Alex Brandon/AP Photo
Rep. Michelle Steel (R-CA) is seen during a hearing of a special House committee dedicated to countering China, February 28, 2023, on Capitol Hill in Washington.
This story is part of the Prospect’s on-the-ground Election 2024 coverage. You can find all the other stories here.
PLACENTIA, CALIFORNIA – A Republican House candidate in a tight race who has received at least $2.84 million from the leading crypto industry PAC is attacking her opponent for owning crypto. The twist is that she’s only putting out that attack in Vietnamese.
Vietnamese-language mailers put out by Rep. Michelle Steel (R-CA) claim that her Democratic opponent Derek Tran “owns tens of thousands of dollars of cryptocurrency related to the Communist Party of China.” The references to China are more than dubious; China banned all cryptocurrency in 2021, and the only even remote tie is that Tran’s cryptocurrency wallet is from a company which pulled out of China seven years ago.
But Steel is getting massive amounts of money from Fairshake, the crypto super PAC that has become a major force in politics this year. Some of Tran’s crypto assets are in a wallet provided by Coinbase, which is one of Fairshake’s major funders. Yet Fairshake is spending millions to stop Tran, despite the sketchy attack on him merely for owning crypto.
Steel’s mailers seek to smear Tran as an agent of Communist China, a familiar tactic for the two-term incumbent. Two years ago, I reported on how Steel was posting signs throughout California’s 45th Congressional District, calling her then-opponent Jay Chen “China’s Choice” and engaging in other red-baiting attacks. This year, with a race that’s a true toss-up, she’s doing the same thing, and roping in crypto to do it.
Tran’s heritage makes the strategy a harder sell. Tran’s father fled Vietnam in a boat after the war. While trying to reach a refugee island, his wife and four of his children drowned. The man remarried, tried again to leave, reached Indonesia with his new wife and three daughters, and immigrated to America, where Derek was born.
“That story is shared by so many people in the refugee community,” Tran told me after a canvass launch in Placentia, one of numerous get-out-the-vote events his campaign is doing in the final weeks. “Calling a son of Vietnamese refugees who fled communism after the fall in 1975 [a communist] … I don’t know how that is sticking with anyone other than the fact that she is getting this community, the Little Saigon community just south of us, very inflamed and really upset with her.”
Steel’s campaign and Fairshake PAC did not respond to requests for comment.
LITTLE SAIGON, THE AREA OF ORANGE COUNTY, CALIFORNIA, around Westminster and other cities, has the largest concentration of Vietnamese people in the world except for Vietnam itself. The migration of refugees escaping communist Vietnam a half-century ago gave Orange County added conservative sentiment. But the county has changed rapidly, voting for Democrats for the presidency and Congress more consistently over the last decade. There are multiple contested House swing seats this year, including Steel’s race against Tran and the open seat in the 47th District, where Democrat Dave Min is trying to replace Rep. Katie Porter and fend off a challenge from Republican Scott Baugh.
Crypto interests have thrown in with Republicans in California. Reps. Mike Garcia (R-CA) in northern Los Angeles County and David Valadao in the Central Valley have benefited from Fairshake PAC ads, but nobody more so than Steel. Fairshake has spent at least $2.84 million on the Steel race as of mid-October.
That’s what makes the mailers so interesting. The Prospect obtained two mailers, both featuring ominous-looking pictures of Tran in front of a Soviet hammer and sickle. In one mailer, Tran appears next to House Speaker Emerita Nancy Pelosi (D-CA) and democratic socialist Sen. Bernie Sanders (I-VT); in the other, he’s next to Chinese Premier Xi Jinping.
The mailers are in Vietnamese, but roughly translated, they warn that Tran will “take our country back to socialism” and is “a tool for socialist forces in the Democratic Party.” Tran is running as a fairly mainstream, middle-of-the-road Democrat, but anti-communism strains run deep in the Vietnamese refugee community, and Steel is hitting them hard.
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The grounds for Steel’s claims are rather thin. Steel claims that Tran has been “backed by a Communist official in the U.S.,” but her evidence is a blog post written by the chair of the Southern California chapter of the (microscopic) Communist Party USA, Richard Green. It does not endorse Tran in any specific way, and is mostly a rote retelling of the fact that Tran won the primary election. Another charge is that Tran has an account on TikTok, “a Chinese-owned software.” If having a TikTok account makes you a communist agent, then there are 150 million U.S. communists. One mailer says that Tran has been endorsed by Sanders; he hasn’t.
But the main piece of evidence is that Tran “owns tens of thousands of dollars of cryptocurrency related to the Communist Party of China,” a claim that appears in both mailers. Tran’s financial disclosure from two months ago lists between $19,000 and $110,000 in Bitcoin, Ethereum, and Shiba Inu, a lesser-known coin. Between $2,000 and $30,000 of that is held in a Coinbase cryptocurrency wallet; the rest is in a wallet run by Binance.
Though Binance, an exchange platform, was initially founded in 2017 in China by Chinese-born Changpeng Zhao, it left the country in September of that year, in anticipation of a total ban in China on all cryptocurrency. That ban was executed in 2021.
So Steel’s insinuation that Tran is trading “Chinese” cryptocurrency is based on the fact that some of his digital assets are in a wallet from a company that was briefly headquartered in China seven years ago. It would be much more fair to call anyone who owns an iPhone a communist; at least those are typically made in China.
None of these attacks have been made in English; Steel’s main ads in rotation position her as a champion of women’s rights, a common tactic among California candidates in a heavily pro-choice state. Ironically, Steel twice co-sponsored the Life at Conception Act, which would have criminalized in vitro fertilization, removing her name from the bill only after winning her primary in March. She also touts her support of the Violence Against Women Act without mentioning that she voted against reauthorizing it and only supported a secondary bill.
Only in Vietnamese has Steel been denouncing Tran for owning crypto, in a clumsy attempt to associate it with communism. In English, Steel has focused on Tran’s former legal clients; he worked for workers in employment law cases, and Steel says he represented an accused perpetrator of sexual assault and someone who displayed a noose at his office. Tran has denied this, calling it “politics at the worst.”
Steel’s mailers seek to smear Tran as an agent of Communist China, a familiar tactic for the two-term incumbent.
Steel’s connections to China appear to be deeper than Tran’s, incidentally. Tran’s campaign has gone after Steel over her husband, GOP operative Shawn Steel, obtaining access to President Trump for Chinese nationals during his term. One of the Chinese officials who met with the president was an official within the Communist Party government, and others had national-security credentials.
It’s notable that Steel’s financial backers with Fairshake are unmoved by their candidate attacking her opponent for owning crypto, or for intimating that crypto is somehow Chinese, foreign, dangerous, and communist. It suggests that the goals of the industry or their political operatives are more about ideological vanquishing than promoting digital assets. Again, Fairshake did not respond to a request for comment. Elon Musk’s America PAC has been supporting Steel as well.
Tran told me that the attacks over communism were not going over well in the district’s large Vietnamese community. “It’s backfiring,” he said. “There are a bunch of YouTube journalists now, they’re all attacking her for doing something like this. Even my mom, all I see her is on her iPhone watching these YouTubes and stuff like that.”
As in many immigrant communities, news and information is disseminated through native-language broadcasts on YouTube. The campaign pointed me to numerous videos covering the controversy over the past week, as well as a different controversy regarding signs Steel has put up in the district that say “Stop Communism, Vote Steel,” using the image of the South Vietnamese flag. Community members have condemned the appropriation of the flag.
Tran has appeared on some of these Vietnamese-language programs. Campaign spokesperson Paul Iskajyan told me that one Vietnamese woman who appeared in a Steel mailer flipped to Tran after the red-baiting attacks.
The Asian American Action Fund issued an open letter decrying the attacks. “Community-led protests and rallies have made it clear that Steel’s rhetoric is out of step with the values, culture, and history of Little Saigon,” the letter states, referring to protests held in the community that have been covered by Vietnamese-language media. Another one of these rallies was held this past Sunday.
David Dayen
Democratic congressional candidate Derek Tran poses with volunteers at a canvass kickoff event in California’s 45th District.
WHILE TRAN DID RUN SOME ADS on Steel’s husband assisting Chinese nationals to get access to top Republicans, it’s not really what his campaign is focused on. I attended a canvass launch with about 50 volunteers, who heard from Tran, California Lt. Gov. Eleni Kounalakis, and Rep. Suzan DelBene (D-WA), chair of the Democratic Congressional Campaign Committee (DCCC), which sees California as one of the prime territories for it to make up the four votes Democrats need to take over Congress. “We can make a huge difference right here,” DelBene told the crowd at the canvass launch. “There’s nothing more important than talking to people at the door.”
Tran, a veteran who grew up in Section 8 housing and joined the military out of high school, is running canvasses out of six cities in the district between now and the election. He told me that reproductive rights was the number one issue he was hearing on the doors, and the threat of a national abortion ban superseding the protections enshrined in the California constitution. The economy is also a main factor. “Right before I got pulled in with you, one of the constituents in Garden Grove was talking about, you know, please lower prescription costs for my mother, please make sure that I have a path to buying a house,” Tran told me.
On housing, Tran is following the message of the top of the ticket, calling for faster building and first-time homebuyer tax credits. But on prescription drugs, Tran has more experience. His wife is a community pharmacist, and together they own an independent pharmacy in Anaheim.
“My wife worked for a long time for CVS,” Tran told me. “She was a district manager, pretty high up, managing 15-16 stores for a couple years. And I just saw the brutality of the work hours and how much they expected from her. It was strong pay, good pay, but it wasn’t worth that stress. So we decided to open our own independent.”
Tran explained to me that the reimbursement system for pharmacists, filtered through middlemen known as pharmacy benefit managers, or PBMs, can often make it so pharmacies lose money on filling certain prescriptions. “What type of system do we have in place when the retailers out there are trying to do their job of getting medication to the patients and we’re losing money? It’s minus $5, minus $15, minus $50 sometimes,” he said.
Tran, who met with independent pharmacist groups recently along with his wife, would be the fourth pharmacist or owner of a pharmacy business in Congress. He supports reforms to the system that would increase transparency and limit the ways in which PBMs raise the cost of prescription drugs and crush independent pharmacists.
On this week’s episode of the podcast Organized Money that I co-host, Rep. Jake Auchincloss (D-MA) explained his legislation, the Pharmacists Fight Back Act, as the most wide-ranging reform effort. It has support from both parties and could get consideration in the lame-duck session. The bill would prevent PBMs from steering patients to its mail-order pharmacies, ban exclusion of certain pharmacies from its network, and prohibit clawback practices that force pharmacists to return money to PBMs after they’ve dispensed the drug.
“We want an economy that works like Legos, not Monopoly,” Rep. Auchincloss said on the podcast. “And I think too many Americans see an economy in which middlemen, by virtue of market position, by virtue of moats that they have put around themselves, whether legal or structural, just don’t have to compete.”
Just yesterday, Steel launched an attack based on Tran’s pharmacy business, alleging that he “partnered with Big Pharma for a payday.” There’s little substantiation, but it appears to suggest that running a pharmacy equals partnering with Big Pharma. Tran’s campaign countered that Steel has taken $200,000 from pharmaceutical interests over her congressional career, and voted against legislation to cap insulin costs and negotiate prescription drug prices for seniors.
Before Tran can get to Congress and assist with PBM reform, he has to get through Michelle Steel’s attacks, which play to different audiences. “It’s our responsibility to explain who Steel is,” said Gowri Buddiga, Tran’s campaign manager. “The biggest thing is combating misinformation.”
