Coinbase faces campaign finance violation allegations over $25m super PAC donation

Coinbase is facing allegations that it violated campaign finance laws with millions of dollars in donations to the Fairshake super PAC, but the exchange is calling those claims “misinformation.”

US public cryptocurrency exchange Coinbase is under scrutiny for possible violations of campaign finance laws following a $25 million donation to super political action committee Fairshake.

The donation, made on May 30, was flagged by crypto critic Molly White, founder of the website Web3 is Going Just Great, who claimed that the timing of the donation coincided with Coinbase’s bid for a federal government contract.

White said the donation to Fairshake could violate federal laws prohibiting contributions from organizations involved in federal contract negotiations. He noted that the U.S. Marshal Service put out a request for proposals for a contract to manage and dispose of crypto assets on March 4, and Coinbase was awarded the $32.5 million contract on July 1.

“This $25 million contribution […] “The allegations appear to violate federal campaign finance laws that prohibit contributions from current or potential federal government contractors. This would be the largest known illegal campaign contribution from a federal contractor.”

Molly White

Coinbase says it complies with all applicable laws

In response, Coinbase’s chief legal officer, Paul Grewal, dismissed the claims as “misinformation” in an X post on August 2. He emphasized that Coinbase “is not a federal contractor under the express language of 11 CFR.” [Code of Federal Regulations] 115.1” and that the company complied with all applicable laws, including those related to campaign finance.

1/3 Whether intentional or not, this is misinformation. Coinbase is not a federal contractor as stated in 11 CFR 115.1. USMS does not pay us with allocated funds; this was made clear in the public RFP. https://t.co/72T22m8rI5

— paulgrewal.eth (@iampaulgrewal) August 1, 2024

The controversy highlights the growing tensions between the cryptocurrency industry and regulators, as the sector seeks greater political influence and regulatory clarity ahead of elections in November.

Fairshake has emerged as one of the most-funded super PACs of the 2024 election cycle, raising over $200 million with significant contributions from major donors such as Andreessen Horowitz and Ripple, according to data from campaign finance researcher OpenSecrets, and received a lead donation of $45.5 million from Coinbase.