# Crypto Has Bought The 2024 Election!

An episode of [Patrick Boyle On Finance](https://invisiblenetwork.ai/podcast/1547740313), 2 Oct 2024, 24 min.

Audio: https://traffic.megaphone.fm/APO8283069199.mp3

Send us a textAccording to the consumer advocacy group Public Citizen, almost half of all corporate money contributed to this year's US election campaigns has come from crypto backers and politicians are bending to their will with promises to reduce regulation and consumer protections.Why do Trump and Kamala Harris suddenly support crypto? In today's video we follow the money.Patrick's BooksStatistics For The Trading Floor: https://amzn.to/3eerLA0Derivatives For The Trading Floor:...

## Transcript

[0:00] Hello and welcome. You are listening to Patrick
[0:03] Boyle on Finance, a podcast exploring ideas from
[0:06] quantitative finance, examining events occurring in markets
[0:10] right now and financial history to see what lessons can be taken
[0:14] away, including interviews with some of the most interesting
[0:17] people in the world of finance. To learn more about the podcast,
[0:20] visit on finance.org. With a bit over a month to go
[0:29] till the US elections this November, it might surprise you
[0:33] to learn that the crypto industry has spent almost $120
[0:36] million already this year in political contributions, meaning
[0:41] that crypto makes up for almost half of all corporate political
[0:45] contributions in this election cycle.
[0:48] I'm sure you've seen all of the political adverts telling you
[0:52] how important this industry is to the average American and how
[0:56] you should vote for a crytofriendly candidate, no?
[1:00] Well, that would be because that's not how the
[1:03] advertisements work. The contributors know that the
[1:07] average American doesn't care one bit about crypto.
[1:10] When the Super PAC's funded by the crypto industry spent money
[1:14] to influence races, either by attacking crypto skeptics or
[1:19] boosting crypto supporters, the ads never mention crypto at all.
[1:24] A few of you are possibly nodding your head, saying, Yep,
[1:27] it'll be Trump. He'll be on their payroll.
[1:30] After all. He famously called Bitcoin a
[1:32] scam against a dollar in 2021, and then a bit over a year later
[1:37] licensed his image for a series of NFTS.
[1:41] This summer, he even flew to Nashville to speak at a Bitcoin
[1:45] conference, where he said that if he was elected, he would fire
[1:49] the head of the SEC and appoint someone who will build the
[1:53] future, not block the future. He even promised to create a
[1:57] strategic crypto reserve, whatever that is, saying that
[2:01] the United States will be the crypto capital of the planet, I
[2:05] guess overtaking El Salvador. But no, it's not just Trump.
[2:10] According to Bloomberg, while lots of money has gone to
[2:13] Republicans, the majority of the money from the crypto industry
[2:17] has been spent on influencing Democrats.
[2:21] Republicans are not too happy about this.
[2:23] A GOP strategist involved in Senate races told NBC that the
[2:29] spending on Democrats risks hurting Trump since his allies
[2:33] are being attacked instead of picking a side in the election.
[2:38] The crypto industry has put together a super PAC with no
[2:41] focus other than advancing the interest of crypto corporations.
[2:46] They've raised a massive sum of money.
[2:48] That's sending the message to politicians that if they commit
[2:52] to advancing pro crypto policies, they'll get help, and
[2:56] if they oppose the industry, it could end their political
[2:59] careers. This spending has been effective
[3:03] too. In the primaries earlier this
[3:05] year, crypto PAC backed candidates were big winners.
[3:09] According to the data, out of 42 primary races where crypto
[3:14] backed super PAC's intervened, their preferred candidate won
[3:18] 86% of the time. Politicians are bending to the
[3:23] will of the crypto industry too. The American Prospect reports
[3:28] that both beneficiaries of crypto campaigns spending and
[3:31] their opponents, the ones who have received no help, are
[3:35] desperately endorsing crypto. Hours before Trump's speech at
[3:40] the Nashville Bitcoin conference, a group of 14
[3:43] Democratic lawmakers released an open letter to the DNC urging
[3:48] them to endorse cryptocurrency policies that would support the
[3:52] crypto industry. All 14 signatories appear to
[3:56] have received support from crypto super PACs.
[4:00] A few weeks after the open letter was published, Vice
[4:03] President Harris gave a speech saying that it's important for
[4:07] the United States to maintain its dominance in blockchain
[4:11] technology. Her campaign policy document,
[4:15] under a heading of sectors that are critical for our economic
[4:18] and national security, included the suggestion of investing in
[4:23] technologies like digital assets.
[4:26] The Washington Post reported last week that she's signalling
[4:30] support for the expansion of the cryptocurrency industry and was
[4:34] rebuffing claims that she would seek a crackdown on the sector.
[4:38] In a separate article, they reported that she promised
[4:41] donors in New York City a safer business environment for digital
[4:46] assets. Mark Cuban, who's described in
[4:49] the press as one of Kamala Harris's most influential
[4:52] political surrogates, told guests at a fundraiser last week
[4:57] that Harris's team opposes regulation through litigation
[5:01] and suggested that Gary Gensler could be removed from his role
[5:05] at the SEC if Harris is elected. Cuban noted that Harris''s team
[5:11] used no uncertain terms to express their lack of support
[5:14] for the Secs current approach to Regulation C against their.
[5:19] You leaving is worth a point in GDP growth he finished up with.
[5:24] So who is behind these massive political donations?
[5:27] Why are Americans seeing so many campaign commercials paid for by
[5:31] the crypto industry that never get around to mentioning crypto?
[5:35] And is it true, as the crypto industry claims, that 50 million
[5:39] Americans own crypto currencies and that it's legal treatment is
[5:43] one of American voters top concerns?
[5:47] It seems like no time since our screens were filled with
[5:50] celebrities and influencers pitching crypto and crypto
[5:54] exchanges. The most memorable example being
[5:56] the Larry David FTX Super Bowl commercial, which even featured
[6:01] P Diddy's roommate's father, Joseph Bankman.
[6:05] In the wake of the collapse of FTX, lawsuits were launched
[6:09] against the celebrities and influencers who had promoted it.
[6:13] Sam Bankman freed Puffy's roommate, stood trial last year
[6:17] on a long list of charges. But some of the charges, like
[6:21] conspiracy to make unlawful campaign contributions,
[6:24] conspiracy to bribe foreign officials and two other
[6:28] conspiracy counts, were held back for a second trial because
[6:32] these charges had not been approved as part of his
[6:35] extradition from the Bahamas. Those charges were supposed to
[6:39] be brought at a second trial that should have occurred this
[6:42] year. Last December, the prosecutors
[6:45] told the judge that evidence at a second trial would duplicate
[6:50] evidence already shown to a jury, also saying that a follow
[6:54] up trial would ignore the strong public interest in a prompt
[6:58] resolution of the case, particularly because victims
[7:02] would not benefit from forfeiture or restitution in
[7:05] orders if sentencing was delayed.
[7:08] Now, it can be argued that there might have been massive public
[7:11] benefit associated with hearing testimony about the $40 million
[7:16] that SBF handed out to politicians and political action
[7:20] committees ahead of the 2022 midterm elections and what he
[7:24] expected in return. While federal election receipts
[7:28] showed that SBF donated almost entirely to Democrats, guided by
[7:33] his mother, Barbara Freed, in an interview with Tiffany Fong, he
[7:38] claimed to have made significant dark or undisclosed donations to
[7:42] Republicans, too. None of this was explored in
[7:45] court. Celebrities, it turns out, took
[7:49] more heed for accepting advertising money from FTX than
[7:53] politicians did for accepting donations.
[7:56] The original indictment stated that he leveraged his influence
[8:00] that his contributions bought him to lobby Congress and
[8:04] regulatory agencies to support legislation and regulation that
[8:09] he believed would make it easier for FTX to continue to accept
[8:14] customer deposits and grow. We recently saw news of Ryan
[8:19] Salami and Caroline Ellison being sentenced to prison time
[8:24] for their participation in the massive fraud at FTX, but
[8:28] there's no news about any prosecutions relating to the
[8:31] massive campaign finance fraud that occurred.
[8:34] That seems like quite an omission.
[8:37] So if crypto makes up for almost half of all corporate political
[8:41] contributions in this election cycle, who are the donors?
[8:45] According to the consumer advocacy group Public Citizen,
[8:49] crypto sector corporations, primarily Coinbase and Ripple,
[8:53] have dumped over $119,000,000 in real money, not meme coins, into
[8:59] the 2024 election so far, almost entirely into super PAC's
[9:04] dedicated to elevating pro crypto candidates and attacking
[9:08] crypto skeptics. Fair Shake, Defend American Jobs
[9:13] and Protect Progress make up a network of super PACs funded by
[9:17] the crypto industry. Fair Shake is listed as being
[9:21] nonpartisan. It's affiliated super PAC
[9:24] Protect Progress supports Democrats and Defend American
[9:28] Jobs supports Republicans. According to data from The
[9:32] Washington Post, all three received funding from the same
[9:36] crypto industry donors. Fair Shake has raised over $200
[9:41] million and its biggest donors by far were Coinbase and Ripple,
[9:46] with large donations also coming from the founders of the venture
[9:50] capital firm Andreessen Horowitz, $5,000,000 came from
[9:54] the Winklevoss twins who run the Gemini exchange, and $1 million
[9:59] came from Coinbase CEO Brian Armstrong.
[10:02] According to news reports, almost all of these donors have
[10:06] had run insurance with securities regulators due to
[10:09] their crypto related activities. The crypto industry denies that
[10:14] its involvement in US elections is a problem.
[10:17] The Fair Shake website writes of the need to support innovators
[10:21] building the next generation of the Internet and argues that a
[10:25] clearer regulatory and legal framework is vital if the
[10:29] broader open blockchain economy is to grow to its full
[10:33] potential. According to Logan Dobson of the
[10:37] lobby group Stand With Crypto, who spoke with The Hill earlier
[10:41] this month, the crypto voter is real, bipartisan, and ready to
[10:46] engage this cycle. Amusingly, Bloomberg reported
[10:50] this summer that the Winklevoss twins, Harvard's dumbest
[10:53] graduates, had their money sent back to them after their Bitcoin
[10:57] donations to Trump's presidential campaign exceeded
[11:01] the maximum limit allowed under federal law.
[11:04] The Winklevoss twins run the crypto exchange Gemini, many of
[11:08] whose users spent months trying to get back funds they invested
[11:12] in a program called Gemini Earn. The exchange agreed to refund at
[11:17] least $1.1 billion to its customers and pay a $37 million
[11:22] fine earlier this year following a settlement with the New York
[11:27] Department of Financial Services.
[11:29] As embarrassing as all of this should be for them, the great
[11:33] thing about being a twin is that you get to claim that whenever
[11:36] you did something stupid that the other one did it.
[11:39] I think at this point they should probably claim to be
[11:42] triplets and all of the dumb stuff was done by Billy
[11:45] Winklevoss. Then look around and say where's
[11:48] he gone now? One of the claims made by crypto
[11:51] insiders is that crypto is owned by at least 50 million
[11:56] Americans. The claim is that it's a general
[11:59] interest group rather than a special interest group.
[12:02] Federal Reserve data shows that this is not the case.
[12:06] The most recent data shows that 7% of Americans, or 18 million
[12:11] people held or used cryptocurrency last year.
[12:15] This is down 2% from the prior year and only 1% of Americans
[12:20] actually used crypto to buy something or make a payment last
[12:24] year, and it's use for payments was high based amongst lower
[12:28] income adults and the unbanked. Crypto appears nowhere in any of
[12:33] the surveys measuring voters top concerns.
[12:37] If we look at the ownership of Bitcoin as a representative
[12:40] cryptocurrency, approximately 29% of all mined bitcoins are
[12:45] estimated to have been lost forever, and 60% of Bitcoin are
[12:50] held in fewer than 7000 wallets, implying that a small number of
[12:54] people care a lot about the price of Bitcoin, and the
[12:58] majority of people have little interest at all.
[13:01] Politicians are cozying up to the crypto industry not because
[13:05] it represents a significant portion of the voting public,
[13:09] but simply because of the amount of money being thrown around.
[13:12] The reason that none of the adverts paid for by the crypto
[13:15] industry mention crypto currencies at all is that the
[13:19] advertisers know that the public either don't care about this
[13:22] issue whatsoever, or that they would be turned off by an advert
[13:26] sponsored by an industry that's been plagued with legal problems
[13:30] and accusations of fraud. The crypto super PACs have names
[13:35] like Protect Progress and Defend American Jobs rather than NFT
[13:40] Hodlers for Harrison, meme coin pumpers for Trump for fairly
[13:44] obvious reasons. At least when you see a
[13:47] political advert paid for by the oil industry, they're open about
[13:52] their self-interest, warning voters that a particular
[13:55] politician's policies might push up the price of energy.
[13:59] Disclosing the true purpose of the crypto funded adverts would
[14:03] likely be toxic for those who took money from them.
[14:06] Jillian Ted in the FT highlighted in a recent column
[14:10] that all of this political lobbying seems to contradict the
[14:14] mantra of the digital assets world, that crypto is a tool
[14:18] that would enable citizens to challenge the establishment and
[14:22] that it was meant to be the antithesis of the Washington
[14:25] swamp. Molly White, a prominent crypto
[14:28] critic, wrote on her blog this summer that Coinbase may have
[14:32] violated campaign finance laws with its super PAC donations.
[14:37] Campaign finance law prohibits federal government contractors
[14:41] from making contributions or promising to make contributions
[14:45] to political entities, including super PACs like Fair Shake.
[14:50] White argues that Coinbase began a contract in July with the US
[14:55] Marshals Service for asset forfeiture and that as a federal
[14:59] contractor, they are not permitted to make these
[15:02] contributions. Because Coinbase first sought
[15:06] the contract in March and gave Save $25 million to Fair Shake
[15:10] in May, She says that their donation is the largest illegal
[15:14] campaign contribution by a federal contractor in U.S.
[15:18] history, the second having been for $1 million.
[15:22] Coinbase has since denied that their contribution was illegal,
[15:27] arguing that they are not a federal contractor because the
[15:30] US Marshall Service contract is not funded by appropriations,
[15:35] but by asset forfeiture funds. The consumer advocacy group
[15:39] Public Citizen rejects that argument, saying that the
[15:42] creation of the Asset Forfeiture Fund itself was an
[15:46] appropriation. I asked Zeke Fox, the author of
[15:50] Number Go Up, who's appeared on this channel in the past, about
[15:53] his thoughts on whether politicians should get in bed
[15:57] with the crypto industry and on the industry's relevance to
[16:00] regular American voters. Here's what he had to say.
[16:04] I can't. Believe these politicians are
[16:06] going full crypto again. The other day Maxine Waters,
[16:09] influential Democrat, said blockchain was the future.
[16:13] The future. That's what crypto Bros have
[16:15] been saying for literally a decade at this point.
[16:18] They've yet to come up with anything useful to do with
[16:20] crypto. Don't these politicians remember
[16:23] the last person from the crypto industry who came to DC bearing
[16:27] campaign contributions? Sam Bankman.
[16:29] Freed. He was running a giant scam.
[16:33] And what about all the ways that crypto is facilitating crime?
[16:36] Ransomware. It's shut down hospitals, It's
[16:39] grounded flights. It wouldn't be possible without
[16:42] crypto and then you got pig butchering scams.
[16:45] Americans are losing billions of dollars to those every year.
[16:49] Cryptos helping Russia move money to evade sanctions.
[16:52] Chinese fentanyl suppliers are using it for their money
[16:55] laundering purposes, and the industry is still completely
[16:59] rife with ponzi's and pump and dumps.
[17:02] The biggest crypto donors are companies like Coinbase that are
[17:06] facing lawsuits from the SEC that could potentially put them
[17:09] out of business. Plus you got the venture
[17:11] capitalists like A 60 and Z who invested in those companies.
[17:15] Rather than comply with the existing securities laws,
[17:18] they're lobbying for looser ones and they're trying to get a
[17:20] friendly chairman of the SEC installed.
[17:23] Honestly, it appears like this influence buying campaign is
[17:27] going pretty well for the crypto industry.
[17:29] They definitely have tons of money.
[17:31] After all, they're in the business of selling made-up
[17:34] coins for real cash. It's pure profit I.
[17:38] Can't find the exact source, but a while back Joe Wiesenthal
[17:41] joked that buying gold instead of stocks was one of the most
[17:45] bearish bets a person could make, describing it as a bet
[17:49] that a rock would generate more wealth than human effort would.
[17:53] He went on to joke that cryptocurrencies were maybe
[17:56] worse, as at least gold has industrial uses and doesn't
[18:00] require a computer running forever to preserve of its
[18:03] existence. Hopefully I'm not misquoting
[18:06] him. While many crypto investors
[18:09] think of crypto as a hedge against inflation or as some
[18:12] sort of digital gold, the reason you might expect it to hold its
[18:16] value or even grow in value in the coming years is because of
[18:20] its importance to criminal organizations in storing, moving
[18:24] and laundering money. If you believe that large scale
[18:28] criminality is likely to grow in the coming years, it might be
[18:32] reasonable to expect cryptocurrency prices to rise as
[18:36] this is a big driver of its demand.
[18:39] It's been quite some time since we've heard crypto enthusiasts
[18:42] making any sort of claim of use cases for crypto.
[18:47] The closest thing to those claims today is the idea that
[18:50] the price should go up because of ETF money inflows.
[18:55] After years of scandals, exchange hacks, Ponzi schemes,
[18:59] and repeated frauds, crypto is finally facing a real
[19:03] existential crisis in the United States, not because of its
[19:08] price, but because it appears that regulators are finally
[19:11] waking up. According to the SEC, most
[19:15] crypto currencies qualify as unregistered securities
[19:19] offerings, and they've been pursuing enforcement against the
[19:22] exchanges for illegally offering these to the the public.
[19:26] The crypto industry would much rather be regulated by the CFTC,
[19:31] a significantly smaller and more poorly funded Regulatory agency
[19:36] who they believe would take it easier on them.
[19:40] This is possibly why both presidential candidates are so
[19:44] vocal about how they would replace Gary Gensler.
[19:47] Not for his lack of enforcement, which has allowed ordinary
[19:51] Americans to lose fortunes to crypto fraud over the last few
[19:54] years, but because their financial backers are
[19:58] complaining about heavy-handed enforcement.
[20:01] The heavy-handed enforcement argument is pretty hard to
[20:05] believe when almost every big name celebrity seems to have
[20:09] been involved in promoting crypto Ponzi schemes in recent
[20:12] years, and I don't think any of face real legal consequences
[20:17] despite ripping off their fan bases in clear public view.
[20:22] After a Kamala Harris speech at the Economic Club of Pittsburgh,
[20:27] Mark Cuban, an outspoken cryptocurrency advocate, told a
[20:31] Fox News reporter that if he was to join the Harris
[20:35] administration, it would be to replace Gary Gensler as SEC
[20:40] chair, a rather disturbing idea from the perspective of investor
[20:44] protection. Governments, regulators, and law
[20:47] enforcement generally dislike cryptocurrency because it makes
[20:52] it extremely difficult to enforce laws, laws that most
[20:56] members of society think are worth enforcing.
[20:59] It's hard to understand how a politician could accept support
[21:03] from this industry while claiming to be tough on crime,
[21:07] but they do this anyway because they don't want to turn their
[21:10] back on almost half of the corporate political
[21:13] contributions available. Since I learnt the scale of
[21:17] these political contributions, I've started paying more
[21:21] attention to the footnotes at the bottom of political adverts
[21:24] that I've been seeing on YouTube.
[21:26] You can click on the little I near the bottom of an advert to
[21:30] get more information on who paid for it.
[21:33] Over the last week, I've been seeing the same advert over and
[21:36] over again for a candidate running for Senate.
[21:40] He brings up all of the big topics that voters might care
[21:43] about with no mention of Crips, but it turns out that the advert
[21:48] was of course paid for by Protect Progress, a crypto super
[21:52] PAC. It's quite possible that there
[21:55] is a candidate that you think is terrible after seeing all of the
[21:59] attack adverts against them, but maybe they're not nearly as bad
[22:03] as you thought. Maybe they just said something
[22:06] that doesn't suit the needs of the crypto industry and all of
[22:09] the money in the world is being spent on shutting them down.
[22:13] I hope that even if you are a crypto investor that you find
[22:16] this video interesting and that you are possibly disturbed that
[22:20] a group of businesses that have been in constant trouble with
[22:23] the law and had to pay fines for misleading customers, losing
[22:27] their money and abusing their trust make up almost half of all
[22:32] corporate political contributions in this election
[22:35] cycle. Maybe it's time we stopped
[22:38] blaming everything on Billy Winklevoss and paid attention to
[22:42] why every politician is suddenly pro crypto out of nowhere.
[22:47] Thanks for tuning into this week's podcast.
[22:49] If you found it interesting, I'd love it if you could send a link
[22:53] to a friend as podcasts generally grow through word of
[22:56] mouth. Have a great week and talk to
[22:59] you again soon. Bye.
[23:01] If you enjoyed this episode, be sure to subscribe so you're
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[23:07] Thank you to everyone who is supporting this content on
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[23:12] can find more like it on YouTube, on the Patrick Boyle on
[23:16] Finance channel, or follow us on Twitter at Patrick E Boyle.
[23:20] Thanks for listening. Bye.

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