Crypto Critics Renew Coinbase Campaign Finance Complaint

Coinbase and the complainants disagree on whether a government contract to hold seized crypto assets violates campaign finance rules.

Public Citizen, a consumer advocacy group, and cryptocurrency critic Molly White have revised their complaint to the Federal Election Commission, claiming that Coinbase broke US campaign funding regulations.

After beginning contract negotiations with the Marshals Service in early March, Coinbase was accused of violating campaign financing regulations in the initial complaint filed on August 1.

They contend that because the bitcoin exchange was a “federal contractor,” its $25 million donation to the pro-crypto Fairshake Super PAC in May violated campaign finance regulations.

The accusations were refuted by Coinbase, whose chief legal officer, Paul Grewal, wrote on X that the company is not a government contractor as the Marshals Service is not paying it with money that has been specifically appropriated by Congress, thereby exempting it from several campaign funding regulations.

In a revised complaint submitted on August 5, White and Public Citizen have contested this rebuttal:

“Since the Assets Forfeiture Fund is a Congressional appropriation, Coinbase was paid for the performance of a contract from funds appropriated by the Congress, and is thus a federal contractor.”

Coinbase answers once more

Since then, Grewal has addressed White and Public Citizen’s most recent amended complaint, emphasizing that the cryptocurrency taken into custody is not money that Congress has authorized.

The Silk Road platform and the defunct bitcoin exchange FTX were the sources of the seized assets. Grewal continued:

“It’s also worth noting that Coinbase has donated to Dem and GOP super PACs equally with $500K to House and Senate funds for each party, respectively, for 2024.”

“It seems that White people and Public Citizen want to expose a political bias that doesn’t exist.”

Rick Claypool, Research Director at Public Citizen, attacked Coinbase in a different statement, accusing it of “aggressively” abusing the legal framework established in the 2010 Citizens United case.

“The crypto corporation’s eye-popping contributions — made in apparent violation of longstanding pay-to-play prohibitions — demonstrate how lax enforcement emboldens corporate lawbreaking. The FEC must step up.”

White is the creator of the websites “Web3 is Going Just Great,” which exposes several frauds, hacks, and broken promises in the cryptocurrency space, and “Follow the Crypto,” which keeps tabs on how much money the sector is spending to sway the next US election.