Thoughts tagged "Coinbase"

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Coinbase Chief Legal Officer Paul Grewal again making oblique legal threats to chill criticism of Coinbase, suggesting to The Hill that it might be “defamatory” for me or Public Citizen to draw a line from their political spending to the current crypto regulatory environment.

Now, critics are putting the industry’s ramped-up campaign involvement last cycle under a microscope. Molly White, a cryptocurrency researcher and prominent crypto skeptic, argued the SEC’s changes in direction were the “goal of a lot of the election spending over the last couple of years.” “I think that the political contributions were quite directly related to both the changing regulatory environment in terms of, you know, broad policy direction, but also in terms of dropping the enforcement action,” White told The Hill. Public Citizen, a nonprofit consumer advocacy organization, slammed Coinbase and the SEC last week, arguing the industry’s campaign spending “paid off.” “The SEC decision is also an important marker in the Trump administration’s rush to abandon prosecution and enforcement actions against corporate criminals and wrongdoers,” Public Citizen co-President Robert Weissman wrote. “This is not just an abandonment of those already wronged by corporate wrongdoers, it is an invitation to a corporate crime spree and epidemic of corporate wrongdoing.”
Coinbase, along with other figures in the crypto world, fiercely rejected the criticism, pointing out opposition to Gensler’s probes was brewing for years. This included long before Trump publicly reversed his stance on crypto to back the industry in late 2023. “I find those comments misinformed at best, if I’m being generous, and defamatory at worst,” Paul Grewal, chief legal officer at Coinbase, told The Hill of the backlash. Some criticism, Grewal argued, fails to consider Trump was once a critic of crypto and at one point called it a “scam.” Grewal pointed out how Congress moved major legislation in 2023 on market structure, an issue that was met with bipartisan support. The Financial Innovation and Technology for the 21st Century Act in 2023 received support from 71 Democrats in the House. “The fact of the matter is that President Trump did evolve and transform in his view on crypto, really starting in December 2023,” Grewal said. “In January 2024, we first started to engage with him and his team, but it was against a much more nuanced, complicated and complete history that I think a lot of the critics just don’t want to engage in.”

Previously:

Tweet by paulgrewal.eth on October 30, 2024 @iampaulgrewal Once again, with feeling. Repeating misrepresentations of facts after previously being put on notice is …. unwise. Quoted tweet by Molly White @molly0xFFF As an active federal contractor, Coinbase is prohibited from making political contributions, including to super PACs. This makes $50 million that they have contributed in violation of pay-to-play laws for contractors.

“Some criticism, Grewal argued, fails to consider Trump was once a critic of crypto and at one point called it a ‘scam.’ ... ‘[It’s a] more nuanced, complicated and complete history that I think a lot of the critics just don’t want to engage in.’”

Huh.

Screenshot of Molly White’s Citation Needed newsletter: “Recently, there has been a push by the cryptocurrency industry to portray crypto as a major issue that will influence votes in the upcoming election season. This just so happens to coincide with Donald Trump's recent statements suggesting he's warmed to the industry. Although Trump personally has actually been far more vocally anti-crypto than Joe Biden — in 2021 saying bitcoin “just seems like a scam”1 and reportedly ordering Treasury Secretary Steve Mnuchin to “go after bitcoin” in 20182 — that hasn’t stopped many in the cryptocurrency world from embracing him as the supposedly pro-crypto candidate anyway. Screenshot of Trump tweets: I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity.... ....Similarly, Facebook Libra’s “virtual currency” will have little standing or dependability. If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations, just like other Banks, both National... ...and International. We have only one real currency in the USA, and it is stronger than ever, both dependable and reliable. It is by far the most dominant currency anywhere in the World, and it will always stay that way. It is called the United States Dollar! It's not entirely clear why Trump has done a U-turn. Perhaps it's simply because supporting crypto has become the Republican thing to do. Perhaps it was because he himself discovered the grift potential this industry unlocks when released his own set of NFTs in 2022 [W3IGG]."
Screenshot of a Public Citizen article titled “Guaranteed Crypto Loss”: “Bitcoin, a cryptocurrency, is “based on thin air.” It is a “scam.” It can facilitate unlawful behavior, including drug trade and other illegal activity.” These are Public Citizen positions. But they are also direct comments from then President Donald J. Trump. Public Citizen continues to believe cryptocurrency is a Ponzi scheme and enables illicit activity. It also wastes enormous energy, contributing to climate change. We support the efforts of the Securities and Exchange Commission (SEC) to enforce securities law with respect to these public offerings, and of criminal law enforcers to arrest crypto actors who engage in fraud and other market manipulations. The FBI reported crypto-related fraud exceeded $5 billion in 2023. Trump, however, has pivoted into full-throated and potentially self-enriching endorsement of the sector. He now serves as the “chief crypto advocate” for World Liberty Financial, a nascent cryptocurrency firm. If elected president, Trump would have a glaring conflict of interest as Washington attempts to address policy for this fraud-ridden sector.”

As an active federal contractor, Coinbase is prohibited from making political contributions, including to super PACs. This makes $50 million that they have contributed in violation of pay-to-play laws for contractors.

Tweet by Brian Armstrong @brian_armstrong We get the U.S. election results in 6 days, and no matter how you slice it, it will be the most pro-crypto congress ever. But we're not slowing down post-election. Today I'm announcing that @coinbase has committed another $25M to support Fairshake PAC, which they will use leading up to the 2026 midterms to elect pro-crypto candidates. We're also supporting @standwithcrypto in their stretch goal to reach 4m advocates by the 2026 midterms. The crypto voter is already a force to be reckoned with, but it will continue to grow. We're going to keep showing up to protect our customer's rights and help get sensible legislation passed in major markets around the world.

See my reporting on their previous violation, which is being reviewed by the FEC: https://www.citationneeded.news/coinbase-campaign-finance-violation/

Coinbase Chief Legal Officer Paul Grewal has responded to the news of the FEC complaint by suggesting I have some shadowy backers funding me.

Tweet thread by Paul Grewal (@iampaulgrewal): Seized crypto assets are not Congressionally appropriated funds, period. There is nothing new in the FEC complaint filed by a self-described crypto critic and Public Citizen’s research director, but it is notable that there is no minimum bar to file such a complaint, and this one – filed by individuals with no election law expertise and funded by who exactly? – appears to amount to a press release by another name. 1/4 @coinbase is proud of its hand-in-glove work with federal law enforcement. We remain committed to playing a trusted role for the U.S. Marshals Service’s cryptocurrency services requirement, which is funded by the sale of assets forfeited to the DOJ’s Assets Forfeiture Fund – not congressionally appropriated tax dollars.

He’s also complained that we accused Coinbase of having partisan bias in who they support, something we did not allege or imply. We single out the donation to the Congressional Leadership Fund and not its Democratic equivalent because only the former happened within the prohibited period.

Tweet thread by Paul Grewal (@iampaulgrewal): Seized crypto assets are not Congressionally appropriated funds, period. There is nothing new in the FEC complaint filed by a self-described crypto critic and Public Citizen’s research director, but it is notable that there is no minimum bar to file such a complaint, and this one – filed by individuals with no election law expertise and funded by who exactly? – appears to amount to a press release by another name. 1/4 @coinbase is proud of its hand-in-glove work with federal law enforcement. We remain committed to playing a trusted role for the U.S. Marshals Service’s cryptocurrency services requirement, which is funded by the sale of assets forfeited to the DOJ’s Assets Forfeiture Fund – not congressionally appropriated tax dollars. 2/4 It’s also worth noting that Coinbase has donated to Dem and GOP super PACs equally with $500K to House and Senate funds for each party, respectively, for 2024. White and Public Citizen appear to want to report a political bias which does not exist. 3/4 Very simply, the world view these researchers espouse in this document is not the law, as much as they wish it was. 4/4

These are the contributions at issue. Those highlighted in yellow were made during the prohibited time period (March 4, 2024–present).

The blue ones are the ones he claims to be upset we didn’t mention. They were made more than two months before the US Marshals published the contract that Coinbase would later apply for and win.

Individual contributions Viewing 11 filtered results for: "coinbase"<br>Contributor name Recipient State Employer Receipt date Amount [begin yellow highlight] COINBASE FAIRSHAKE CA 05/30/2024 $24,999,995.00 COINBASE, INC. COINBASE, INC. INNOVATION PAC (COINBASE INNOVATION PAC) CA 05/03/2024 $100.00 COINBASE CONGRESSIONAL LEADERSHIP FUND CA 03/20/2024 $500,000.00 [end yellow highlight] [begin blue highlight]  COINBASE INC. SENATE LEADERSHIP FUND CA 12/22/2023 $500,000.00 [end blue highlight] COINBASE PROTECT PROGRESS CA 12/22/2023 $1,500,000.00 [begin blue highlight]  COINBASE, INC. SMP CA 12/22/2023 $500,000.00 [end blue highlight]  COINBASE INC DEFEND AMERICAN JOBS CA 12/22/2023 $1,500,000.00 COINBASE, INC. COINBASE, INC. INNOVATION PAC (COINBASE INNOVATION PAC) CA 12/20/2023 $50.01 [begin blue highlight]  COINBASE, INC. HMP CA 12/20/2023 $500,000.00 [end blue highlight] COINBASE FAIRSHAKE CA 12/20/2023 $15,500,000.00 COINBASE FAIRSHAKE CA 11/03/2023 $5,000,000.00

(Note: that third, $100 contribution highlighted in yellow seems to be a permitted contribution made by an individual employee that has just been misattributed to Coinbase in the FEC data).

Campaign finance complaint filed regarding Coinbase

Last week, Public Citizen ’s Rick Claypool and I filed a complaint with the Federal Election Commission based on my research into apparent campaign finance violations by the Coinbase cryptocurrency exchange.

Read the full complaint and my updated article.

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Coinbase has tried to portray its “Stand With Crypto” PAC as having broad grassroots support among over a million “crypto advocates”, and boasts on its homepage of nearly $180 million raised by these advocates.

Its first quarterly FEC filing reveals it has had only $13,690 in contributions from seven people over the most recent three-month period. Two of them work for Stand With Crypto and two of them work for Coinbase.

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After my reporting about the falsified donations amount on the Stand With Crypto homepage, the PAC added a tooltip that acknowledges that $177.8 million of the “donations by crypto advocates” are actually the multi million dollar donations by a handful of big crypto companies and their executives.

However, they still claim that $1.48 million was raised by Stand With Crypto itself. Either they've raised 99% of their funds in the last 19 days, or they’re doing more funny business with the numbers they’re claiming.

Coinbase’s “Stand With Crypto” PAC claims to have raised $87 million, but their donations list totals up to only $1,176,900. They seem to be double-counting corporate contributions to super PACs to overstate how much their “community” supports this supposedly grassroots project.

Screenshot: $87,186,950 donated by crypto advocates
Our community See how our community is taking a stand to safeguard the future of crypto in America. Donations to Fairshake, a pro-crypto Super PAC, are not included on the leaderboard. Recent activity Top donations 1 position 1 medal MoonPay profile picture MoonPay $1,000,000.00 2 position 2 medal ENS avatar for toshibase.eth toshibase.eth $20,000.00 3 position 3 medal Generic profile picture for anonymous user geminifrontierfund.eth $15,000.00 4 ENS avatar for barmstrong.eth barmstrong.eth $11,774.37 5 Generic profile picture for anonymous user wwarren.eth $10,049.30 6 Generic profile picture for anonymous user Anonymous $10,000.00 7 Generic profile picture for anonymous user 0x...37e02 $8,951.84 8 Generic profile picture for anonymous user 0x...ede10 $7,174.67 9 Generic profile picture for anonymous user Anonymous $5,000.00 10 ENS avatar for warpie.eth warpie.eth $3,500.00

The list trails off at donations of $44.67, so there could be additional smaller donations not shown on the page, but not more than $85 million’s worth.

The Stand With Crypto PAC was registered just days after the April quarterly filing deadline, so they have not yet had to file any receipts with the FEC.