Super Tuesday set to test political power of resurgent crypto industry By Reuters

By Stephanie Kelly

NEW YORK (Reuters) – Crypto is back! And not just in the markets.

The nascent cryptocurrency industry is rushing into the 2024 US elections, spending millions of dollars on 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 candidates, will show how much influence the increasingly rich crypto executives could wield in November.

Brand new industry super PACs, or independent fundraising groups, Fairshake, Protect Progress and Defend American Jobs, backed by money from Coinbase (NASDAQ:) and the Winklevoss twins, have at least $13 million in funding, according to a Reuters analysis Tuesday’s primary election data released by OpenSecrets, a research group that tracks money in US politics and its influence on elections and politics.

And that’s just the beginning, officials say.

“The crypto community plays politics to win,” said Fairshake spokesman Josh Vlasto. “We will have influence and impact in the race for 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 shows.

The cryptocurrency industry has been on a tear in recent months, hitting a new high last week after the collapse of several major players in 2022 depressed prices and triggered 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, up from $26.8 million in the 2022 midterm cycle and $1.6 million in the 2020 cycle, data shows from OpenSecrets showed.

A key target is progressive California Democrat Katie Porter, who is running for Senate. Fairshake has spent over $10 million convincing voters not to support Porter, including launching a nationwide TV and digital media buyout.

Porter joined U.S. Senator Elizabeth Warren in 2022 to seek information from the Texas electric grid operator about crypto mining operations in the state and the impact of electricity used by the industry on climate change and the energy grid.

“This shady super PAC is spending more than $10 million to drive Katie out of Washington because they know she will stand up for Californians and take on powerful special interests like her in the Senate,” said Lindsay (NYSE: ) Reilly, Porter’s campaign spokeswoman.

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, to run for Alabama’s 2nd Congressional District. 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.

If elected, Figures is committed to “leveraging the new landscape around digital assets such as cryptocurrencies to stimulate innovation and technological advancement,” according to its website.

In Texas, Protect Progress has committed about $962,000 to support Rep. Julie Johnson, a Democrat running for the state’s 32nd Congressional District.

Meanwhile, Defend American Jobs committed more than $1 million to support Reps. John Bradford III and Tim Moore, both Republicans in North Carolina, data from OpenSecrets showed. Moore is the speaker of the state House of Representatives.

In the 2024 elections, Democrats are expected to take control of the House of Representatives, perhaps by a narrow margin, meaning individual members of Congress could play a crucial role in passing legislation.

“In all of these races, there are candidates who have not only shown an openness to learning and thinking more about digital assets, but have actually called on Congress and policymakers to take action there,” said Kara Calvert, head of the US Politics at Coinbase.

Coinbase, an online platform for buying and selling crypto, is also behind a nonprofit group called the Stand With Crypto Alliance, which now has 315,000 members and aims to organize crypto-owning voters and influence public opinion .

The industry’s interest in the 2024 election follows one of the largest financial fraud cases of all time. FTX founder Sam Bankman-Fried was found guilty of customer theft last year. 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 predominantly Democratic-leaning groups and campaigns.

An indictment also accused Bankman-Fried of directing two FTX executives to circumvent contribution limits by giving $9.7 million to Democratic candidates and causes and more than $24 million to Republican candidates in 2022 and donated to causes to Democrats and Republicans.

At least some gave the money back afterwards.

“The FTX/Alameda experience should be a cautionary tale for 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.

“The FTX/Alameda funds that flowed into politics are the subject of two separate attempts to recover the money: one attempted recovery from FTX’s bankruptcy estate and another attempted recovery by federal prosecutors who view the money as the fruits of a crime.”