©Reuters. FILE PHOTO: Representations of the Bitcoin cryptocurrency are seen in this illustration, 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 in the markets.
The burgeoning cryptocurrency industry is jumping into the 2024 US elections, spending millions of dollars in Super Tuesday primaries in California, Alabama and Texas to promote crypto-friendly candidates and defeat those pushing for more regulation.
How these candidates fare 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.
The industry’s newest super PACs, or independent fundraising groups, Fairshake, Protect Progress and Defend American Jobs, backed by money from Coinbase (NASDAQ:) and the Winklevoss twins, spent at least $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 politics.
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 raised nearly $102 million from January 2023 to January 2024, Federal Election Commission data showed.
The cryptocurrency industry has surged in recent months and 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 contributed about $59.2 million to the 2024 election cycle so far, compared to $26.8 million in the 2022 midterm cycle and 1.6 million dollars in the 2020 cycle, OpenSecrets data showed.
Progressive California Democrat Katie Porter, running for Senate, is a key target. Fairshake spent more than $10 million trying to convince voters not to support Porter, including launching a statewide TV and digital media buy.
Porter joined U.S. Senator Elizabeth Warren in 2022 seeking information from the Texas power grid operator on cryptomining operations in the state and how the energy used by the industry impacts climate change and the energy grid.
“This shady super PAC is spending more than $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 spokesperson Lindsay (NYSE: ) Reilly.
Protect Progress 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 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.
Figures, if elected, pledged to “embrace the new landscape around digital assets, such as cryptocurrency, to spur innovation and technological progress,” its website says.
In Texas, Protect Progress has committed approximately $962,000 to support Rep. Julie Johnson, a Democrat running for the state’s 32nd congressional district.
Meanwhile, Defend American Jobs has committed 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 favored to take control of the House of Representatives in the 2024 elections, perhaps by a slim margin, meaning individual members of Congress could play a key role in passing legislation.
“There are candidates in all of these races who have demonstrated not only an openness to learning and thinking more about digital assets, but who have also called on Congress and policymakers to take action on that,” said Kara Calvert, of US politics at 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 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 $100 million to U.S. political campaigns.
Federal election disclosures show he donated about $40 million to mostly Democratic-aligned groups and campaigns.
An indictment also accused Bankman-Fried of directing two FTX executives to evade contribution limits by donating to Democrats and Republicans in the amount of $9.7 million to Democratic candidates and causes and more than $24 million of dollars to Republican candidates and causes in 2022.
At least some returned the money afterward.
“The FTX/Alameda experience should be a warning” to any campaign, said Ciara Torres-Spelliscy, a law professor at Stetson University College of Law. Alameda Research was Bankman-Fried’s cryptocurrency-focused hedge fund.
“FTX/Alameda funds that have entered politics are subject to two separate attempts to recover the money: one by the FTX bankruptcy estate and another by federal prosecutors who consider the money the result of a crime.”