© Reuters. FILE PHOTO: In this illustration, representations of the Bitcoin cryptocurrency are seen, August 10, 2022. REUTERS/Dado Ruvic/Illustration/File Photo/File Photo
By Stephanie Kelly
NEW YORK (Reuters) – Cryptocurrencies are back! And it's not just about the markets.
The burgeoning cryptocurrency industry is charging into the 2024 US elections, spending millions of dollars in Super Tuesday primaries in California, Alabama and Texas to boost pro-cryptocurrency candidates and defeat those pushing for greater regulation.
How these candidates perform on Tuesday, when dozens of races across the United States come down to two contestants, will indicate how much influence increasingly wealthy cryptocurrency executives can wield in November.
The industry's new super PACs, or independent fundraising groups, Fairshake, Protect Progress and Defend American Jobs, backed by funding from Coinbase (NASDAQ 🙂 and the Winklevoss twins, have spent at least $13 million on Tuesday's primary election , according to a Reuters analysis of data from OpenSecrets, a research group that tracks money in American politics and its influence on elections and politics.
And that's just the beginning, officials say.
“The crypto community is playing politics to win,” said Fairshake spokesperson Josh Vlasto. “We will influence and impact elections behind candidates who align with our agenda and our vision.”
In total, the three super PACs have raised nearly $102 million from January 2023 to January 2024, Federal Election Commission data showed.
The cryptocurrency industry has soared in recent months and hit a new high last week, after the collapse of several big players in 2022 crushed prices and sparked a regulatory crackdown.
The industry, including its employees and political action committees, has so far contributed about $59.2 million for the 2024 election cycle, up from $26.8 million in the 2022 midterm cycle and $1.6 million in the 2020 cycle, OpenSecrets data showed.
Progressive California Democrat Katie Porter, who is running for Senate, is a key target. Fairshake has spent more than $10 million trying to convince voters not to back Porter, including launching a statewide television and digital media buyout.
Porter joined U.S. Senator Elizabeth Warren in 2022, seeking information from the Texas power grid operator about crypto mining operations in the state and how the energy the industry uses affects climate change and the energy grid.
“This shady super PAC is spending over $10 million to oust Katie from Washington because they know she will stand up for Californians and take on powerful special interests like them in the Senate,” said Porter campaign spokeswoman Lindsay (NYSE:) Reilly.
Protect Progress has also spent about $1.7 million to support Shomari Figures, a Democrat and former deputy chief of staff to U.S. Attorney General Merrick Garland, who is running in the race for Alabama's 2nd Congressional District. . A Democrat is expected to win the close race, which broke out after a federal court ordered Alabama to draw a new congressional map.
If elected, Figures has committed to “embracing the new landscape around digital assets, such as cryptocurrencies, to stimulate innovation and technological advancement,” its website says.
In Texas, Protect Progress has committed about $962,000 to support Rep. Julie Johnson, a Democrat running in the race for the state's 32nd Congressional District.
Meanwhile, Defend American Jobs has allocated more than $1 million to support Rep. John Bradford III and Rep. Tim Moore, both Republicans in North Carolina, OpenSecrets data showed. Moore is the speaker of the state House.
Democrats are the favorites to take control of the House of Representatives in the 2024 elections, perhaps by a narrow margin, meaning individual members of Congress could play critical roles in passing legislation.
“There are candidates in all of those races who have demonstrated not only an openness to learning and thinking more about digital assets, but they have also called on Congress and policymakers to take action on it,” said Kara Calvert, US policy chief. on Coinbase.
Coinbase, an online platform for buying and selling cryptocurrencies, is also behind a nonprofit group called Stand With Crypto Alliance that now has 315,000 members, which aims to organize voters who own cryptocurrencies and influence public opinion. .
The industry's interest in the 2024 election comes on the heels of one of the largest financial frauds ever recorded. FTX founder Sam Bankman-Fried was convicted last year of stealing from customers. Prosecutors allege he used those funds to donate more than $100 million to U.S. political campaigns.
Revelations about the federal elections show that he donated approximately $40 million to groups and campaigns mostly aligned with Democrats.
An indictment also accused Bankman-Fried of directing two FTX executives to evade contribution limits by donating to Democrats and Republicans a sum of $9.7 million to Democratic candidates and causes, and more than $24 million to Republican candidates and causes in 2022.
At least some have returned the money later.
“The FTX/Alameda experience should be a cautionary tale” for any campaign, said Ciara Torres-Spelliscy, a law professor at Stetson University School of Law. Alameda Research was Bankman-Fried's cryptocurrency-focused hedge fund.
“FTX/Alameda funds that were dedicated to politics are subject to two different attempts to recover the money: one from FTX's bankruptcy estate and another from federal prosecutors who consider the money the fruit of a crime.”
