The industry’s political awakening — and enormous pool of cash — is already affecting high-profile races nationwide. Image / New York Times
Ryan Selkis, a cryptocurrency executive, was eating dinner at Mar-a-Lago last month when he got an unexpected invitation: former President Donald Trump wanted him to come to the stage and say a few words.
Selkis, who runs the crypto data firm Messari, was among a couple of hundred attendees at an event celebrating Trump’s series of nonfungible tokens, the digital collectibles known as NFTs. When he reached the lectern, Selkis turned to face the former President.
“There’s 50 million crypto holders in the US,” the executive declared. “That’s a lot of voters.”
That message has become a political talking point in the crypto world, as the industry tries to shake off a wave of scandals and establish itself as a powerful force in the 2024 election cycle. Three large crypto firms have banded together to finance a group of affiliated super political action committees, investing about US$150 million to elect pro-crypto candidates in congressional races.
The PACs are not planning to participate in the presidential election, a spokesperson for the groups said. But top crypto executives have tried to mobilise the industry behind Trump, who has reciprocated by praising digital currencies and hosting executives at Mar-a-Lago.
Many crypto supporters view the 2024 election as a pivotal moment. After a series of crypto firms collapsed two years ago, the Biden administration embarked on an aggressive crackdown, bringing lawsuits and criminal charges against some of the industry’s leading figures. The Securities and Exchange Commission is pursuing cases that could effectively force the crypto industry out of the United States.
“The 2024 elections will be the most consequential in crypto’s history,” said Brad Garlinghouse, CEO of Ripple, a crypto company that has sparred with the federal government for years. “You are seeing a technology become a partisan political issue.”
Garlinghouse, Selkis and other executives have argued that newly energised “crypto voters” could sway the outcome of the election. They often cite a survey, commissioned by crypto exchange Coinbase, that suggests that 52 million Americans own digital currencies. (The Federal Reserve estimates tthe total is 7% of the adult population, or roughly 18 million people.)
But voters’ supposed passion for crypto may be less important than the industry’s campaign war chest. Ripple, Coinbase and venture capital firm Andreessen Horowitz have each donated about US$50 million to the crypto PACs, which plan to spend those funds in several competitive Senate races. In March, the largest PAC, Fairshake, spent about US$10 million on attack ads against Representative Katie Porter, a Democratic candidate in the California Senate primary who was allied with Senator Elizabeth Warren, a long-time crypto critic. Porter lost her race.
“A single, relatively small industry is literally trying to buy enough politicians to hijack the public agenda,” said Dennis Kelleher, president of Better Markets, a financial reform advocacy group. “It’s pretty breathtaking.”
The industry’s vast resources have turned a niche set of issues into a talking point in the presidential campaign. Robert F. Kennedy jnr, an independent presidential candidate, made his first official campaign appearance at a Bitcoin event in Miami, and he has attended multiple industry conferences, sometimes holding fundraising meetings with wealthy executives on the sidelines.
President Joe Biden has long been seen as anti-crypto because his Securities and Exchange Commission chairman, Gary Gensler, has sued many crypto companies. But some Biden supporters, including investor Mark Cuban, have pressed his campaign to mend fences.
The campaign has been receptive to the message, Cuban said in an email. In recent weeks, Biden officials have reached out to Coinbase and Ripple, asking to discuss crypto policy, four people familiar with those discussions said.
Still, much of the industry appears to be coalescing around Trump. While the former President once said that Bitcoin “seems like a scam” and has frequently been critical of the tech industry, he has made several supportive comments about crypto over the past month, promising to end the regulatory crackdown.
On Tuesday, Trump met at Mar-a-Lago with executives from some of the world’s largest Bitcoin mining companies, including Marathon Digital and Riot Platforms.
Bitcoin should be “MADE IN THE USA!!!” he posted on his social network.
The last time the crypto industry spent large sums on a political race, its top donor was Sam Bankman-Fried, founder of FTX, who spent tens of millions of dollars supporting both Democrats and Republicans in the 2022 mid-terms. Two years later, Bankman-Fried’s company is bankrupt, and he’s serving a 25-year prison sentence for fraud.
The collapse of FTX was an enormous setback for the crypto industry’s efforts in Washington. Last year, the SEC sued Coinbase and other crypto companies, arguing the digital assets they allowed customers to buy and sell were unregistered securities. In May, the industry notched a rare legislative victory when Congress voted to overturn an SEC accounting guideline that crypto companies had disputed. Biden vetoed the resolution.
Now, the industry is fighting back. Fairshake has announced plans to participate in four other Senate races this year, including close contests in Ohio and Montana, where Democrats who have been critical of crypto are up for re-election. Privately, crypto executives have credited Fairshake with softening sceptical legislators, including Senator Sherrod Brown, Democrat-Ohio, according to two people familiar with the conversations. Brown, who chairs the Senate Banking Committee, said in April he was open to advancing a bill that the industry supported.
A few weeks after the California Senate primary in March, Representative Adam Schiff, the Democrat who defeated Porter, visited Coinbase’s offices in Mountain View, California. He met with representatives from Coinbase, Andreessen Horowitz and the crypto-focused investment firms Electric Capital, Paradigm and Haun Ventures, two people familiar with the meeting said.
Trump has not always been a crypto supporter. He has said he preferred dollars to Bitcoin, and in 2019, he tweeted that digital currencies were “based on thin air”. But lately, some crypto executives — in the market for a political saviour — have embraced him.
Vivek Ramaswamy, a crypto enthusiast and former presidential candidate, has claimed credit for Trump’s pivot on crypto and carved out a role as his emissary to the industry: on Wednesday afternoon, Ramaswamy met privately with Brian Armstrong, Coinbase’s CEO, at the Capitol Hill Club in Washington and encouraged him to support the Trump campaign, a person familiar with the meeting said.
Armstrong has not publicly endorsed a presidential candidate. “We will not give special treatment to one particular party,” he said in a statement. “Crypto is a truly bipartisan issue.”
Selkis, who identifies as a libertarian, attended the Mar-a-Lago event in May after getting a ticket from a colleague who couldn’t make it. “I’m in the middle of eating my salad, and I get cold-called on the stage by the President,” Selkis recalled in an interview.
That night, Trump declared, “If you’re in favour of crypto, you better vote for Trump.” He has also announced his campaign would accept donations in digital currency and pledged to commute the life sentence of Ross Ulbricht, a cult hero in the crypto world who ran the online drug marketplace Silk Road.
On Tuesday evening, Trump met with about 15 Bitcoin mining executives for over an hour at Mar-a-Lago, according to one of the attendees, Salman Khan, the chief financial officer at Marathon Digital.
At one point, Khan said, the executives showed Trump the inside of a machine used for Bitcoin mining, an energy-guzzling process that has raised environmental concerns. “He liked the made-in-America feature to it,” Khan said.
Not everyone in the crypto world is on board with Trump. At a conference in May, Marvin Ammori, a Democrat who works for crypto firm Uniswap, debated Selkis on stage about the industry’s political strategy, warning Trump might not follow through on his campaign promises.
Still, this month, Trump attended a fundraiser at the San Francisco home of David Sacks, a prominent venture capitalist, and reiterated his support for crypto, according to three people who attended. Among the guests were Selkis, crypto executives Tyler and Cameron Winklevoss and Paul Grewal, chief legal officer at Coinbase, the people said.
“The crypto vote has already been won by President Trump,” Selkis said. “It’s over.”
Written by: David Yaffe-Bellany, Erin Griffith and Theodore Schleifer
© 2024 THE NEW YORK TIMES
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