A new front has opened in the crypto industry’s 2024 election fundraising push.
This week, an online clash erupted between two of the industry’s leading voices — researcher Molly White and Coinbase Chief Legal Officer Paul Grewal.
At the heart of the beef: a $25,000 campaign donation from Coinbase.
Last week, White and Public Citizen, a consumer advocacy group, filed a complaint with US officials alleging Coinbase violated campaign finance laws.
On Monday, Grewal fired back on X by calling the accusation “misinformation” and belittling White’s credibility.
“It is notable that there is no minimum to file such a complaint,” Grewal posted on X. “And this one — filed by individuals with no election law expertise and funded by who exactly? — appears to amount to a press release by another name.”
Seized crypto assets are not Congressionally appropriated funds, period. There is nothing new in the FEC complaint filed by a self-described crypto critic and Public Citizen’s research director, but it is notable that there is no minimum bar to file such a complaint, and this one…
— paulgrewal.eth (@iampaulgrewal) August 5, 2024
White countered quickly.
“I’m very transparent that I am fully independent and funded by one of the individuals who generously support my work,” she posted.
“Stopping to innuendo about who is ‘funding me’ is beneath you.”
‘Shadowy opponent’
The donnybrook features two very different but influential figures in crypto.
White is a software engineer and researcher who runs the Web3 is Going Just Great website.
With 121,000 followers on X, she is a closely watched crypto sceptic and has been profiled on numerous “Most Influential” lists in the business press.
She told DL News Grewal appeared to be trying to confuse matters by misstating her position.
“He reduced himself to innuendo that I am being funded by some shadowy secret opponent,” White said.
A onetime US magistrate judge in California, Grewal served as a deputy general counsel at Facebook and a director at Epiq, a legal technology firm, before joining Coinbase in 2020.
He has played a key role in Coinbase’s response to the US Securities and Exchange Commission’s lawsuit alleging the listed company is operating in the market unlawfully.
‘An apparent campaign finance violation of historic size is not a good look.’
Molly White
That crackdown, which also swept up Binance, Kraken, Consensys, and other crypto players, drove the industry to spend big in the 2024 election cycle.
Coinbase and other donors, for example, raised $162 million to back the Fairshake super PAC and support crypto-friendly candidates.
Stand with Crypto
Indeed, Coinbase spearheaded a group called Stand With Crypto, which launched Fairshake.
The industry’s newly finance clout has made an impact. Donald Trump, the former president and Republican Party nominee in 2024, has embraced crypto and promised to roll back the Biden Administration’s regulatory efforts.
His opponent, Vice President Kamala Harris, has welcomed input from the industry in a sign she may forge her own regulatory path should she win the White House in November.
Even so, some critics questioned whether crypto was truly an important campaign issue to mainstream voters.
White also decided to scrutinise the industry’s spending and in mid-July launched a campaign finance tracker.
Joining forces
Her data finds that crypto-focused PACs have raised more than $183 million to influence 2024 elections.
Then on July 30, she joined forces with Public Citizen to file a complaint with the Federal Election Commission accusing Coinbase of illegally donating to Fairshake.
The complaint says that at the time of the donation, Coinbase was negotiating a contract — which it later won — with the US Marshals Service, an agency within the Justice Department.
The Marshals were looking for a contractor to hold a large amount of crypto seized during criminal investigations.
Current or prospective federal contractors may not donate to PACs while negotiating or performing federal contracts, White’s complaint said.
“An apparent campaign finance violation of historic size is not a good look for an industry attempting to regain legitimacy in the political sphere,” White wrote on her blog.
Rebuttal from Grewal
Underpinning her concerns about Coinbase are broader ones that, since a controversial Supreme Court ruling in 2010, industry finds it easier to influence policy via financial contributions.
“I look forward to the FEC enforcing its longstanding prohibitions against ‘pay-to-play’,” White wrote on X.
On Monday, White amended her complaint to include a rebuttal from Grewal, which he had posted on social media.
Grewal said that Coinbase was not a federal contractor.
The Marshals Service isn’t paying Coinbase with funds allocated to it by Congress, but with the proceeds of assets seized after the collapse of the FTX and Silk Road platforms, he said.
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
“Seized crypto assets are not Congressionally appropriated funds, period,” he wrote in a post on X, adding that the exchange is proud to work with law enforcement.
Coinbase media representatives reiterated Grewal’s stance.
They directed DL News to an FEC web page where federal contractors are defined as a person paid with funds appropriated by Congress.
Political bias
Grewal also accused White and Public Citizen of presenting Coinbase as politically biased because the complaint mentions a second donation made to Republican members of the House of Representatives.
Grewal said the exchange has donated equally to each party — $500,000 to PACs for House and Senate Republicans and Democrats in 2024.
White told DL News that her complaint in no way states or implies that Coinbase is making political contributions along party lines.
The complaint only mentions “the contribution to the House Republicans because it is the only of those four contributions that occurred during the prohibited time period,” she told DL News.
White said her other research on Coinbase’s political activity, such as the spending tracker, “is quite transparent that Coinbase is contributing roughly equally to PACs aligned with both parties.”
“Grewal’s interpretation of what I ‘want to report’ is either imagined or fabricated to try to stir up political anger and likely distract from the substance of the complaint,” she said.
Joanna Wright is regulation correspondent for DL News. Got a tip? Email at joanna@dlnews.com.
