Coinbase CLO denies allegations of finance violations in crypto super PAC donations
Crypto critic Molly White recently claimed in a post that crypto exchange Coinbase might have violated the finance laws with a donation to political action committee (PAC) Fairshake. In response, the chief legal officer of Coinbase, Paul Grewal has called the claim “misinformation,” underlining that the Nasdaq exchange is not a federal contractor.
Ahead of the US 2024 Elections, crypto has become a major political topic. However, in a June 3 post, Coinbase’s Brian Armstrong called the exchange an ‘apolitical company’ while spearheading the StandWithCrypto campaign. The campaign has been pushing for regulatory clarity while by identifying pro-crypto and opposing candidates for the elections.
White claims Coinbase could be non-compliant
In an X thread, White questions the timing of the donations by Coinbase. She notes that Coinbase’s large donations to Fairshake crypto super PAC were made while they were negotiating a contract with the US Marshals Service. Cumulatively, Coinbase reportedly donated $45.5 million between November 2023 and May 2024. Coinbase had acknowledged its May donation of $25 million in a blog post the following month. It said,“We, along with others in the industry, have helped fund Fairshake SuperPAC to help elect pro-crypto candidates, and defend the rights of our customers.”
While claims that federal campaign finance laws do not allow contributions from federal contractors to political entities during contract negotiations and performance periods. She reports that the U.S. Marshals Service (USMS) posted a contract for managing seized cryptocurrency assets on March 4. While bids were made in April, Coinbase received the contract worth $32.5 million in July.
Coinbase CLO Paul Grewal has called the claims raised by White as “misinformation” in an X thread. He said, “Coinbase is not a federal contractor under the plain language of 11 CFR 115.1.” He cites the official definition of a federal contractor which notes that the payment is made “from funds appropriated by the Congress.”
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
From the definition, Grewal also suggests that the payment from the US Marshals Service (USMS) to Coinbase is not government funds approved by Congress. The CLO points out that funds in the contract come from the Assets Forfeiture Fund, which is money collected from the sale of property seized by the government.
White also alleges that not only was the May donation done in the prohibited period, the March payment to the Congressional Leadership Fund may also have this compliance issue. White cited comments by campaign finance expert Dr. Craig Holman, who confirmed that a federal contractor cannot make campaign contributions to federal committees like a super PAC. He also suggested filing a complaint with the Federal Election Commission (FEC) in cases of violation. Notably, it has not been established that Coinbase can be put in this category.
Meanwhile, White notes that some corporations have avoided FEC restrictions by contributing through separate entities. Molly White said, “I don’t believe that’s what’s happening here, and Coinbase refused to provide any further information.”
Coinbase-led StandWithCrypto campaign has gained stream
Coinbase previously noted that 52 million Americans have owned crypto and both Democratic and Republican parties have crypto supporters. And with crypto a major part of the US Elections in 2024, StandWithCrypto campaign has over 1.3 million advocates as per the official website.
The campaign tags Donald Trump as an ‘A’ category who strongly supports crypto while Democratic candidate Kamala Harris’ position is currently unknown.
Actually there are 3 whales backing the ~$203 million crypto super PAC Fairshake:
▪️ Coinbase at $45.5M
▪️ Ripple Labs at $45M
▪️ a16z + founders Marc Andreessen and Ben Horowitz at a collective $88MThis is astonishing levels of donations from corporate + tech billionaires. https://t.co/irBEDeR9TG
— The BERN Identity (@bern_identity) July 31, 2024
Trump has also revealed that his campaign has raised $25 million from crypto players since May. At the Bitcoin 2024 conference in Nashville, former President Trump underlined that he has engaged with key industry leaders in a closed-door roundtable.
