Highlights:
- Coinbase’s $25 million donation to Fairshake super PAC is under scrutiny for potential finance law violations.
- Chief Legal Officer Paul Grewal refutes the claims, stating Coinbase is not a federal contractor.
- The controversy underscores growing political tensions as the 2024 U.S. elections approach.
A leading cryptocurrency exchange, Coinbase, has denied accusations of violating campaign finance laws. The company faced scrutiny after a $25 million donation to Fairshake, a super political action committee (PAC), in May 2024. This donation, along with additional contributions totaling $45.5 million between November 2023 and May 2024, has been labeled as “misinformation” by Coinbase’s Chief Legal Officer, Paul Grewal.
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Allegations of Violations
Critics, including well-known crypto critic Molly White, have raised concerns about the timing of these donations. White argues that the contributions occurred during Coinbase’s negotiations for a federal contract with the U.S. Marshals Service. She claims this might constitute a breach of federal campaign finance laws, prohibiting federal contractors from making political contributions during contract negotiations and performance periods.
In an X post, White questioned the legality of the donations, highlighting that the U.S. Marshals Service posted a contract for managing seized cryptocurrency assets on March 4, 2024. Coinbase, she notes, was awarded a $32.5 million contract in July following their substantial contributions to the Fairshake PAC.
1/3 Whether intentional or not, this is misinformation. Coinbase is not a federal contractor under the plain language of 11 CFR 115.1. USMS isn’t paying us with appropriated funds—something it made clear in the public RFP. https://t.co/72T22m8rI5
— paulgrewal.eth (@iampaulgrewal) August 1, 2024
Paul Grewal has responded by emphasizing Coinbase’s compliance with all applicable laws. He stated, “Coinbase is not a federal contractor under the plain language of 11 CFR 115.1.” He further explained that the payment received from the U.S. Marshals Service is derived from the Assets Forfeiture Fund, not from funds appropriated by Congress.
Clarification and Defense
Grewal’s statements clarify that the Assets Forfeiture Fund comprises money collected from the sale of property seized by the government, indicating that Coinbase’s status as a contractor does not align with the definition of a federal contractor. He reiterated this point in the X post, saying, “USMS isn’t paying us with appropriated funds — something it made clear in the public [request for proposal].”
White, however, remains unconvinced. She referenced comments from campaign finance expert Dr. Craig Holman, who asserted that federal contractors should not contribute to super PACs, labeling it as illegal. Holman suggested filing a complaint with the Federal Election Commission (FEC) for suspected violations. Coinbase denies accusations, stating the claims are unfounded. “Whether intentional or not, this is misinformation,” Grewal asserted, pointing out the need for accurate information dissemination.
Growing Political Engagement
Coinbase’s involvement in political advocacy has grown with its StandWithCrypto campaign, which promotes regulatory clarity and supports pro-crypto candidates. This initiative highlights the increasing political engagement of crypto companies ahead of the U.S. 2024 Elections.
The StandWithCrypto campaign has identified various political figures as cryptocurrency supporters, with former President Donald Trump being a notable proponent. Trump has reportedly raised $25 million from crypto players since May, emphasizing the industry’s influence in the political arena.
Fairshake PAC has emerged as a major player in the 2024 election cycle, raising over $200 million. Significant contributions have come from notable crypto entities such as Andreessen Horowitz and Ripple, with Coinbase leading as a major donor. This funding underscores the growing importance of cryptocurrency in shaping political discourse.
Actually there are 3 whales backing the ~$203 million crypto super PAC Fairshake:
▪️ Coinbase at $45.5M
▪️ Ripple Labs at $45M
▪️ a16z + founders Marc Andreessen and Ben Horowitz at a collective $88MThis is astonishing levels of donations from corporate + tech billionaires. https://t.co/irBEDeR9TG
— The BERN Identity (@bern_identity) July 31, 2024
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