The biggest name and biggest spender of cryptocurrency in the 2022 election cycle is now awaiting prison time on fraud and conspiracy charges. But new political action committees have emerged as successors to Sam Bankman's collapsed Fried empire, and are making their first big bet of the 2024 election cycle: trying to crush Rep. Katie Porter, a Democrat who will run in California's Senate primary next month.
The largest new cryptocurrency-focused political action committee, Fairshake, began booking TV and digital ads across California in a multimillion-dollar buyout late Monday, and could be a major player in the final three weeks of the race.
Fairshake revealed two weeks ago in federal filings that it and two of its political action committees raised nearly $80 million in 2023, with most of the money coming from three major players in the cryptocurrency space: Coinbase, Ripple Labs, and Andreessen Horowitz.
The California Senate race pits Ms. Porter against Rep. Adam Schiff, a Democrat, and Rep. Barbara Lee, another Democrat, as well as Steve Garvey, a Republican and former baseball player. The top two finishers in the March primary will advance to November, even if they are Democrats.
In a statement, Vershayek accused Ms. Porter of taking campaign money from other industries and misleading the state about her record, saying: “Katie Porter says one thing and does another.”
The group plans an anti-Porter advertising campaign and began booking time in markets statewide on Monday. The ad released on Tuesday begins with the phrase “Katie Porter is playing dumb” and accuses her of accepting some donations from industry executives.
It's not entirely clear what Ms. Porter has drawn the ire of the cryptocurrency industry other than her record as a progressive who favored regulating the industry to better benefit consumers and made questioning of the financial CEO a viral moment a few years ago.
“Californians Don’t Be Fooled: Mysterious Crypto Billionaires Don’t Want a Powerful Consumer Voice in the Senate,” Ms. Porter Written on X After the New York Times published a report on the advertising campaign. “They fear people who criticize corporate greed, so they spend millions on dishonest dark money ads against me.”
She quickly sent out fundraising emails about “crypto billionaires” attacking her.
The cryptocurrency financiers behind Fairshake and its two affiliated groups, Protect Progress and Defend American Jobs, are fairly open about their agenda: to ensure a favorable set of regulations while the federal government considers how to regulate the cryptocurrency industry and use political spending to get it done.
“Money moves the needle,” Coinbase CEO Brian Armstrong, who personally gave $1 million in September, told Axios that same month. “For better or worse, that’s how our system works.”
“If you look at the oil and gas lobby or the banking lobby, I mean, they're spending, I don't know, in the range of $100 million a year,” Mr. Armstrong said at the time. Interestingly, Fairshake's statement cited some of these same industries that support Ms. Porter.
The massive new cryptocurrency conglomerate and its affiliates have attracted prominent Democratic and Republican consulting firms.
Fairshake has so far paid money to Impact Research, a polling firm that worked for President Biden in 2020, as well as to Jamestown Associates, an ad industry firm that produced commercials for former President Donald J. Trump that same year. Records show the group employs two other prominent polling firms: Schoen Survey Research, founded by Doug Schoen, and Global Strategy Group, which works for a wide range of Democrats in Congress.
On Capitol Hill, Ms. Porter was a close ally of Sen. Elizabeth Warren, Democrat of Massachusetts, who was once her professor at Harvard Law School. Ms. Warren has been an outspoken critic of lax regulations surrounding cryptocurrencies, and Ms. Porter once signed a letter with Ms. Warren to Texas regulators about cryptocurrencies, according to the cryptocurrency news tracking website Bitcoin.com.
Mr. Schiff, who has been campaigning to elevate Mr. Garvey over Ms. Porter in the general election, has a statement about the cryptocurrency industry on his policy page, where he writes about the need to nurture such innovative industries. “We need to develop comprehensive regulatory frameworks to ensure these businesses and jobs stay here and grow here,” the page says.
Fairshake and its groups have already spent relatively small sums on other races, for candidates including Rep. Patrick McHenry of North Carolina, the Republican chairman of the House Financial Services Committee, last year before he announced he would retire.
The other largest spending to date, from cryptocurrency group Protect Progress, was to help Shomari Figures, a Democrat running for the Alabama House of Representatives. On the issues page on his website, Mr. Figgers stressed the importance of supporting cryptocurrencies, writing that he would work to “embrace the new landscape around digital assets, such as cryptocurrencies, to stimulate innovation and technological progress.”
Mr. Figures has benefited from nearly $750,000 in cryptocurrency spending since late January — reminiscent of the huge sums Mr. Bankman-Fried and others have poured into 2022 congressional contests.
Mr. Bankman-Fried's cryptocurrency trading company, FTX, collapsed in late 2022, and he was arrested and charged with fraud following the multibillion-dollar implosion. He was convicted in November.
