Terán for Congress
Raquel Terán, running for an open seat in Arizona’s Third District, faced significant outside spending by the pro-crypto PAC Protect Progress to boost her opponent.
The Democratic Party is in an open war over whether or not to re-embrace the fraud-ridden cryptocurrency industry.
With a $120 million war chest, the pro-crypto PAC Fairshake is the single largest spending operation in the 2024 elections, and has targeted Democratic crypto critics in key swing states and districts. The PAC successfully kneecapped Rep. Katie Porter’s (D-CA) primary bid for Senate in 2023 with $10 million in outside spending, contributed $2 million toward the ousting of Rep. Jamaal Bowman (D-NY), and has another $1 million on the line in next week’s primary effort against Rep. Cori Bush (MO-01). The two top Democrats on the Senate Banking Committee, Sens. Sherrod Brown (D-OH) and Jon Tester (D-MT), are expected to see an avalanche of crypto spending against them in their critical re-election races this fall.
Quiet angst among Democrats about this outside spending escalated into all-out panic when high-profile figures in Silicon Valley connected to the crypto industry came out in support of Donald Trump over the past month. Those tech tycoons are the very same individuals bankrolling Fairshake: Marc Andreessen and Ben Horowitz, co-founders of the venture capital juggernaut A16z, along with the billionaire Winklevoss twins.
The other top donor to Fairshake is Coinbase, which appears to be in violation of campaign finance laws. As Molly White first reported, Coinbase began a contract on July 1 with the U.S. Marshals Service for asset forfeiture. Federal contractors are not allowed to contribute to campaigns or political action committees. Because Coinbase first sought the contract in March and gave $25 million to Fairshake in May, that donation is actually the largest illegal campaign contribution by a federal contractor in history.
UPDATE: Coinbase has denied that this contribution is illegal, because the U.S. Marshals Service contract is not funded by appropriations but asset forfeiture funds, making Coinbase not a federal contractor for campaign finance purposes. But the progressive research group Public Citizen has rejected that argument, saying instead that the creation of the U.S. Marshals Asset Forfeiture Fund itself was an appropriation. Public Citizen and Molly White have filed an official FEC complaint challenging the donation.
Rather than denounce the influence of MAGA donors and potential campaign finance scofflaws who continue to shape Democratic primary races, a group of pro-crypto Democrats penned an open letter this weekend to the DNC calling for a more “forward looking approach to digital assets and blockchain technology.”
This group, spanning from moderates to progressives like Rep. Ro Khanna (D-CA), as well as candidates in upcoming primary races, either believe in crypto’s transformational power or are caving to the industry’s blackmailing. Advisers to Kamala Harris are in a similar position, telling the Financial Times that they want to “reset” the relationship with crypto and reaching out to key companies in the industry, including Coinbase.
Two key Democratic primaries epitomize the intense pressure from the industry and the Democratic response. Each race prominently features the PAC Protect Progress, which is affiliated with Fairshake, shares all the same donors, and has put its thumb on the scales for their preferred candidate, with millions of dollars in outside spending. In Washington’s Sixth Congressional District, an open seat vacated by Rep. Derek Kilmer, they dropped $1.4 million this month to lift state Sen. Emily Randall’s candidacy against Hilary Franz, the state’s public lands commissioner. The PAC has put the same amount into Arizona’s Third District, boosting Phoenix City Council member Yassamin Ansari, who faced former Arizona Democratic Party chair and state lawmaker Raquel Terán for the open seat in a Tuesday primary.
The spending certainly aided crypto’s preferred candidates in the final stretch of the races. But once the PAC’s main financial backers endorsed Trump, it also exposed those campaigns to attacks over their donors’ political ties. Nevertheless, both Franz and Terán tried to block this spending by posting language on their websites supporting blockchain development. This defensive strategy ultimately becomes a self-fulfilling prophecy; if you’re backing crypto just to avoid a flood of ads, you have to keep doing so. At that point, what you may actually believe matters less than how you end up voting.
THIS RECENT SPENDING BLITZ COMES less than a year after the crypto kingpin from the 2022 elections, Sam Bankman-Fried, was sent to prison on embezzlement and fraud charges.
During the 2022 midterms, SBF and his brother Gabe led the industry’s campaign spending, with a main focus on crypto regulation and future pandemic prevention. Bankman-Fried’s PAC frequently lined up with the Democratic Majority for Israel PAC to oppose progressive picks in open Democratic primary races. But Bankman-Fried was not strictly ideological, and numerous progressive congressional members were the beneficiaries of his donations.
This year, the crypto spending operation under Fairshake is even better financed than in 2022 and ostensibly geared toward one goal: bludgeoning candidates to support light-touch crypto regulations. To advance these aims, the PAC regards Republicans as generally more pro-business and blames the Biden administration’s Securities and Exchange Commission (SEC) for cracking down on the industry.
The main objective for Fairshake is to pass a piece of legislation favoring the burgeoning digital currency market, known as the FIT21 Act. This bill would place digital currency under the regulatory purview of the far weaker Commodity Futures Trading Commission instead of the SEC, which has greater funding and authority to actually go after bad actors, of which there are many in the crypto market.
This year, the crypto spending operation under Fairshake is even better financed than in 2022.
Earlier this year, the bill passed the House with the support of 71 Democrats, including prominent members of the leadership like Rep. Nancy Pelosi (D-CA). Senate Majority Leader Chuck Schumer (D-NY) gave the bill his blessing, though it hasn’t been brought to a vote yet, largely because of the opposition of the Biden administration. Some observers saw these votes by congressional Democrats as an olive branch by the party to get the crypto industry to ease off their spending against swing-state Democrats like Brown and Tester.
Protect Progress has put sizable resources into not especially competitive Democratic primaries to support generic Democrats who support crypto. They pumped $3.4 million to back Julie Johnson in Texas’s 32nd Congressional District and Shomari Figures in Alabama’s Second Congressional District.
In several key races this year, though, Protect Progress is replicating many of the same patterns from the 2022 midterms by repeatedly opposing progressive candidates in open primaries. Fairshake has spent heavily against Bowman and Bush, both of whom voted against FIT21.
IN ARIZONA’S THIRD DISTRICT, neither candidate has an extensive record on crypto. Both candidates’ issue pages appear nearly identical on the issue, both name-checking their support for blockchain technology and digital assets.
Polling showed the race as extremely close, practically a toss-up going into the last month before Election Day.
But in the final stretch, Protect Progress chose to spend $1.3 million on the airwaves to boost Ansari over Terán, with Spanish-language ads that didn’t mention anything about crypto. Instead, they highlighted Ansari’s stance on issues like abortion and combating inflation.
The more distinguishing factor between the candidates is that Terán was endorsed by the Congressional Progressive Caucus, which has spent $335,000 on mail and digital ads for her campaign. The BOLD PAC, representing the Congressional Hispanic Caucus, also backed Terán’s candidacy. Ansari, on the other hand, was endorsed by the Democratic Majority for Israel PAC, which spent $350,000 on her campaign.
Ansari also had corporate support from the Mainstream Democrats PAC, bankrolled by LinkedIn co-founder and Democratic Party fundraising mega-bundler Reid Hoffman. Hoffman is a leading figure in the current push by Silicon Valley billionaires to swing the Harris campaign in a more “pro-business” direction, which means less regulation across various tech sectors including crypto. He recently went on CNN to call for Kamala Harris to oust FTC chair Lina Khan for her enforcement of antitrust laws.
Terán’s website says she “supports collaborative approaches to studying blockchain and crypto innovation, which have the potential to provide more equitable access to capital.” There’s a vague reference to a “modern regulatory framework,” leaving the door open to FIT21 without opposing it. Her campaign likely took this position preemptively, just to try and prevent massive outside spending from tanking her campaign.
But then, when Protect Progress placed their ads, Terán tried to turn this around and use it to her advantage. She blasted the crypto funders, indirectly referring to Andreessen Horowitz, which has contributed over a million dollars to the PAC directly.
“This is a blatant attempt by MAGA extremists to meddle in a Democratic primary and boost Yassamin Ansari. Democratic primary voters deserve to know who is doing this and why,” Terán said in a press statement.
In Tuesday’s primary election, Ansari was ahead of Terán by about 1,400 votes in early returns. The race has not been called.
IN ANOTHER CRUCIAL PRIMARY RACE in Washington, Protect Progress’s intervention to support Emily Randall doesn’t appear to be as strictly along ideological lines. Both Franz and Randall are trying in their own ways to position themselves as progressives, though with different bases of support.
Randall, the deputy majority leader in the state Senate, carries endorsements from Planned Parenthood and the House LGBTQ caucus’s PAC and home-state Sen. Patty Murray. She holds the types of positions on social issues that attract public support. Her campaign talks about protecting Medicare and abortion access from MAGA extremism.
Franz, on the other hand, touts support mostly from sovereign nation tribes and a long list of labor unions, along with an endorsement from the Seattle Times editorial board. Franz’s close relationship with unions largely comes from the pro-worker positions she staked out as commissioner of public lands. For example, she mandated project labor agreements with the state’s building trades for all clean-energy development projects on public lands (and helped phase out any fossil fuel permits).
This isn’t to say that there aren’t any clear points of contrast between the candidates. Randall, for example, was just one of three Democrats in the state legislature to vote against banning ghost guns. Though she frequently mentions growing up in a union household, she wrote in a candidate questionnaire regarding the role of government in union contract negotiations that “it is best for elected officials to not get involved unless asked to by both sides to help management and the union come to a favorable conclusion to a negotiation.” As stated, this principle would apply to walking a union picket line while the UAW was embroiled in a contract dispute with the Big Three automakers, as President Biden and other lawmakers did.
After receiving criticism for the questionnaire response, Randall amended the answer back in April to take out the line about not intervening in contract disputes, and instead insert a line that “I unequivocally support workers in contract fights.”
Franz, on the other hand, used the state’s leverage to assist hotel workers amid contract negotiations with a luxury hotel leased on public lands. When the hotel asked for a break on its lease during COVID, Franz insisted that in exchange they give workers the raise the union was asking for. That’s one reason why UNITE HERE Local 8 is endorsing her candidacy. The state union representing Franz’s own federal employees, the Washington Federation of State Employees, endorsed Randall.
When it comes to crypto though, both candidates appear to hold nominally similar positions. Both Franz and Randall have virtually identical though nondescript language on their websites indicating support for “blockchain” and “digital assets.”
With an early fundraising advantage and polling lead over Randall, Franz’s campaign did not push hard for the crypto endorsement. Instead, the position appears to have been an attempt to try and dissuade a massive ad dump, to no avail. This month, ahead of the August 6th primary, Protect Progress pumped $1.4 million worth of ad buys to boost Randall’s candidacy, again never mentioning crypto specifically in the ads. The ads mirror a “red box” on Randall’s website, which is a way for campaigns to indirectly coordinate with outside independent expenditures without violating campaign finance laws.
Franz hit back with a statement decrying the PAC: “We’re appalled by record Super PAC spending by ‘Protect Progress’, which is largely funded by out-of-state millionaires and donors, set to flood the TV airwaves in our region.” The Winklevoss twins also made individual contributions of $3,000 to the Randall campaign back in June.
It may be too little, too late to effectively deploy this counterattack against crypto spending, and the money alone certainly talks. But it might be the best path for a Democratic Party under siege by a hostile industry intent on leveraging its fortunes to subvert the regulatory crackdown on its lawlessness.
UPDATE: In a statement made to the Prospect after publication, Randall spokesperson Erik Houser responded to the attacks, arguing that the campaign is getting grassroots traction. “Since Emily announced her campaign the community has been behind her—she’s amassed more than 6,500 donors with a median contribution of $25,” he said. “Hilary Franz’s comments are a desperate attack from a desperate politician.”
Franz has accepted individual campaign contributions from a couple donors who’ve also given to Republicans over the years, though that’s not exactly the same as accepting help from a super PAC funded by Trump backers.
