Molly White's Citation Needed - Cryptocurrency companies have raised over $115 million to influence US elections this cycle, and they’re just getting started

Episode Date: May 30, 2024

As election season kicks into high gear, we need to watch how cryptocurrency companies are influencing US politics. Originally published on May 30, 2024.

I'm Molly White, and you're listening to the audio feed for the Citation Needed Newsletter. You can see the text version of the newsletter online at citation needed. News. Cryptocurrency companies have raised over $115 million to influence U.S. elections this cycle, and they're just getting started. As election season kicks into high gear, we need to watch how cryptocurrency companies are influencing U.S. politics. This issue was originally published on May 30, 2024. I am worried about cryptocurrency's impact on the upcoming elections in the United States, but not in the way the industry would like you to think.

Recently, there has been a push by the cryptocurrency industry to portray crypto as a major issue that will influence votes in the upcoming election season. This just so happens to coincide with Donald Trump's recent statements suggesting he's warm to the industry. Although Trump personally has actually been far more vocally anti-crypto than Joe Biden in 2021 saying Bitcoin, quote, just seems like a scam, and reportedly ordering Treasury Secretary Steve Mnuchin to, quote, go after Bitcoin in 2018, that hasn't stopped many in the cryptocurrency world from embracing him as the supposedly pro-crypto candidate anyway. It's not entirely clear why, Trump has done a U-turn. Perhaps it's simply because supporting crypto has become the Republican

thing to do. Perhaps it was because he himself discovered the grift potential this industry unlocks when he released his own set of NFTs in 2022. Either way, in a span of mere months, he's gone from a rather dispassionate, quote, I can live with it in February, too much more emphatically telling a press pool a few weeks ago, from behind a podium emblazoned with the name of his NFT collection, that, quote, I'm good with crypto, and quote, if you're for crypto, you better vote for Trump. When pressed for specifics, his responses have been flimsy, suggesting he is merely saying what people want to hear on the campaign trail. Another possible explanation for his sudden shift could be the cryptocurrency industry's hard work,

urging political candidates on both sides of the aisle to embrace cryptocurrency by suggesting it is now a major election issue, particularly when it comes to younger voters or people of color. One notable recent example is a survey funded by the Digital Currency Group and published by the Crypto Lobbying Group, the Blockchain Association, which elicited uncritical headlines such as Politico's quote, crypto is Trump's new weapon against Biden. Despite finding that a whopping 80% of respondents disagreed, 50% strongly, with a statement that, quote, crypto, is a major issue I'm considering during the next election. In reality, their poll of 1,201 American voters in six swing states is a masterclass in spin. Sixty-nine percent of the people surveyed had very

or somewhat negative opinions towards crypto, but DCG is crowing that, quote, among a sizable contingent of voters, crypto attracts a level of interest that translates into pro-crypto sentiments across the board. and advising political candidates to adopt pro-crypto stances to attract voters. Many of the questions were framed ambiguously, such as, quote, crypto is a major issue I'm considering during the next election one, which allowed DCG to put 21% agree in big letters, while obfuscating the fact that those who agreed were not necessarily crypto supporters. In fact, if you do the math, more than 100 of the 252 people,

or around 40%, who said they felt crypto was a major issue in upcoming elections, do not feel positively towards crypto. In other words, there's a contingent of fellow skeptics among that 21%, who are likely hoping for candidates who might support more aggressive approaches against the industry. I've pulled the available data from the agree, disagree questions in the DCG survey to present it a bit more concisely and without their editorializing, which I think illustrates both the ambiguity of many of the questions and a much more muted response to their questions

than their report's conclusions sections would suggest. For listeners, I'd really recommend checking out the graphic I included in the web version of this issue. Frankly, it just doesn't seem likely to me that a substantial number of people are single-issue crypto-voters and would be swayed to vote for a candidate they might not otherwise support because of it. Many of the people celebrating Trump's recent crypto U-turn were probably already planning to vote for him.

And I doubt there were many crypto-sceptical people out there previously who didn't otherwise support Trump, but who intended to vote for him because of his former critical position on the industry. When it comes down to it, Americans tend to care more about the typical election issues, strengthening the economy, other economic issues like high food prices and cost of living, healthcare, education, crime, the environment, then about their crypto holdings. Crypto advocates argue that people who have much of their net worth in crypto aren't likely to vote for candidates who threaten those holdings, which may be true, except that they seem to forget that outside of crypto Twitter, this is likely an incredibly small portion of the population.

Regardless of what crypto lobbyists and the companies paying for these polls might like you to think, or more precisely what they would like the politicians who are willing to adopt new policy positions to wound more voters to think, it's not the opinions of the general voting public that has me worried. I'm worried about the money. The cryptocurrency industry has been throwing money into politics unlike ever before, and that's even after political donations from the industry, I rocketed in 2022. The super PACs their backing have raised more than $137 million already. Over 117 million of that has been raised by Fairshake, a super PAC funded by Coinbase, Ripple,

Jump Crypto, Circle, Cracken, and others. That amount puts Fairshake at number three on Open Secrets list of super PACs by amount raised, following just behind the Senate Majority Pack at number 2, and Ron DeSantis' Never Back Down Pack at number 1. Two other cryptocurrency-focused super PACs, the conservative defend American jobs and liberal protect progress, have raised roughly another combined $10 million, both funded by nearly identical donations from Coinbase, Ripple, and Andresen Horowitz. As noted in a report by public citizen, much of this money is coming from companies directly, taking advantage of the Citizens' United decision to enable unlimited corporate political spending.

And that's not all. Coinbase, which created its Stand With Crypto Advocacy Group last year, is now organizing a pack of the same name, of the non-super variety, where they will encourage their customers and others in the industry to donate. They claim they've already raised over $87 million. dollars. Coinbase, and affiliated people like CEO Brian Armstrong, have poured so much money into politics this cycle, almost $27 million to date, that Coinbase has landed at number seven on the list of organizations by political contributions to outside spending groups. Until today, Ripple wasn't far behind, in ninth place with almost $25 million contributed. However, their announcement today of a new

$25 million infusion to the Fair Shake pack should put ripple at number five on the list, with around $50 million spent in total. Most of the money hoarded in that crypto war chest has not yet been spent. Of the roughly $25 million that has, over $20 million has gone towards supporting Republicans or opposing Democrats. A sizable portion of that was the roughly $10 million spent by Fairshake, mostly on attack ads that didn't mention cryptocurrency to oppose Democratic California Senate candidate Katie Porter. As I wrote previously, the ad attacks Porter for receiving three contributions of $500, $2,000, and $2,900

from individuals who are executives at a pharmaceutical company, oil company, and bank, respectively, and claim that she has received more than $100,000 in such contributions from, quote, big pharma, big oil, and the big bank executives. The irony of big crypto spending 20 times this amount on an attack ad is apparently lost on them. Porter ultimately lost her race for one of the two primary seats to Democrat Adam Schiff and Republican Steve Garvey. While Coinbase's Stand With Crypto Advocacy Group had given Katie Porter an F, or strongly against rating on cryptocurrencies, after she co-signed a letter by Elizabeth Warren, inquiring about the impact of cryptocurrency miners on Texas's electrical grid, Schiff was blessed with a B or supportive rating, after he, quote,

completed the stand with crypto questionnaire and demonstrated support for crypto and digital assets. Garvey is, as of writing, unrated on their website. The SuperPAC's mundane names and the conspicuous absence of any mention of cryptocurrency, technology, or technology regulation in many of their advertisements, thus far belie the industry's claims that there is a substantial sector of crypto voters just waiting to be mobilized. Instead, it points to their more sinister belief that elections, and by extension, favorable regulations, are merely there for the buying.

Though many are more coy about it, Coinbase CEO Brian Armstrong has said it himself. Quote, money moves the needle. For better or for worse, that's how. our system works. I have been working as hard as I can and as quickly as I can on a project to try to track cryptocurrency-related spending in these upcoming elections. It's challenging to trace, and there's a lot of research involved, but I think it's incredibly important to know how these powerful and wealthy companies and individuals are trying to buy crypto-friendly politicians. It's not ready yet, but I'll let you know the minute it is. Unfortunately, these companies have

billions of dollars and entire teams of developers, researchers, and lobbyists to put towards flashy projects like Coinbase's Stand with Crypto Initiative, through which they urge their customers to donate to their PAC and support or oppose the politicians they have labeled as pro or anti-crypto. I am just one person, and I haven't got billions of dollars, but I'm going to do my very best. And if you haven't already, now would be a great time to support my work, either by signing up for a pay-what-you-want subscription to this newsletter, or by making a one-time contribution. This is what I do full-time these days, including these projects like the cryptocurrency spending tracker, and it's only possible thanks to support from people like you.

Thanks for listening to this issue of the citation-needed newsletter. To learn how to support my work, visit mollywhite.net slash support. If you'd like to read the text versions of these episodes, sign up to receive the newsletter in your or support my work on a recurring basis, go to citation needed.news.