters who own crypto and influence public opinion.
The industry’s interest in the 2024 election comes on the heels of one of the biggest financial frauds on record. FTX founder Sam Bankman-Fried was found guilty last year of stealing from customers. Prosecutors allege he used those funds to donate more than US$100-million to U.S. political campaigns.
Federal election disclosures show he gave roughly US$40-million to mostly Democratic-aligned groups and campaigns.
An indictment also accused Mr. Bankman-Fried of directing two FTX executives to evade contribution limits by donating to Democrats and Republicans, to the tune of US$9.7-million to Democratic candidates and causes, and more than US$24-million to Republican candidates and causes in 2022.
At least some have returned the money after.
“The experience of FTX/Alameda should be a cautionary tale” for any campaign, said Ciara Torres-Spelliscy, a professor of law at Stetson University College of Law. Alameda Research was Mr. Bankman-Fried’s crypto-focused hedge fund.
“The FTX/Alameda funds that went into politics are subject to two different attempts to claw back the money: one clawback from the bankruptcy estate of FTX, and another clawback from federal prosecutors who consider the money fruits of a crime.”
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