Amongst the sea of American flags and ubiquitous blue signs at the Democratic National Convention in Chicago this week prowled Jonathan Padilla, the “crypto guy.”
Wearing a baseball cap and conspicuous pineapple-print shirt, Padilla tramped the halls of the convention, talking crypto policy with anyone who would listen. In a selfie posted on Facebook, he posed with his arm around Senator Chris Coons of Delaware. “Senator Coons now knows about crypto,” reads the caption.
Padilla is delighted with his new “crypto guy” moniker, assigned by fellow DNC delegates, which he sees as implicit recognition that cryptocurrency has arrived on the political agenda. “Four years ago, crypto was a nonissue and nobody talked about it,” says Padilla. “But now, you have President Trump talking about it at major conferences. And it’s being discussed by some of the highest-ranking Democrats.”
Padilla is the founder of crypto marketing company Snickerdoodle Labs and was previously resident blockchain whisperer at PayPal. He is also one of the organizers of Crypto4Harris, a coalition of Democrat-supporting members of the crypto industry, whose aim is to encourage Kamala Harris to support crypto-specific legislation and demonstrate that the sector “is not monolithically Republican,” says Padilla.
On August 14, Crypto4Harris hosted a virtual town hall attended by prominent Democrats, among them Senate majority leader Chuck Schumer, who said he “believed in the future of crypto.” The group has also “made headway,” Padilla claims, with “finance and policy folks” inside the Harris camp.
The group’s access to the Harris team reflects a sea change in the attitude toward crypto among US politicians, who seem to have accepted that there exists a bloc of voters who will cast their ballot based exclusively on which candidate will send their investments to the moon. (You know, forget immigration, health care, and the rest.) Not to mention the hefty donations crypto businesses are throwing around.
Flush after an upswing in crypto prices in 2024, crypto firms have invested an “unprecedented” amount in influencing the outcome of the US election this year, an analysis by consumer advocacy nonprofit Public Citizen suggests. Despite their comparatively diminutive size from a revenue perspective—and the continued paucity of use cases outside of financial speculation—crypto businesses account for 48 percent of all corporate contributions this election cycle.
The crypto industry put some money behind the 2020 race. But there is fresh urgency and forcefulness in its attempted intervention in the 2024 campaign. “The industry believes this election is existential,” says Veronica McGregor, chief legal officer at crypto wallet company Exodus, speaking in a personal capacity as an industry veteran. “No matter who gets into office, changes need to happen for our industry to thrive like it should.”
The majority of political donations from the crypto industry are being fed through a trio of affiliated super political action committees (PACs): Fairshake, Protect Progress, and Defend American Jobs. These organizations cannot donate directly to political candidates, but they can spend freely to promote those that make the right sort of cooing sounds about crypto.
Under the Biden administration, crypto companies have been roughed up and dragged into court by US financial regulators, which they view as deeply unfair. But through the super PACs, crypto firms are hoping to bring into power politicians who will support bespoke crypto legislation that ends the debate over how crypto should be classified and which regulator’s rules should apply.
The largest of these super PACs, Fairshake, has raised more than $200 million—a greater sum than any other super PAC, crypto-specific or otherwise. Its major donors include crypto businesses Coinbase and Ripple, pro-crypto venture capital firm a16z, and an investment firm started by Cameron and Tyler Winklevoss, founders of crypto exchange Gemini.
The largest of the Fairshake donors, Coinbase, which has contributed $45 million to the pot, is the subject of a formal complaint to the Federal Election Commission. Lodged jointly by Public Citizen and software developer Molly White, creator of Follow the Crypto, a project that traces crypto industry donations, the complaint alleges that Coinbase violated campaign finance laws by contributing to Fairshake while negotiating a deal to become a federal contractor.
Coinbase declined an interview request, pointing instead to public comments made by Paul Grewal, its chief legal officer, disputing the characterization of the company as a federal contractor on the grounds that the service it provides is not technically funded by tax revenue. “To us, it looks like Coinbase is trying to find a loophole that doesn’t really exist,” says White.
“The crypto industry has been historically very willing to ignore laws they don’t like, and it would be nice to see some consequences for that,” she says “I don’t like watching any big companies or very wealthy executives throwing money around in ways that most voters are not able to do. I’m just hoping to see that the spending is at least within the law.”
The FEC will now decide whether Coinbase should be penalized. But in the meantime, the crypto super PACs are deploying their war chests to good effect against crypto nonbelievers. In California, Fairshake spent $10 million on ads attacking Katie Porter, a California Democrat running for the Senate, and who ended up losing her primary. The same fate befell Democratic congress members Jamaal Bowman and Cori Bush—who Fairshake spent a combined $3.5 million smearing—in their respective primaries. None of the hostile ads made any mention of crypto.
Fairshake declined to speak publicly about its strategy, but a common thread connects the candidates it opposes: an allegiance with outspoken crypto critics—like Senator Elizabeth Warren of Massachusetts, one of the industry’s favorite cartoon villains—or a failure to vote in favor of proposed legislation popular in crypto circles.
In 2022, Porter launched an investigation alongside Warren into the impact of crypto mining on the Texas energy grid. In May, Porter, Bowman, and Bush all voted against a crypto bill that would clarify the jurisdiction of the Securities and Exchange Commission, a US financial regulator that has launched a volley of lawsuits against crypto businesses under the Biden administration, including Coinbase. (The bill nonetheless passed by a landslide and awaits Senate approval.)
So far, industry figureheads have largely lined up behind the Trump campaign: The Winklevii each donated $1 million to Trump, as did Jesse Powell, cofounder of the Kraken exchange. Marc Andreessen and Ben Horowitz, founders of a16z, have also publicly endorsed Trump.
Trump, for his part, despite having previously dismissed bitcoin as a “scam,” has recently taken to pitching himself as the “crypto president.” In July, speaking to thousands of bitcoiners at a conference in Nashville, Tennessee, Trump promised to turn the US into the “crypto capital of the planet” and establish a national “bitcoin stockpile” if reelected. The most raucous cheers of the night were prompted by Trump’s promise to fire Gary Gensler, chairman of the SEC.
“There is a lot of anger and frustration with the fact that we in the industry often don’t know what to do. We think we are complying, then the SEC or another agency sues,” says McGregor. “We are serving a bunch of different masters. That’s not how regulation is supposed to be done.”
Organizations like Crypto4Harris are pulling for a “reset” with the Harris campaign, to beat back the narrative that Trump is the only rational choice for cryptoheads. “People are angry. People are concerned,” says Padilla. “But I think if you have the reset we are talking about with the Harris campaign, you’re in a really good spot to have temperatures simmer down.”
Unlike her Republican counterpart, Harris has kept her cards close to her chest. The Democratic platform for 2024 did not include any mention of crypto. But on Wednesday, an adviser to Harris provided the first indication that the vice president might be considering a supplication. “She’s going to support policies that ensure that emerging technologies and that sort of industry can continue to grow,” the adviser told Bloomberg.
Both sides of the crypto industry have come to the conclusion that the 2024 election is “existential” by way of different reasoning. The Trump-supporting faction believes a Harris presidency would represent a continuation of the bad old times under Biden and that talk of a “reset” is misdirection. “We will not fall for any bluffs,” wrote Cameron Winklevoss on X, tagging Harris.
Meanwhile, the crypto-Democrats see Trump’s giddy courtship of the industry as blatant electioneering. “You have to ask yourself: Is Donald Trump somebody you actually trust?” says Padilla. “The only person running for president that has ever said cryptocurrency is a scam is Donald Trump.”
Time Travel
The crypto world has largely given over to its more profit-conscious denizens. But it wasn’t very long ago that true believers were equally invested in the power of the blockchain to replace the internet as we know it with a decentralized paradise. In a 2022 cover story for WIRED, Gilad Edelman spent an illuminating few days at the ETHDenver conference, where he found a glimpse at a crypto future that has yet to materialize.
If Bitcoin attracts anarcho-capitalists who want to dethrone the central bankers, the culture around Ethereum and Web3 has a more progressive bent. After I walked into the Denver Sports Castle, a massive former sporting goods store turned events space that served as ETHDenver’s main venue, the first panel I caught was about using blockchains to build “public goods.” Another was titled “Navigating the Web3 Workforce as a BIPOC, Queer, Marginalized Individual.” (The overall crowd skewed heavily white and male.) Aesthetically, ETHDenver embraced a spirit of collaborative, LARPish make-believe; there was quite a bit of talk about the Bufficorn, the cartoon buffalo-unicorn hybrid that was the event’s NFT mascot. (It fuses the magic of the unicorn with the strength of the buffalo.) People communicated with all manner of cheerful memes: gm, for “good morning,” was the universal greeting, regardless of the time of day; wagmi meant “we’re all gonna make it.”
During the opening ceremony, the conference organizers emphasized Web3’s idealism. “It’s not about money,” said John Paller, founder of ETHDenver. “We don’t care about that.” The theme of the conference, he explained, was “BUIDLing.” The term, which everyone pronounced “biddling,” is a riff on the crypto meme “HODLing”—holding one’s assets no matter how grim the market looks, as an expression of faith in its long-term value. (In crypto, as in all internet culture, typos are a rich source of memes.) “BUIDL is the rally cry of the Bufficorn,” Paller said.
What exactly were they BUIDLing? It’s easy to find brilliant, idealistic, experienced technology experts who think Web3 is pure nonsense. But it’s almost as easy to find ones who think it’s the real deal—humanity’s best chance of redeeming the entire promise of the internet.
You can submit questions to mail@wired.com. Write ASK LEVY in the subject line.
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Source : Wired
