The crypto industry’s spending on the election amounted to one of the most aggressive corporate spending sprees in modern political history, experts said.
Credit...Maansi Srivastava for The New York Times

The Crypto Industry’s Spending on the Election Pays Off

The spending spree fueled a string of victories on Tuesday for congressional candidates who had expressed support for cryptocurrencies.

by · NY Times

Locked in a tight race for the U.S. Senate in Ohio, the Republican candidate Bernie Moreno got a major boost in the weeks before the election: $40 million from the cryptocurrency industry.

The money, which funded ads that aired across Ohio, was the most ambitious effort in an audacious multistate campaign by crypto firms to influence dozens of crucial congressional races. On Tuesday, that push was rewarded as Mr. Moreno, a longtime crypto enthusiast, defeated Senator Sherrod Brown, a Democrat who chairs the influential Senate Banking Committee and has called for strict oversight of crypto companies.

“The crypto army is striking,” Tyler Winklevoss, a crypto executive, cheered on social media. A spokesman for the leading crypto super PAC blasted out the Ohio results in an email with the subject line: “Crypto’s big bet pays off.”

The crypto industry treated this year’s election as a pivotal moment, spending tens of millions of dollars to support candidates who favored softer regulations for the sector. A super PAC called Fairshake and two related organizations, Protect Progress and Defend American Jobs, spent a total of about $135 million, financed by donations from the crypto companies Coinbase and Ripple and the venture capital firm Andreessen Horowitz, which has backed over 100 crypto start-ups.

The effort amounted to one of the most aggressive corporate spending sprees in modern political history, experts said. And it appears to have paid off handsomely.

A tracker run by Stand With Crypto, an industry group that vets politicians, said that 253 pro-crypto candidates had been elected to the House of Representatives on Tuesday, compared with 115 anti-crypto candidates. In the Senate, 16 pro-crypto candidates and 12 anti-crypto candidates were elected, the tracker said.

Fairshake and its related organizations poured money into more than 50 congressional races that were decided on Tuesday. In addition to Mr. Moreno, pro-crypto congressional candidates backed by the PACs won elections in Arizona, Indiana, Maryland, Missouri and other states. As results trickled in last night, the price of Bitcoin surged to a record of more than $75,000.

“The most important message from last night is that crypto wins,” said Paul Grewal, the chief legal officer for Coinbase. “We now have the most pro-crypto Congress in history.”

None of the crypto PACs contributed to a presidential candidate. But their spending turned a niche set of issues into a major talking point in the campaign, elevating an industry with a long track record of fraud, scams and consumer harm.

The Biden administration spent years pursuing crypto companies for violations of securities law. President-elect Donald J. Trump has vowed to end that crackdown and make the United States “the crypto capital of the planet.” Once an outspoken crypto skeptic, he appeared at a Bitcoin conference in Nashville this summer and even started his own crypto business.

The arrival of new pro-crypto voices in Congress could offer the industry a path to pass legislation that would defang the Securities and Exchange Commission, the federal agency that has most aggressively pursued crypto companies in court. Even lawmakers who were not on the ballot this year might be less willing to oppose the industry’s interests after it showed its fund-raising muscle.

The spending has alarmed groups that fight the influence of money in politics. In a report this summer, the nonprofit consumer group Public Citizen said that the crypto industry’s outlay was “corrupting our political process.”

“Crypto has become this huge issue in the 2024 elections, solely because crypto corporations have spent a ton of money,” said Rick Claypool, a research director for Public Citizen. “Other sectors are going to try to duplicate this strategy.”

The crypto industry’s last attempt to influence an election ended in disaster. Before the 2022 midterms, Sam Bankman-Fried, the founder of the crypto exchange FTX, served as the industry’s chief representative in Washington, meeting with lawmakers and donating millions to candidates on both sides of the aisle. Then FTX imploded, and Mr. Bankman-Fried was indicted on charges that included campaign finance fraud. He is serving a 25-year prison sentence.

After FTX failed, the U.S. government embarked on a wide-ranging crackdown, suing some of the largest crypto companies, including Coinbase, for violations of federal securities laws. Lawmakers who had once been enthusiastic about meeting with pro-crypto groups suddenly backed off.

But the industry kept pushing its agenda in Washington, trying to advance legislation that would strip power from the S.E.C. and create a more favorable regulatory framework for crypto companies.

A central pillar of that strategy: Fairshake.

Early this year, the super PAC spent $10 million on attack ads against Katie Porter, a Democratic candidate for the Senate in California who was allied with Senator Elizabeth Warren, an outspoken crypto skeptic.

Ms. Porter lost the primary in March. The winner of that race was Adam Schiff, a California Democrat who has “demonstrated support for crypto and digital assets,” according to Stand With Crypto.

The California primary spooked candidates across the political spectrum. Not long after Ms. Porter’s defeat, Fairshake announced it was planning to intervene in the Senate race in Montana, where the Democratic incumbent, Jon Tester, faced a close contest. Mr. Tester had expressed skepticism about crypto, but he voted in May for a pro-crypto measure over the objections of the Biden administration.

Fairshake ultimately did not spend money in the Montana race. The group’s spokesman, Josh Vlasto, declined to comment. A representative for Senator Tester did not respond to a request for comment. He lost his election.

As Election Day approached, Fairshake unleashed a spending blitz in Senate and House races nationwide, supporting Democrats and Republicans. Throughout the campaign, crypto executives fielded complaints from leaders in both parties who were irritated that the super PAC was backing candidates on the other side, two people with knowledge of the conversations said.

The industry’s most ambitious aim was to unseat Senator Brown. In many ways, Mr. Moreno was the perfect pro-crypto candidate: He had founded a crypto company, Ownum, and received an A rating from Stand With Crypto.

By contrast, Mr. Brown was a vocal crypto opponent who said that digital currencies helped fund terrorists, and argued that the industry was plagued by “scams and spectacular blowups.”

Defend American Jobs, one of the crypto PACs, spent $40,134,927 to support Mr. Moreno in a race that drew hundreds of millions of dollars in contributions from outside groups, according to OpenSecrets, a group that tracks political spending. When Mr. Moreno won on Tuesday, crypto executives celebrated and claimed credit.

“Sherrod Brown was a top opponent of cryptocurrency and thanks to our efforts, he will be leaving the Senate,” Mr. Vlasto, the Fairshake spokesman, said in a statement. “Senator-elect Moreno’s come-from-behind win shows that Ohio voters want a leader who prioritizes innovation.”

The extent of the industry’s victory was still coming into focus on Wednesday morning. The crypto PACs also spent a combined $20 million backing two Democrats running for the Senate: Elissa Slotkin in Michigan and Ruben Gallego in Arizona. Neither of those races had been called by Wednesday morning.

But the industry was already looking to the future. This week, Fairshake announced that it had raised more than $78 million to spend on the 2026 midterms.

Inside the World of Cryptocurrencies