Pro-crypto cash floods Democratic primaries, rankling some lawmakers

WASHINGTON – In many ways, Georgia’s primary Democratic fight between two seated members of the House – Representatives Carolyn Bourdeaux and Lucy McBath – is a fairly close showdown. The biggest difference could be $ 2 million in cryptocurrency support.

Both Democrats have been fundraising and aggressively accumulating support. McBath rose to fame as a gun control activist after his 17-year-old son was shot dead a decade ago. Bourdeaux says his newly designed district, which forced two colleagues to run against each other, makes up 60 percent of his former district.

But McBath has something Bourdeaux doesn’t: the backing of a 30-year-old billionaire who co-founded a cryptocurrency exchange that allows people to exchange coins.

This year, Protect Our Future, a new super PAC launched by FTX co-founder and CEO Sam Bankman-Fried, aired in Greater Atlanta with nearly $ 2 million in ads praising McBath. That’s a big sum to spend a group in a primary among a pair of Democratic incumbents.

U.S. Representative Lucy McBath, D-Ga.Alex Edelman / AP Pool file

On Wednesday, the cryptocurrency-linked super PAC said it was supporting nearly a dozen Democratic House incumbents and candidates and would spend an additional $ 10 million on Democratic primaries, doubling its projected spending this cycle to more than $ 20 million. dollars.

Cryptocurrency is still a relatively new and minimally regulated currency, but as it grows in popularity, lawmakers are increasingly looking to put limits on the industry. He is in the crosshairs of people like Massachusetts Democrat Elizabeth Warren, who recently compared him to “buying air” and could be the subject of much more scrutiny in the coming months.

With the May 24 primaries approaching, Bourdeaux is attacking foreign cryptocurrencies that are poured into his main race and others across the country, from Ohio and Oregon to Kentucky and Texas, while Washington is stepping up scrutiny and starting drafting regulations for the rising $ 3 trillion. digital currency industry.

“You can’t help but think, yes, that they are seeking the favor of members of Congress and influencing the regulations that are being proposed now,” he said in an interview. “And those regulations are things like preventing Russian oligarchs from using crypto to protect their money.”

Bourdeaux called it a “surreal experience” and a “strange situation” for a Bahamas-based cryptocurrency exchange executive to spend millions of dollars to influence the outcome of his career in the affluent suburbs of North Atlanta. (Bankman-Fried is a US citizen, which allows him to spend in the US election even if his company is based abroad).

Image: Representative Carolyn Bourdeaux, D-Ga.
Representative Carolyn Bourdeaux, D-Ga.Bill Clark / CQ Roll Call via AP Images file

Not only is he highlighting his main rival, McBath, whom Bourdeaux will face in his first and perhaps only debate on Sunday afternoon. Bourdeaux is also calling on some of his other Democratic colleagues, including Rep. Ritchie Torres, DN.Y., who are being backed by Protect Our Future and a number of other cryptocurrency-compatible super PACs that have emerged on the scene in the past two years.

“Lucy in my career: they support her, and then Ritchie Torres. And then, of course, a few days later, you have Ritchie out there really looking for cryptocurrencies,” Bourdeaux said.

She describes herself as skeptical and has made critical comments about the industry.

Approached by NBC News, McBath declined to answer questions about the cryptocurrency-linked super PAC that supported it; a spokesman also declined to comment.

Torres was endorsed by Protect Our Future, but said the super PAC did not spend money on its disputed primaries and received only “minimal” contributions to the industry campaign.

“I don’t own cryptographic property, so members of Congress should be informed before making such comments,” he said in an interview at the Capitol. “Criticism often comes from members who do not understand. No one knows for sure how the cryptographic revolution will unfold.”

After President Joe Biden signed an executive order last month directing the government to develop a strategy to “address the risks and harness the potential benefits of digital assets,” such as cryptocurrencies, Torres wrote an article arguing that Democrats , and especially the Liberals, should adopt cryptocurrency because it may even be the playing field for immigrants and other low-income communities.

“Crypto, which facilitates direct money transfers without a corporate intermediary, gives lower-income Americans, especially immigrants, more freedom to transfer their own money and send remittances to their loved ones abroad without the burden of long arrears. high rates, “he wrote. Torres, who serves in the Congressional Black Caucus with McBath and represents the South Bronx.

“The ability to move the dollar at the speed of the blockchain can be a game changer if we, the policymakers and regulators, allow it.”

Michael Sadowsky, president of Protect Our Future, dismissed criticism that the super PAC is trying to win the favor of lawmakers and said that “candidates’ views on cryptocurrencies are not a factor in any spending decision or support for Protect Our Future “.

“Protect Our Future backs and invests in Democratic candidates who have their eyes on our future, not just our present, who have shown that they are committed to prioritizing issues that will safeguard our nation from the consequences of challenges like a future global pandemic.” , Sadowsky said in a statement.

“We support Rep. Lucy McBath because she led Congress in the midst of the pandemic, in particular by leading legislation that is helping modernize the CDC; she eventually got $ 500 million for the CDC as part of a COVID-19 relief. to help fight public health crises, “the statement said, referring to the Centers for Disease Control and Prevention.

Torres is neutral in Georgia’s race, but noted that last year, Bourdeaux initially joined a gang of moderates to block Biden’s Build Back Better package, insisting that Democrats get an infrastructure victory first. He later voted for Biden’s $ 1.7 trillion social and climate spending package.

“If you’re trying to sabotage the Build Back Better Act and the biggest cause of pandemic preparedness, it should come as no surprise that those who care about pandemic preparedness oppose you in your primaries,” Torres said. “That’s a relevant factor to consider here. There were only a few members who tried to derail the Build Back Better Act.”

Bankman-Fried, the son of law professors at Stanford University and one of the richest billionaires in the world, quickly emerged as a major player in Washington politics. He gave more than $ 5 million to a super liberal PAC that supported Joe Biden in 2020.

Image: Sam Bankman-Fried at a hearing in Washington on February 9, 2022.
Sam Bankman-Fried at a hearing in Washington on February 9, 2022. Sarah Silbiger / Bloomberg via Getty Images file

He has since given money to both parties, according to Federal Electoral Commission documents, by writing large personal checks to Republican Senators Susan Collins, Lisa Murkowski, Mitt Romney, Bill Cassidy, John Boozman and Richard Burr, as well as influential Democrats, including the Senate. Joe Manchin, Patty Murray, Maggie Hassan, Cory Booker, Debbie Stabenow and reps Hakeem Jeffries and Pete Aguilar.

Bankman-Fried also donated $ 2 million to the crypto-friendly GMI PAC, which is backed by a hedge fund managed by former Trump communications director Anthony Scaramucci.

The young tech entrepreneur’s super PAC is now shaking up the 2022 House Democratic primary. Protect Our Future is spending $ 7 million to support political neophyte Carrick Flynn, 35, in the primaries for a recent House seat created in Oregon. He is spending more than $ 1 million to help new Rep. Shontel Brown who is in a fierce primary rematch with progressive Nina Turner.

And the PAC is posting announcements to help elect Texas State Representative Jasmine Crockett, who is running to replace retiring Rep. Eddie Bernice Johnson; North Carolina State Sen. Valerie Foushee, who is expected to succeed retiring representative David Price; and Kentucky State Senator Morgan McGarvey, who is running to replace retiring representative John Yarmuth.

California Democrat Brad Sherman, one of the most vocal critics of cryptocurrencies on Capitol Hill, said it’s no secret that crypto executives are trying to gain influence with policymakers and gain public support for the digital currency industry fast. growth.

“The Lakers don’t play in the ‘Effective Sanctions Enforcement Arena.’ They don’t play in the ‘Effective Interdiction of Drug Money Arena.’ “If you want to know where the money and power are, just look at ESPN.”

Sherman, first elected in 1996, faces a major challenge from Aarika Rhodes, a 36-year-old Los Angeles County primary school teacher who made Bitcoin a key part of her campaign platform.

In recent months, Bankman-Fried has made a couple of appearances on Capitol Hill, testifying about the cryptocurrency industry and regulations before the Senate Agriculture Committee in February and the House Financial Services Committee in December.

California Democrat President Maxine Waters, who led the hearing, said she had set up a Democratic task force to study digital markets: “We’re in the process of learning.” But she did not criticize cryptographic executives for supporting certain candidates, saying many industries are involved in the practice.

“You have any number of entities that do that. That has become the acceptable form of funding, and it’s not just crypto. It’s other organized efforts that do that,” he said. “It’s unfortunate that so much money is needed in campaigns, people are eager to be competitive. But that’s the way life is.”

Bourdeaux, a former Georgia Senate budget official who has taught courses on public budgeting and finance at Georgia State University, said she is concerned about voters buying and investing in cryptocurrencies and taxpayers who may suffer if the market collapses.

“Anyone who has gone through the misery of the Great Recession, who has been on the front lines dealing with it, is justifiably skeptical of exotic financial instruments,” he said in the interview.

“I’m not hostile, but I think they need a very good look to make sure they don’t flood the economy and leave the taxpayer with the stock market.”

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