How tech bros bought “the most crypto-friendly Congress in American history”

Bernie Moreno was a political unknown until he announced his candidacy for the Senate in April 2023. A former Cleveland-area car salesman, his only political experience came in 2022 when he lost a bid for another Senate seat in Ohio.

Since then, Moreno has achieved the once unthinkable.

On Nov. 5, as part of the election that returned Donald Trump to the White House, Moreno defeated incumbent Democratic Sen. Sherrod Brown, who was first elected to the House in 1992 and then won the Senate seat in 2006. and became the chairman of an influential bank. Committee from 2021.

Mr. Moreno’s rise from an unknown Ohio businessman to a prominent political leader was no accident. His campaign has received $40 million in support from the cryptocurrency industry as part of a highly targeted effort to elect friendly candidates and, perhaps more importantly, weed out its critics. I received it. Moreno’s victory was one of several Senate seats flipped by Republicans to take control of the chamber.

Cryptocurrency-related PACs and other groups connected to the industry collectively raised more than $245 million, according to Federal Election Commission data. According to the nonprofit watchdog group Public Citizen, cryptocurrencies accounted for nearly half of the corporate money flowing into the election. The Stand With Crypto Alliance, an advocacy group launched by Coinbase last year, has developed a scoring system for House and Senate races across the country as a way to help decide where money should be spent.

Crypto industry executives, investors, and evangelists viewed the election as an existential one for an industry that has been repeatedly defeated over the past four years while simultaneously trying to grow. According to Stand With Crypto, nearly 300 pro-crypto lawmakers will gain seats in the House and Senate, giving the field unprecedented influence over the legislative agenda.

The crypto political lobby has performed so well this cycle because it has simplified something as complex as campaign finance. They raise large amounts of money from a small number of donors and buy ad space in battleground states to either support candidates who support cryptocurrencies or denigrate candidates who support cryptocurrencies. Please don’t. We also had to think about candidates a little bit dualistically. They are either for the industry or against it.

Cryptocurrency companies and their executives quickly came together and succeeded in finding ways to deploy their funds across the country through sophisticated advertising machines. They also took a cue from what big tech companies got wrong. Rather than spending hundreds of millions of dollars lobbying lawmakers after the election, the crypto industry will invest in targeting opponents before the election and avoid having to do business with them at all for years to come. I did it like that.

For more than a year, Moreno has been grilled by Silicon Valley heavyweights including Marc Andreessen, Ben Horowitz and David Sachs over blockchain technology, digital asset policy and the changing landscape of global finance. .

“They didn’t just jump in headfirst,” Moreno said of the numerous meetings dating back to his own campaign in the primary. “We had to build a lot of trust.”

I also met Mr. Moreno. coinbase Co-founders Brian Armstrong and Fred Eltham, and policy director Faryal Shirzad. Armstrong and Arsam did not respond to CNBC’s requests for comment about the meeting through Coinbase.

Coinbase, the largest digital asset exchange in the United States, has been in a court battle with the Securities and Exchange Commission for more than a year. The company is the king of cryptocurrencies in the 2024 cycle, having donated more than $75 million to a super PAC called FairShake. This is one of the top spending committees of any industry this cycle, and was given only to pro-crypto candidates running for Congress. FairShake candidates won nearly every election the company financed in the general election.

“Being anti-crypto is just bad politics,” Coinbase’s Armstrong wrote about X following Moreno’s victory.

As the price of Bitcoin has increased approximately six times over the past four years, SEC Chairman Gary Gensler has taken major crypto players such as Coinbase and Ripple to court for allegedly selling unregistered securities, and They avoided working together to develop new professional regulations.

Meanwhile, Sen. Brown sides with explicitly anti-cryptocurrency Sen. Elizabeth Warren (Massachusetts) in targeting cryptocurrencies that are said to fund terrorist organizations, including Hamas. I stood there. Brown stepped up his calls for a crackdown on the industry after the collapse of cryptocurrency exchange FTX in late 2022.

As FTX was pushed into bankruptcy, Brown retweeted a post from the Senate Banking Committee on Nov. 10, calling the event a “loud wake-up call that cryptocurrencies could fail” and that “consumption “This could have knock-on effects on individuals and other parts of the financial system.” ”

The bipartisan Fair Shake won all but three races in the general election, spending millions on Republicans and Democrats targeting key seats. Protect Progress, a PAC affiliated with FairShake, has donated more than $10 million each to Democratic U.S. Senate candidates in Arizona and Michigan. Both won. Defend American Jobs, another FairShake-affiliated PAC, has 300 votes to support West Virginia Republican Jim Justice, who will take over Democratic Sen. Joe Manchin’s former seat when the new Congress opens in 2025. Spent over $1,000.

In California, Democratic Rep. Katie Porter lost her Senate primary after FairShake spent more than $10 million on ads against her.

“I was like, ‘What the hell is a fair shake?'” Porter told The New Yorker.

Those scrutinizing Moreno wanted to understand what differentiated him from the current administration and regulatory regime, the senator-elect said in an interview with CNBC.

“They know how to vet investments, they know how to vet people, and they held me to that same discipline,” Moreno said.

It helps that he founded a blockchain startup called Champ Titles, which digitizes vehicle ticketing and registration.

“What they didn’t want was to spend time and effort and energy behind someone who was ultimately going to be disappointed,” Moreno said.

Spokespeople for Mr. Andreessen and Mr. Horowitz, co-founders of the venture company that bears their names, declined to comment. Craft Ventures founder Sachs did not respond to CNBC’s request for an interview.

Coinbase’s Mr. Shirzad met Mr. Moreno over breakfast in Washington in the spring. Although Moreno was not an expert on the specifics of the policy agenda he pursued, Shirzad said in an interview with CNBC that he had a clear understanding of cryptography and its applications.

“We had a really great exchange between me as a policy guy and him as a kind of business guy who understands the potential of technology,” Shirzad said.

David McIntosh, an early supporter of Moreno’s bid for the Senate and president of the conservative group Club for Growth, which focuses on economic issues in the United States, said Moreno faced a tough and expensive primary. After spending all his money, he said he was out of cash. McIntosh said Fairshake played a key role in Moreno’s campaign, which began in the summer.

Moreno’s victory over Brown “sent a very strong signal to Washington that voters support pro-blockchain candidates,” McIntosh said.

McIntosh noted that the Growth Club spent $6.5 million promoting Moreno in the primary through various super PACs, including the Bitcoin Freedom Fund.

Brown’s office did not respond to multiple requests for comment.

Brown told Politico that he has not ruled out running for Vice President-elect J.D. Vance to fill the vacant Senate seat in Ohio that will be filled in a special election in 2026.

While Mr. Moreno has profited from touting himself as a “transformational” candidate, Mr. Brown has “become a champion of the status quo,” Mr. Shirzado said.

“Cryptography is thematically a matter of change,” Shirzad said. “This appeals not only to younger demographics, but also to voters who want change.”

FairShake declined to comment on whether it would spend to prevent Brown from re-electing the Senate, but the super PAC has already raised $78 million for the 2026 midterm elections.

“We stuck to our core strategy from day one, supported a pro-crypto candidate, opposed a candidate who plays politics on jobs and innovation, and won,” Fairsheik told CNBC in a statement. Ta.

The past two election cycles have seen the collapse of bankrupt cryptocurrency exchange FTX and its founder Sam Bankman, who was sentenced to 25 years in prison in March for stealing more than $8 billion in customer funds through FTX. Spending from Mr. Freed drew attention.

This year’s donor list is stronger, but with significant funding from companies that have long been at odds with SEC Chairman Gensler. These include Coinbase and blockchain giant Ripple Labs. Prominent venture fund Andreessen Horowitz, who has a large portfolio of crypto companies, is one of the other major contributors.

Many well-known companies in the crypto industry also made significant contributions in 2024.

Cameron and Tyler Winklevoss are among the largest individual cryptocurrency donors this election cycle, contributing a combined $10.1 million, according to FEC filings. Ripple’s top executives have donated millions of dollars, led by billionaire founder Chris Larsen, who has contributed about $12 million this cycle.

Coinbase CEO Armstrong has donated more than $1.3 million for the Senate to a combination of PACs including Fair Shake and J.D. Vance. It also donated directly to Democrats and Republicans running for House and Senate seats. Paul Grewal, Coinbase’s chief legal officer, has attended at least two Trump fundraising events, including one in Nashville, Tennessee, on the sidelines of the year’s biggest Bitcoin event.

Kraken Chairman Jesse Powell donated more than $1 million to the Trump campaign.

Other individual crypto contributors include former Bitfinex head of strategy Phil Potter (over $1.6 million), Multicoin Capital’s Kyle Samani ($878,600), and Paradigm co-founder Fred – Includes Arsam ($735,400), Union Square Ventures partner Fred Wilson ($1.4 million), and Paxos. CEO Charles Cascarilla ($198,500), BitGo CEO Mike Belshe ($119,825), Solana co-founder Anatoly Yakovenko ($67,100), and Xapo Bank founder Wences Casares ($374,899).

Armstrong reportedly met with the president-elect this week to discuss the appointment. Throughout the day, conversations arose about the possibility of the White House’s first crypto czar. By the end of the week, Gensler, SEC chairman and longtime crypto opponent whose term ends in June 2026, announced he would step down on Inauguration Day.

One of Trump’s promises to crypto fans during his campaign was that if elected, he would fire the SEC chief and choose a crypto-friendly regulator. Gensler may have looked at the pressures he was facing across Washington and decided it wasn’t worth enduring.

“Welcome to the most pro-crypto Congress in American history,” Armstrong wrote to X on November 5th.