Empire Newsletter: Crypto campaign spending ramps up

A bull market for PACs

If art reflects culture, what does crypto’s parabolic political spend say?

Ripple Labs and a16z released dueling announcements this week stating they’d each given $25 million to crypto PACs, including this season’s biggest, Fairshake.

Based on data compiled from FEC.gov — which doesn’t yet include Ripple and a16z’s contributions — that would bring the total crypto PAC contributions to $117 million this election season.

Affiliated PACs Defend American Jobs and Protect Progress have otherwise received about $5 million each. 

All that is nearly double what crypto PACs raised throughout 2021 leading up to the midterms, when crypto markets were red hot and former FTX execs Sam Bankman-Fried and Ryan Salame were at their busiest.

The pro-crypto PACs from last cycle are dormant, replaced by Fairshake

Crypto PACs tend to work strategically in key battleground states. The general idea is to get either pro-crypto candidates elected or, at a minimum, replace anti-crypto incumbents.

The committees generally use contributed funds for supportive voter research, consultation and election ad campaigns.

In Fairshake’s case, it has backed a roughly equal number of Republicans and Democrats so far. 

It has however directed almost all of its independent expenditures to date ($10 million out of $11.3 million) on ads opposed to California Democratic Senate candidate Katie Porter, who’s very much aligned with industry villain Elizabeth Warren on all things anti-crypto.

Porter lost her bid for the empty Senate seat in March and called the outcome “rigged,” apparently in response to Fairshake’s antagonistic ads.

Most crypto PAC contributions during the midterms came from SBF and Salame 

As for who’s bankrolling this season’s crypto PACs the most — Coinbase and Ripple by far. 

Both companies have now given more than Sam Bankman-Fried and Ryan Salame ever did to distinctly pro-crypto political action committees. (Although, SBF actually sent much more to political causes operating outside of the crypto space, as well as through other channels.) 

A16z partners Marc Andreessen and Ben Horowitz have also stepped up, together giving $24 million in late 2023.

Crypto in politics is awkward after the whole FTX thing. Luckily, there’s enough dollars flowing into these PACs to slowly wash that funk away.

— David Canellis

Data Center

• PolitiFi coin MAGA is back up over $15 after it tanked following the news that former President Donald Trump was found guilty on 34 counts.
• Ethereum’s validator queue is at three-week highs with 6,600 stakers in waiting.
• Global stablecoin supplies have still barely budged, sitting around $160 billion throughout all of May.
• BTC’s looking to hold steady at $68,500 early Friday, up nearly a percent in the last 24 hours.
• Bitcoin ETFs reported inflows of $48 million. Ark’s ETF saw outflows of $99 million, but Fidelity reported inflows of $119 million, per Farside . 

We’re all in this together 

No, really, we are. Presidential candidate Robert F. Kennedy Jr. told me Thursday at Consensus in Austin, TX. 

I asked him what he thought about former President Donald Trump turning his support for crypto to which he said he was “happy” about it.

“I think it’s a good thing for our country. Commitment to crypto is a commitment to freedom and transparency. I’m not going to question if it was a political decision, I’m happy he did it and I hope President Biden does too,” he added. 

But crypto isn’t the only thing the two candidates see eye to eye on. Kennedy added that he also agreed with Trump’s pledge that he’d commute Silk Road founder Ross Ulbricht if elected, noting that he’s also talked about that. Though, at a later point in the press conference, Kennedy said he’d need to review the case before deciding whether to issue a pardon. 

In a small room above the hustle and bustle of the main event, Kennedy spoke about bitcoin, ETH ETFs and even fielded a question on whether he’d consider himself a conservative. (He said no, he thinks he’s not “right or left,” but rather, “my positions are common sense.”)

My colleague, Eleanor Terrett of Fox News, even asked if he believed he was an ape after buying up 24,000 shares of GameStop to which he replied, “I do.”

Anyway, to focus specifically on crypto: Kennedy revealed he recently bought 21 bitcoin (three for each of his children). 

“Bitcoin is the way to save the dollar,” he said in response to a question about bitcoin as a possible national security threat.

When it comes to our current regulatory environment, which is not very friendly toward crypto (to put it lightly), Kennedy said the US needs transactional freedom. 

“We need sovereignty over our own wallets, transactional freedom and a currency that is transparent. We need to make sure America remains the hub of Blockchain technology. I’m going to make sure cryptocurrency is regulated in a way that protects the consumer from deceptive schemes,” he continued.

And the presidential candidate repeated (he initially announced this in April ) that he wants to put the federal budget on the blockchain, but that’s not the only use case for him. He thinks it can make the country more decentralized and encourage both entrepreneurship and innovation in the US. 

— Katherine Ross

The Works

• Robert F. Kennedy Jr. said the guilty verdict in President Trump’s case may help Donald Trump.
• Rashawn Russell, ex-Deutsche Bank banker, was sentenced to three-and-a-half years for fraud, per Bloomberg .
• Venture capital firm Andreessen Horowitz announced it donated $25M to crypto-focused super PACs, including Fairshake, Blockworks reported . 
• Terraform and former CEO Do Kwon agreed to settle the SEC’s civil case against the two, Reuters reported .
• The US and UK should launch a digital securities sandbox, SEC commissioner Hester Peirce proposed .

The Morning Riff

Q: Is PolitiFi a joke or a real indicator of sentiment?

Overintellectualizing memecoins has got to stop. 

Still, I wouldn’t treat political memecoin price action as a thermometer for voter sentiment. What it does reflect is that Trump memes are just funnier. 

Say what you will about the comedic nuances of Biden trying to leave a stage or form complete sentences. Trump is a natural showman and we’re likely seeing that translated into memecoins in his orbit.

— David Canellis

Can I take both for $500, Alex?

No, but really, this is a tough one. I stand by that it’s a mixture of both. For example, after the Trump verdict news broke yesterday, we saw the MAGA memecoin drop (it’s up this morning). And the Trump coins are a bit of a mixed bag as of Friday morning. 

It gets murky, however, because people might flock to them because of the implied humor in a memecoin, so maybe stick to the polls if you want to really understand public sentiment.

— Katherine Ross

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