Coinspeaker Coinbase Denies Allegations of Campaign Finance Violations
Coinbase, a prominent crypto exchange in the United States, is facing allegations that it violated federal campaign finance laws by making large donations to a newly formed political action committee (PAC) called Fairshake. However, the company has strongly denied any wrongdoing, calling the accusations “misinformation”.
The Accusation
On July 31, Molly White, a well-known crypto critic, accused the exchange of breaching US federal campaign laws by donating $25 million to the PAC. According to her, this donation, along with earlier contributions totaling $45.5 million, was intended to influence political candidates in favor of the cryptocurrency industry.
White argued that this contribution is illegal under federal law because it was made by a company she believes to be a federal contractor. She contends that federal contractors are prohibited from making such political donations.
White’s accusations are based on the fact that Coinbase had previously entered into business dealings with the US Marshals Service (USMS). She asserts that this relationship classifies Coinbase as a federal contractor, thus making its contributions to the PAC a violation of campaign finance laws.
Coinbase’s Defense
In response to White’s allegations, Coinbase has strongly denied any legal violations. The company’s Chief Legal Officer Paul Grewal released an official statement on August 1, asserting that the accusations are baseless and constitute “misinformation”.
Grewal emphasized that the exchange is not a federal contractor under the legal definition provided by US campaign finance regulations, specifically citing 11 CFR 115.1, which outlines the restrictions on contributions from federal contractors.
He further explained that Coinbase’s work with the USMS does not involve payments made with appropriated federal funds, which is a key factor in determining whether a company is classified as a federal contractor.
According to Grewal, this distinction was made clear in the public Request for Proposal (RFP) issued by the USMS. Therefore, he argued that the exchange is not subject to the campaign finance laws that prohibit federal contractors from making political contributions.
Not the First
Despite this controversy, Coinbase is not the only company donating money to Fairshake to support pro-crypto candidates and oppose those who push for stricter regulations. Other companies, like Ripple, have also made significant donations to the PAC for the same cause.
The blockchain payment infrastructure provider began supporting Fairshake in 2023 with a $25 million donation. In May of this year, Ripple donated an additional $25 million, bringing its total contributions to $50 million.
In addition to Coinbase and Ripple, industry executives like the Winklevoss brothers have also financially supported the PAC. Tyler and Cameron Winklevoss donated nearly $5 million to the super PAC in February of this year.
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Coinbase Denies Allegations of Campaign Finance Violations