How cryptocurrency executives helped decide California’s Senate primary

(Dania Maxwell/Los Angeles Times)

How cryptocurrency executives helped decide California’s Senate primary

Homepage News, Elections 2024

Laura J. Nelson

March 14, 2024

In the days before the California Senate primary, political ads calling Rep. Katie Porter (D-Irvine) a phony, an actor and a hypocrite flooded social media platforms and television shows.

The $10 million bill for the ads, which were intended to knock Porter out of the race for a rare open Senate seat, was paid by a super PAC called Fairshake that is funded by cryptocurrency companies and their executives.

As primary results rolled in and showed Porter a distant third behind Rep. Adam B. Schiff of Burbank and Republican Steve Garvey, Fairshake boasted that the Orange County lawmaker’s alliance with mentor Sen. Elizabeth Warren (D-Mass.), a vocal cryptocurrency skeptic, had “ended her career in Congress.”

Porter later blamed her loss on “an attack by billionaires spending millions to rig this election,” a none-too-subtle allusion to the crypto group’s top donors.

After two years of bad headlines, including the conviction of FTX founder Sam Bankman-Fried for fraud, the cryptocurrency industry is back in the political arena and using its significant cash reserves during the 2024 election cycle. The battle for the California Senate is one of many in which the industry has indicated it will boost candidates who support more favorable crypto laws in Washington, and almost those who do not.

“That amount of money buys you a seat at the political table in Washington, D.C., and that is their goal,” said Dennis Kelleher, chief executive and co-founder of Better Markets, a financial watchdog group that frequently opposes the administration. crypto industry in Washington.

The Securities and Exchange Commission has argued in court that cryptocurrency should be regulated like stocks and bonds, which would require trading firms to follow a wide range of disclosure and investor protection laws. The industry has lobbied for more favorable regulation, including allowing the markets to be regulated by the smaller Commodity Futures Trading Commission.

Fairshake was the largest outside donor in the Senate primaries, but to what extent this was the deciding factor is a matter of debate. Schiff and his allies have spent heavily to boost Garvey among Republican voters, blanketing the state with ads that described the retired baseball star as a two-time Trump voter who was “too conservative for California.”

Under California’s unusual primary system, the two candidates who receive the most votes in the primaries advance to the November election, regardless of their political affiliation. The ship team


gambled that his path to victory in a deep blue state would be easier if he faced a Republican.

“If you look at everything else that happened in that race, I’m extremely skeptical that it had any impact,” Kelleher said.

of the cryptocurrency advertisements

. He cited Schiff’s campaign strategy to boost Garvey and strong support from Democratic Party leaders, including Speaker Emerita Nancy Pelosi (D-San Francisco), as well as Schiff’s lengthy resume and Porter’s status as a relative newcomer to Democratic politics.

Polls taken the week before the election showed Garvey and Schiff in a battle for first place, although Porter received a lower share of votes than polls predicted. Who will fill the remainder of the late Dianne Feinstein’s term in the Senate, as well as a six-year term beginning in 2025, will be decided on the November ballot.

Sawyer Hackett, a spokesman for the Progressive Change Campaign Committee, which endorsed Porter, said the $10 million ad buy probably contributed “a significant amount” to Porter’s loss. In California’s expensive media markets, he says, $10 million doesn’t win or lose a race, but “it’s certainly an important factor, especially when you’re talking about the final weeks of the election, when Democratic voters are weighing up the options for consider elections. theirs.”

He said he wasn’t surprised to see the crypto industry spending money on Porter, who has a “somewhat small” track record on crypto issues but has proven he’s willing to take on major industries to defend consumers. The crypto industry, he said, “is focusing on candidates with a generic brand that appears to be focused on antitrust and pro-consumer policies.”

Fairshake’s top donors include venture capital giants Marc Andreessen and Ben Horowitz, who have invested in dozens of crypto companies; crypto investors Cameron and Tyler Winklevoss; and Brian Armstrong, the CEO of Nasdaq-listed Coinbase





Coinbase, which has the highest trading volume of any crypto exchange in the US, is working this year to ensure that “candidates and incumbents continue to view crypto as an opportunity to make a real difference by transforming, protecting jobs, national security,” said Kara Calvert, the company’s head of U.S. policy.

Coinbase will work through November to “educate” members of Congress, she said, so that “when they get questions about crypto at a town hall, or when they get asked about crypto by Fairshake or by any of the other organizations” That they know what they are talking about.”

On the afternoon before Election Day, a group called Stand With Crypto organized a voting rally for crypto owners in Los Angeles. There was a line around the corner of the Hollywood Walk of Fame outside the Bourbon Room bar for an event headlined by rapper Nas, who was an early investor in Coinbase.

Inside, as guests ate sliders and drank Sofia Coppola wine, Armstrong told the crowd to vote to send a “very clear message” ahead of the November election: “you have to understand innovation, you have to be pro.” -tech, pro-innovation, pro-crypto, to be elected and represent our values ​​in California.”

Armstrong did not name any candidates for Senate in California, but referred voters to a guide prepared by Stand With Crypto, which as a political 501(c)4 nonprofit is not required to disclose its donors. The guide described Schiff as “strongly in favor” of crypto and Porter as “strongly against.” Garvey and Rep. Barbara Lee of Oakland, the other candidates in the race, are listed as “pending,” with a question mark icon.

Porter’s “F” rating cited three references, including a post aboutshady crypto billionaires


for their ad campaign against her, as well as her signature on a 2022 letter Warren sent to the Texas Electric Grid Authority questioning the practice of paying crypto mining companies to turn off power during peak periods. Some companies reported making more money with the

payment subsidies

than from their mining operations, Warren wrote.

Stand With Crypto also said that Porter voted “no” last summer on the House Finance Committee’s drafting of a cryptocurrency bill favored by the industry. But Porter is not a member of that committee and her name is not on the ballot. Porter did not vote on the legislation, her spokesperson said.

Schiff’s ‘A’ rating on crypto issues was attributed to a single statement on his campaign website saying the US must “develop comprehensive regulatory frameworks” to ensure cryptocurrency and blockchain companies “stay here and grow here , and that the United States will continue to exist.” the world leader in these important new technologies.”

Schiff told reporters last week during a campaign stop in San Francisco that he supports “clear rules of the road” and “good regulation” for cryptocurrency companies that protect consumers but keep the companies in the US.


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