Crypto-linked super PACS boost spending on primaries
WASHINGTON — Super PACS with ties to the cryptocurrency industry have spent at least $31.2 million in primary races ahead of this year’s midterms, with most of the money coming from a handful of executives at just one company.
The super PACS are part of a Washington spending spree by the industry that has included big checks for lobbying and individuals’ campaign donations to cryptocurrency-friendly incumbents. Industry insiders are now trying to increase their political clout with millions funneled through super PACS. The money arrives as Washington is writing the rules that will govern the industry.
Craig Holman, government affairs lobbyist for Public Citizen, said it’s unusual to see this much spending on primaries by outside groups.
“What we’re seeing is a fundamental politicization of the cryptocurrency industry,” Holman said in an interview. Cryptocurrency industry insiders have emerged as political megadonors just as Washington lawmakers and regulators have flexed their muscles in the space, he said.
Lawmakers have introduced dozens of bills in the current Congress touching on the governing of cryptocurrencies. Provisions on tax reporting of digital assets made it into last year’s infrastructure law over the industry’s objections.
On the executive level, President Joe Biden in March instructed the executive branch to start work establishing a national policy for digital assets.
“This is a very wealthy industry that was very happy to be unregulated,” Holman said. “But once the federal government started shifting attention towards regulating the industry, the same as we saw with the big tech industry, they suddenly became big political players on Capitol Hill.”
The PACS have put money into the campaign for Sen. John Boozman, R-ark., the ranking member of the Senate Agriculture Committee, the panel with oversight of the Commodity Futures Trading Commission, the industry’s preferred regulator. They’ve also contributed to campaigns for House Financial Services ranking member Patrick T. Mchenry and Ted Budd, a Republican committee member running for Senate in North Carolina.
But the largest single recipient of crypto-linked super PAC money was Carrick Flynn, a Democrat seeking to be the party’s nominee in Oregon’s newly created 6th District. Flynn lost to Andrea Salinas.
Through June 14, cryptolinked super PACS tracked through Federal Election Commission disclosures had spent $31.2 million in support of 13 Democratic and 11 Republican candidates in 24 primary races, including four Senate and 20 House primaries. The super PACS spent $22.5 million on Democratic races and $8.7 million on Republican races.
Crypto-linked super PACS supported the winner in 18 of the 19 primaries with final results as of June 15. Super PACS can raise unlimited cash from corporations, unions and individuals, but they have to spend the money without coordinating with parties or candidates.
Kristin Smith, executive director of the Blockchain Association, said the stakes are high for the industry come November.
The industry wants to avoid another situation like the tax reporting provisions that ended up in the infrastructure
bill, Smith said. There are also pieces of legislation that have come together, including the bill introduced this month by Sens. Cynthia Lummis, R-wyo., and Kirsten Gillibrand, D-N.Y., showing Congress is getting serious about cryptocurrency, she added.
“The pieces are starting to come together to see legislation move next year. I think that that’s definitely a possibility,” Smith said in an interview. “Having more candidates elected who have an understanding of crypto technology, I think will help inform better policymaking.”
INDEPENDENT FTX-PENDITURES
A pair of super PACS, Protect Our Future PAC and American Dream Federal Action PAC, funded almost entirely by executives at the cryptocurrency exchange FTX and its subsidiaries, have independent expenditures of $27.5 million in support of candidates in primary races.
More than 72 percent of that, $19.8 million, has come from Protect Our Future, funded mostly through donations from FTX founder and CEO Sam Bankman-fried and Nishad Singh, the company’s director of engineering. BankmanFried has contributed $23 million of the $24.2 million the PAC has raised so far, and Nishad $1 million, according to FEC filings.
Bankman-fried — who at 30 had an estimated net
worth of $8.8 billion as of Wednesday, according to the Bloomberg Billionaires Index, despite the recent crash in cryptocurrency markets — is relatively new to the political scene. But his giving escalated in both amount and sophistication since he emerged as a donor last cycle.
Bankman-fried’s donations to Protect Our Future alone quadruple the $5.7 million he spent during the entire 2020 election. All-in this cycle, Bankman-fried has spent at least $32.8 million spread out over dozens of Democratic and Republican candidates, and PACS, including a $6 million donation to the House Majority PAC, the biggest outside group supporting House Democratic candidates.
Protect Our Future PAC spent $11.4 million in Oregon’s 6th District, with $10.5 million going to support Flynn and $938,600 opposing Salinas.
So far, the PAC has spent money in support of candidates in 10 other Democratic primaries in California, Georgia, Illinois, Kentucky, New Jersey, North Carolina, Ohio and Texas. That included a fight between two sitting Democrats in Georgia, Lucy Mcbath and Carolyn Bourdeaux, in a redrawn district. The PAC spent $1.9 million in support of Mcbath, who won.
The Pac-backed candidate has won in eight races, with primaries in Illinois coming up on June 28.