With a bit over a month to go till the US elections this November, it might surprise you to learn that the crypto industry has spent almost 120 million dollars already this year in political contributions, meaning that crypto makes up for almost half of all corporate political contributions in this election cycle. I’m sure you have seen all of the political adverts – telling you how important this industry is to the average American, and how you should vote for a crypto-friendly candidate… No? Well, that would be because – that’s not how the advertisements work – the contributors know that the average American doesn’t care one bit about crypto. When the superPACs funded by the crypto industry spend money to influence races, either by attacking crypto skeptics or boosting crypto supporters, the ads never mention crypto at all. A few of you are possibly nodding your heads saying, yep, it’s Trump,

he’ll be on their payroll… After all, he famously called Bitcoin a “scam against the dollar” in 2021, and then a bit over a year later licensed his image for a series of NFTs. This summer he even flew to Nashville to speak at a Bitcoin conference, where he said that if he was elected, he would fire the head of the SEC and “appoint someone who will build the future, not block the future.” He even promised to create a strategic crypto reserve (whatever that is), saying “The United States will be the crypto capital of the planet.” - I guess overtaking El Salvador… But no, it’s not just Trump. According to Bloomberg, while lots of money has gone to Republicans, the majority of the money from the crypto industry has been spent on influencing Democrats. Republicans are not too happy about this, a GOP strategist involved in Senate races told NBC that the spending on Democrats risks hurting Trump,

since his allies are being attacked. Instead of picking a side in the election, the crypto industry has put together a super PAC with no focus other than advancing the interest of crypto corporations. They have raised a massive sum of money that’s sending the message to politicians that if they’ll commit to advancing pro-crypto policies, they will get help, and if they oppose the industry, it could end their political careers. This spending has been effective too. In the primaries - earlier this year - crypto PAC backed candidates were big winners. According to the data, out of 42 primary races where crypto-backed super PACs intervened, their preferred candidate won 86% of the time. Politicians are bending to the will of the crypto industry too. The American Prospect reports that both beneficiaries of crypto campaign spending and their opponents (the ones who have received no help) are desperately endorsing Crypto.

Hours before Trump's speech at the Nashville Bitcoin conference, a group of fourteen Democratic lawmakers released an open letter to the DNC urging them to endorse cryptocurrency policies that would support the crypto industry. All fourteen signatories appear to have received support from crypto super PACs. A few weeks after the open letter was published, Vice President Harris gave a speech saying that it is important for the United States to maintain its dominance in blockchain technology. Her campaign policy document, under a heading of sectors that are critical for our economic and national security, included the suggestion of investing in technologies like “digital assets.” The Washington Post reported last week that she is signaling support for the expansion of the cryptocurrency industry and was rebuffing claims that she would seek a crackdown on the sector. In a separate article, they report that she promised donors in New York City a “safer business environment” for digital assets.

Mark Cuban – who is described in the press as one of Kamala Harris's most influential political surrogates – told guests at a fundraiser last week that Harris’ team opposes “regulation through litigation,” and suggested that Gary Gensler could be removed from his role at the SEC if Harris is elected. Cuban noted that Harris’ team used no “uncertain terms” to express their lack of support for the SEC’s current approach to regulation. “CYA Gensler. You leaving is worth a point in GDP growth,” he finished up with. So, who is behind these massive political donations, why are Americans seeing so many campaign commercials paid for by the crypto industry – that never get around to mentioning crypto – and is it true – as the crypto industry claims – that 50 million Americans own cryptocurrencies and that it’s legal treatment is one of American voter’s top concerns?

Before we go any further, let me introduce this week’s sponsor, NordPass, a password manager created by the experts behind NordVPN, the world’s most popular VPN solution. Research shows that the average number of passwords used for personal purposes is 168, and it’s 87 for business-related accounts. Chances are, you reuse your passwords across many of your accounts, which means if one account is compromised, your finances are in danger. 86% of business hacks involve stolen credentials, and this type of breach can take months to discover and can result in huge financial losses, legal repercussions, and reputational damage. NordPass is an effortless-to-adopt password manager that allows you to create, store, and manage strong passwords that can be shared internally, along with other sensitive information. It also scans the web for data leaks and notifies you if your account is involved in a data breach.

Businesses love NordPass because it allows encrypted password and credit card sharing between employees, which even allows password autofill without revealing the password and access revocation when needed. Our audience can get a free 3-month trial of NordPass Business. Use the activation code PATRICK at nordpass dot com forward slash patrick. No credit card is required. Link is in the description below. It seems like no time since our screens were filled with celebrities and influencers pitching Crypto and crypto exchanges – the most memorable example being the Larry David – FTX Super Bowl commercial – which even featured P Diddy’s roommate's father Joseph Bankman. In the wake of the collapse of FTX, lawsuits were launched against the celebrities and influencers who had promoted it. Sam Bankman Fried (Puffy's roommate) stood trial last year on a long list of charges – but some of the charges like conspiracy to make unlawful campaign contributions,

conspiracy to bribe foreign officials and two other conspiracy counts were held back for a second trial because these charges had not been approved as part of his extradition from the Bahamas. Those charges were supposed to be brought at a second trial that should have occurred this year. Last December, the prosecutors told the judge that evidence at a second trial would duplicate evidence already shown to a jury. Also saying that a follow-up trial would ignore the “strong public interest in a prompt resolution” of the case, particularly because victims would not benefit from forfeiture or restitution orders if sentencing was delayed. Now, it can be argued – that there might have been massive public benefit associated with hearing testimony about the forty million dollars SBF handed out to politicians and political action committees ahead of the 2022 midterm elections and what he expected in return. While federal election receipts showed that SBF donated almost entirely to Democrats – guided by his mother Barbara Fried, in an interview with

Tiffany Fong claimed to have made significant dark (or undisclosed) donations to Republicans too. None of this was explored in court… Celebrities – it turns out - took more heat for accepting advertising money from FTX than politicians did for accepting donations. The original indictment stated that He leveraged the influence that his contributions bought him “to lobby Congress and regulatory agencies to support legislation and regulation that he believed would make it easier for FTX to continue to accept customer deposits and grow. We recently saw news of Ryan Salame and Caroline Ellison being sentenced to prison time for their participation in the massive fraud at FTX, but there is no news about any prosecutions relating to the massive campaign finance fraud that occurred. That seems like quite an omission. So, if crypto makes up for almost half of all corporate political contributions in this election cycle, who are the donors? According to the consumer advocacy group Public

Citizen - crypto-sector corporations – primarily Coinbase and Ripple – have dumped over $119 million dollars in real money - (not meme coins) into the 2024 elections so far, almost entirely into super PACs dedicated to elevating pro-crypto candidates and attacking crypto skeptics. Fairshake, Defend American Jobs and Protect Progress make up a network of super PACs funded by the crypto industry. Fairshake is listed as being nonpartisan, its affiliated Super PAC Protect Progress supports Democrats and Defend American Jobs supports Republicans. According to data from the Washington Post – all three receive funding from the same crypto industry donors. Fairshake has raised over two hundred million dollars and its biggest donors by far were Coinbase and Ripple with large donations also coming from the founders of the venture capital firm Andreessen Horowitz. Five million dollars came from the Winklevoss twins who run the Gemini exchange, and $1 million dollars came from Coinbase CEO Brian Armstrong.

According to news reports, almost all of these donors have had run-ins with securities regulators due to their crypto-related activities. The crypto industry denies that its involvement in US elections is a problem. The Fairshake website writes of the need to support “innovators building the next generation of the internet,” and argues that “a clearer regulatory and legal framework is vital if the broader open blockchain economy is to grow to its full potential.” According to Logan Dobson of the lobby group Stand with Crypto, who spoke with “The Hill” earlier this month, “The crypto voter is real, bipartisan, and ready to engage this cycle.” Amusingly, Bloomberg reported this summer that the Winklevoss twins (Harvard’s dumbest graduates) had their money sent back to them after their Bitcoin donations to Trump’s presidential campaign exceeded the maximum limit allowed under federal law. The Winklevoss twins run the crypto exchange Gemini, many of whose users spent months trying

to get back funds they invested in a program called Gemini Earn. The exchange agreed to refund at least $1.1 billion dollars to its customers and pay a $37 million dollar fine earlier this year, following a settlement with the New York Department of Financial Services. As embarrassing as all of this should be for them, the great thing about being a twin is that you get to claim that whenever you did something stupid – that the other one did it. I think that at this point they should claim to be triplets – and that all of the dumb stuff was done by Billy Winklevoss – then look around and say “where has he gone now???” One of the claims made by crypto insiders is that Crypto is owned by at least 50 million Americans. The claim is that it is a general interest group – rather than a special interest group. Federal Reserve data shows that this is not the case. The most recent data shows

that seven percent of Americans (or 18 million people) held or used cryptocurrency last year. This is down two percent from the prior year. Only one percent of Americans actually used crypto to buy something or make a payment last year, and its use for payments was highest amongst lower-income adults and the unbanked. Crypto appears nowhere in any of the surveys measuring voters’ top concerns. If we look at the ownership of bitcoin – as a representative cryptocurrency – approximately 29% of all mined bitcoins are estimated to have been lost forever, and 60% of bitcoin are held in fewer than 7000 wallets, implying that a small number of people care a lot about the price of Bitcoin – and the majority of people have little interest at all. Politicians are cozying up to the crypto industry not because it represents a significant portion of the voting public, but simply because of the amount of money being thrown around. The reason

that none of the adverts paid for by the crypto industry mention cryptocurrencies at all. Is that the advertisers know that the public either don’t care about this issue whatsoever, or that they would be turned off by an advert sponsored by an industry that has been plagued with legal problems and accusations of fraud. The Crypto Super PACs have names like “Protect Progress” and “Defend American Jobs” rather than NFT Hodlers for Harris and Meme Coin Pumpers for Trump for fairly obvious reasons. At least when you see a political advert paid for by the oil industry, they are open about their self-interest – warning voters that a particular politician's policies might push up the price of energy. Disclosing the true purpose of the crypto-funded adverts would likely be toxic for those who took money from them. Gillian Tett in the FT highlighted in a recent column that all of this political lobbying seems to contradict the mantra of the digital assets world that crypto is a

tool that would enable citizens to challenge the establishment — and that it was meant to be the antithesis of the Washington “swamp.” Molly White – a prominent crypto critic wrote on her blog this summer that Coinbase may have violated campaign finance laws with its super PAC donations. Campaign finance law prohibits federal government contractors from making contributions, or promising to make contributions, to political entities including super PACs like Fairshake. White argues that Coinbase began a contract in July with the U.S. Marshals Service for asset forfeiture and that as a federal contractor, they are not permitted to make these contributions. Because Coinbase first sought the contract in March and gave $25 million dollars to Fairshake in May, she says that their donation is the largest illegal campaign contribution by a federal contractor in US history – the second largest having been one million dollars. Coinbase has since denied that their contribution was illegal, arguing that they are not a federal

contractor because the U.S. Marshals Service contract is not funded by appropriations but by asset forfeiture funds. The consumer advocacy group Public Citizen rejects that argument, saying that the creation of the Asset Forfeiture Fund itself was an appropriation. I asked Zeke Faux, the author of “Number Go Up,” who has appeared on this channel in the past, about his thoughts on whether politicians should get in bed with the crypto industry – and on the industry’s relevance to regular American voters. Here is what he had to say. [Zeke Faux Clip] I can’t find the exact source, but a while back Joe Wiesenthal joked that buying gold instead of stocks was one of the most bearish bets a person could make – describing it as a bet that a rock would generate more wealth than human effort would. He went on to joke that cryptocurrencies were maybe worse – as

At least gold has industrial uses – and doesn’t require a computer running forever to preserve its existence. Hopefully, I’m not misquoting him. While many crypto investors think of crypto as a hedge against inflation, or as some sort of digital gold – the reason you might expect it to hold its value or even grow in value in the coming years is because of its importance to criminal organizations in storing, moving, and laundering money. If you believe that large-scale criminality is likely to grow in the coming years, it might be reasonable to expect cryptocurrency prices to rise – as this is a big driver of its demand. It’s been quite some time since we have heard crypto enthusiasts making any sort of claim of use cases for crypto – the closest thing to those claims today is the idea that the price should go up because of ETF money inflows. After years of scandals, exchange hacks, Ponzi schemes, and repeated frauds, crypto is finally

facing a real existential crisis in the United States – not because of its price – but because it appears that regulators are finally waking up. According to the SEC, most cryptocurrencies qualify as unregistered securities offerings, and they have been pursuing enforcement against the exchanges for illegally offering these to the public. The crypto industry would much rather be regulated by the CFTC – a significantly smaller and more poorly funded regulatory agency – who they believe would take it easier on them. This is possibly why both presidential candidates are so vocal about how they would replace Gary Gensler – not for his lack of enforcement – which has allowed ordinary Americans to lose fortunes to crypto fraud over the last few years – but because their financial backers are complaining about heavy-handed enforcement. The heavy-handed enforcement argument is pretty hard to believe when almost every big-name celebrity seems to have been involved in promoting crypto ponzi schemes in recent years, and I don’t think

any have faced real legal consequences – despite ripping off their fanbases in clear public view. After a Kamala Harris speech at The Economic Club of Pittsburgh, Mark Cuban – an outspoken cryptocurrency advocate – told a Fox News reporter that if he were to join the Harris administration, it would be to replace Gary Gensler as SEC chair – a rather disturbing idea from the perspective of investor protection. Governments, regulators, and law enforcement generally dislike cryptocurrency because it makes it extremely difficult to enforce laws – laws that most members of society think are worth enforcing. It is hard to understand how a politician could accept support from this industry while claiming to be tough on crime – but they do this anyway – because they don’t want to turn their back on almost half of the corporate political contributions out there. Since I learned the scale of these political contributions, I’ve started paying more attention to the footnotes at the bottom

of the political adverts I have been seeing. On YouTube, you can click on the little “I” near the bottom of an advert to get more information on who paid for it. Over the last week, I’ve been seeing the same advert over and over again for a candidate running for senate. He brings up all of the big topics that voters might care about with no mention of crypto – but it turns out the advert was (of course) paid for by “Protect Progress” – a crypto Super Pac. It's quite possible that there is a candidate that you think is terrible after seeing all of the attack adverts against them, but maybe they are not nearly as bad as you thought, maybe they just said something that doesn’t suit the needs of the crypto industry, and all the money in the world is being spent on shutting them down. I hope that even if you are a crypto investor that you find this video interesting – and that you are possibly disturbed that a group of businesses

that have been in constant trouble with the law – and had to pay fines for misleading customers, losing their money and abusing their trust make up almost half of all corporate political contributions in this election cycle. Maybe it’s time we stopped blaming everything on Billy Winklevoss – and paid attention to why every politician is suddenly pro crypto – out of nowhere. If you found today's video interesting you should watch my video on influencer securities fraud next. Don’t forget to check out our sponsor NordPass using the link in the description and see you in the next video – bye.

Crypto Has Bought The 2024 Election!

Patrick Boyle is a hedge fund manager, a university professor and a former investment banker. 

This channel is all about quantitative finance. By subscribing you will see videos explaining what is happening in markets right now, you will learn about financial derivatives, corporate finance and how traders use quantitative tools like statistics. You will see interviews with some of the most interesting people in the financial industry.  In addition, you will see some longer form documentaries on the history of financial markets.

To contact Patrick go to the website http://onfinance.org

DISCLAIMER:
This channel is not affiliated with any financial institution. The videos on this channel are for entertainment purposes only and do not constitute financial advice. Those seeking investment advice should seek out a registered professional. Patrick is not responsible for investment actions taken by viewers and his content should not be used as a basis for investment.

Crypto Has Bought The 2024 Election!

Crypto Has Bought The 2024 Election!

Scripts