In the days before the California Senate primary, social media and TV programs were awash with political ads calling Democrat candidate Katie Porter a fake and a hypocrite. The ads, which cost $10 million, were aimed at destroying Porter's career and paid for by Fairshake, a "super PAC" financed by crypto companies.
Super PACs are independent expense-only political organizations that can receive unlimited donations from corporations, individuals, labor unions, etc., to finance independent expenses and other independent political actions.
A fulfilled purpose
The ads were successful, with Porter coming in very far behind Democrat Adam B. Schiff and Republican Steve Garvey. Porter attributed her loss to "an onslaught of billionaires spending millions to rig this election."
Crypto is back in politics
After a prolonged bear market, the cryptocurrency industry is back in politics, spending a significant amount of money in the 2024 elections. The industry has indicated it would support candidates who want more favorable crypto laws in the country and try to prevent those who don't from winning.
According to Dennis Kelleher, CEO and co-founder of financial watchdog group Better Markets, an amount like $10 million "buys you a seat at the political table in Washington, DC, and that's their goal." His group has frequently opposed the crypto industry's influence in Washington.
The fight for looser regulations
The US SEC wants to regulate cryptocurrencies like stocks and bonds. Such regulations would mandate the industry to follow a wide range of investor protection and disclosure laws. The industry has lobbied for laxer regulations, including allowing the smaller Commodity Futures Trading Commission to regulate the markets.
The real impact of the ads
Fairshake was the biggest external spender in the Senate primary, but there is debate on the extent of its influence. California has an untypical election system, where the two candidates who get the highest number of votes in the primary move on to the main election in November, regardless of which party they represent. Schiff's team believes it'd be easier for him to win if he faced a Republican in the traditionally Democrat-voting state. Kelleher himself doubts the ads had any impact.
According to poll results in the week before the primaries, Schiff and Garvey were the top two candidates, just as it turned out. Porter got fewer votes than polls predicted, though.
According to Sawyer Hackett, a spokesman for the Progressive Change Campaign Committee, which supported Porter, the loss was mainly due to the ads. California's media markets are expensive, and while $10 million is not an exorbitant amount of money, it's definitely a big factor, especially considering we're in the last weeks of the election and Democratic voters are weighing their options very carefully. Hackett believes the crypto industry is "targeting candidates who seem to focus on pro-consumer and antitrust policy.
About Fairshake
Fairshake's major contributors include venture capital titans Ben Horowitz and Marc Andreessen, Cameron and Tyler Winklevoss of Gemini, and Coinbase CEO Brian Armstrong. Coinbase is still the crypto exchange with the highest trading volume in the US. This year, it is working to make sure that candidates see crypto as "an opportunity to really make a difference to change, to protect jobs, to protect national security," according to Kara Calvert, Coinbase's head of US policy.
Notable pro-crypto rally on Walk of Fame
On the afternoon before the elections, a nonprofit organization called Stand With Crypto hosted a rally for crypto owners in Los Angeles. The event took place in the Bourbon Room bar and was headlined by Nas, a rapper and early Coinbase investor. There was a long line spanning the block on Hollywood's Walk of Fame.
Armstrong told guests inside that they had to vote to send a "very clear message" for the main elections in November, which was to understand and be pro-innovation, pro-tech, and pro-crypto and to elect candidates that held those values in California. He directed voters to a guide Stand With Crypto prepared, which described Schiff as strongly pro-crypto and Porter as strongly anti-crypto. The other candidates, Garvey and Barbara Lee of Oakland, were listed with a question mark icon.
Where do the candidates really stand?
According to Stand With Crypto, Porter voted against a crypto bill in the House finance committee, but she's not actually a member of that committee. Her spokeswoman said she didn't vote on the legislation.
Schiff's pro-crypto rating was accounted for by a single statement on his site, which was that the country needed "comprehensive regulatory frameworks" to make sure blockchain and cryptocurrency firms remain and grow in the US and that the US is still the world leader "in these important new technologies."
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