In the final days of the hard-fought Democratic primary for an open congressional seat in Texas, a wave of glowing TV ads began appearing in Dallas in support of state Rep. Julie Johnson, one of the top candidates.
“Democrat Julie Johnson is a trailblazer in Texas,” the ad's narrator said, touting Johnson's record on gun reform and abortion rights, her endorsements from leaders like Beto O'Rourke, and the possibility of becoming the first openly gay member of Congress from Texas. south.
The ad was paid for by Protect Progress — a major political action committee funded by figures in the cryptocurrency industry — which spent nearly $1 million to air the ad this week ahead of Tuesday's primary, according to federal campaign finance records.
The late investment could be crucial for Johnson, who is locked in a close battle for first place in the primary with Brian Williams, a prominent Dallas surgeon.
But the super PAC's move to support Johnson was no coincidence. This came after Johnson added language to her campaign website indicating her support for cryptocurrencies and her desire to pass legislation in Congress that would stimulate “cryptocurrency innovation.”
On Johnson's “Issues” page on her website, there is now a section dedicated to “Innovation,” much of which focuses on cryptocurrencies.
“Blockchain technology and its applications herald the next generation of the Internet, allowing Americans to own their data, create wealth, and be stakeholders in the digital spaces of the future,” the page says in part. “Americans can benefit from cryptocurrency innovation. “We must set clear rules of the road for the cryptocurrency industry to build technology that benefits everyday Americans, while protecting consumers and ensuring fair outcomes for all.”
He continued: “As a member of Congress, I will work to ensure that the United States has regulatory frameworks in place that allow American values to determine the future of the global financial system, while protecting consumers and ensuring that no American is left behind.”
This language did not exist on Johnson's campaign website before February, according to versions of the website available at the Internet Archive. Because these archives are limited, it's unclear exactly when the section was added, or whether it was added with a whole bunch of other issue placements that also didn't appear before February.
However, the underlying conditions are clear: Johnson added language about powerful, politically active industry in the final stretch of a close election — and got a decisive boost because of it.
In response to questions from The Daily Beast, Johnson campaign spokeswoman Chelsea Rowe said, “Any campaign is a living shell.”
“We regularly update the site with new endorsements, response letters, and issue positions,” she said, adding that they had to respond to “alleged Trump-style misinformation” from her rival, Williams. (Johnson's camp complained about Williams' characterization of her legislative record on guns.)
Elsewhere on her site, there is more clear evidence that Johnson, who apparently did not have strong views on cryptocurrencies before this month, wanted help from this particular special interest. Although it is illegal for candidates and super PACs to coordinate directly, candidates can circumvent these rules by using issue pages on their website to indicate relevant positions.
But there's a more controversial tactic that candidates sometimes use to inform distinct political action committees of the specific content they want to use in their ads. On one page of their website, they'll have text — set in a red outline — that includes things the campaign says “voters should know.”
Johnson uses a tactic known as “red boxing” on her site. There, her campaign identifies aspects of her resume and record that they want to highlight in paid outdoor advertising. Protect Progress made many of these points in its announcement. Inside the red box is also Johnson's campaign language on cryptocurrencies, which is as clear a call as possible for the industry to run ads supporting it.
Campaign finance watchdogs argue that redboxing is harmful to democracy and completely undermines the principle laid out in Citizens United A decision that campaigns and super PACs cannot legally coordinate. But the Federal Election Commission, which enforces those rules, allowed it to continue.
If Johnson wins the primary, it could send a strong message to other candidates looking to gain an advantage in their competitive races in 2024.
In December 2023, Fairshake — the super PAC that is Protect Progress's parent company — said it would “support leaders who support U.S. cryptocurrency and blockchain innovation and responsible regulation in the upcoming 2024 election.”
“We support Julie because she is a lawmaker who gets things done and will move the ball on responsible regulation to protect American consumers and preserve American jobs,” Fairshake spokesman Josh Vlasto told The Daily Beast in a statement. At home where they belong.”
“Every day that Congress fails to act is another day that cryptocurrency jobs and wealth move offshore, and scammers and criminals can game the system,” Vlasto said.
In today's electoral politics – if not finance – there are few better bets than cryptocurrencies. In 2022, well-resourced and crypto-funded super PACs spent lavishly to make potentially decisive impacts in several Democratic congressional primaries.
The Protect Our Future political action committee, funded by disgraced FTX founder Sam Bankman Fried and his cronies, has spent at least $1 million on television ads promoting candidates in six different Democratic primaries with safe seats. Five of the candidates they supported won. Some have been more vocal about cryptocurrency. Others did not address this issue at all.
The substance of Johnson's encryption policy raises more questions. Much of the language on Johnson's website matches, word for word, the language used on the website of another candidate, Evan Low, a progressive Democrat running for an open congressional seat based in Silicon Valley.
Lu's website includes the same wording about “blockchain technology” that “heralds the next generation of the Internet” used on Johnson's website.
Both candidates also make exactly the same promise, which is that they will “work to ensure that the United States has regulatory frameworks in place that allow American values to determine the future of the global financial system, while protecting everyday consumers and ensuring that no American is left behind.” behind.”
It is worth noting that both Johnson and Lu also say that “the United States should lead the development of cryptocurrency and blockchain technology in the 21st century, rather than countries like Russia and China.”
Johnson's campaign did not respond to an email question about the source of the campaign's language regarding cryptocurrencies. A spokesman for Low did not respond to a request for comment.
Despite the collapse of big-spending FTX — with the candidates left to grapple with being backed by a convicted felon — there are still powerful crypto interests that have made no secret of their plans to influence the 2024 election.
In January, Axios reported that Fairshake and its two subsidiaries, Protect Progress and Defend American Jobs, had collectively raised $85 million to spend in 2024.
These PACs have already had a huge imprint on other races. Fairshake spent $7 million on ads targeting Rep. Katie Porter (D-CA), a cryptocurrency skeptic who is a leading candidate for California's open U.S. Senate seat, an election also being held on Tuesday.
Johnson is competing to succeed Rep. Colin Allred (D-Texas), who hopes to win his primary election on Tuesday to challenge Sen. Ted Cruz (R-Texas) in the November elections. The district based in north and east Dallas is safely Democratic. Allred won re-election in 2022 by more than 30 points.
There is not much ideological contrast between Johnson and her main rival, Williams. Johnson was the race's top fundraiser and received an endorsement Dallas Morning News.
In a statement to The Daily Beast, Williams criticized the PAC's spending on cryptocurrencies on behalf of his opponent, and said voters in the district should have questions about what Johnson will do in office because of that support.
“It is disheartening to see corporate special interests throw away a million dollars at the last minute to buy an election for Julie Johnson,” he said. “This is exactly the kind of politics I am seeking to change.”
