[continued from previous message]

those under legal fire, and he clearly felt victimized. He told
Bloomberg that the federal government was acting like “a bully,” and
tweeted, “Dems continue to enable Gensler’s unlawful war on
crypto—sabotaging the ability for American innovation to thrive. It’s
no wonder the GOP has announced a pro-crypto stance . . . . Voters are
paying attention.” (Last year, a federal judge upheld some portions of
the S.E.C.’s case against Ripple and dismissed others.)

To certain people, the government’s approach felt oddly aggressive. One
crypto executive told me she discovered that her bank accounts had been
frozen—with no explanation—only when she tried to make a withdrawal to
repair a catastrophic home-septic-system failure. Around this time,
various regulatory agencies were warning banks about the risks posed by
the crypto industry. When the executive’s accounts were later
unfrozen—again, without a clear explanation—she was left wondering if
the government’s goal was to intimidate the industry. (The Office of
the Comptroller of the Currency, which regulates national banks, said
that it does not direct banks to freeze individual accounts.)

Cartoon by Michael Maslin
Copy link to cartoon
Link copied

Shop

Open cartoon gallery
The Biden Administration’s oppositional stance, however, seemed
warranted when, in 2022, FTX—the enormous crypto exchange and hedge
fund led by Sam Bankman-Fried—imploded amid revelations that more than
eight billion dollars had been misallocated or lost. Bankman-Fried had
been a prolific political donor, and violating campaign-finance law was
among the crimes for which he was arrested. Another crypto executive
told me that, after the FTX scandal, many figures in the industry “just
wanted to put our heads down and disappear,” adding, “The less people
noticed us, the better.”

But among Silicon Valley’s most moneyed class retreat wasn’t an option.
The powerful venture-capital firm Andreessen Horowitz had already
raised more than seven billion dollars for crypto and blockchain
investments. The “super angel” investor Ron Conway had poured millions
of dollars into crypto firms through his venture fund. Lehane urged
some of the largest crypto investors and companies, many of whom were
bickering on Twitter, to instead form a coalition devoted to changing
the public narrative. He began hosting private biweekly gatherings,
known as the Ad-Hoc Group, where various collaborations were discussed.
Eventually, a former partner at Andreessen Horowitz, Katie Haun,
recommended that the large crypto firm Coinbase, where she was a board
member, bring on Lehane as an adviser.

Lehane met with Coinbase’s co-founder Brian Armstrong and told him
that, just as with Airbnb, what seemed like a crisis was actually an
opportunity. “This is not the time to go quiet,” Lehane told him. “This
is your chance to define your company and the industry, and prove
you’re different from FTX.” In 2023, Lehane joined Coinbase’s Global
Advisory Council. Twenty-five days later, the S.E.C. sued the firm.

Lehane established a war room with the primary goal of convincing
politicians that the political consequences of being anti-crypto would
be intensely painful. The person familiar with Fairshake, who was then
an employee at Coinbase, told me, “It wasn’t really about explaining
how crypto works, or anything like that. It’s about hitting politicians
where they are most sensitive—reëlection.” Armstrong clarified this aim
at a crypto conference in 2023. The goal, he said, was to ask
candidates, “Are you with us? Are you against us? Are we going to be
running ads for you or against you?”

Although Lehane’s basic strategy resembled the one he’d used at Airbnb,
that campaign had been focussed on municipal issues and local political
races. The crypto effort was national in scale, targeting Senate and
House races—and potentially even the Presidential contest—and would
require significantly more money. Lehane suggested to Armstrong that
crypto firms set aside fifty million dollars for outreach. Let’s
earmark a hundred million, Armstrong replied. Coinbase, Ripple, and
Andreessen Horowitz donated more than a hundred and forty million
dollars to Fairshake, the crypto super pac. Executives at other firms
contributed millions more.

Lehane, collaborating closely with Fairshake, began crafting a pro-
crypto message and helping to build a “grassroots” army. “We need to
demonstrate there’s a crypto voter,” he told the Coinbase team.
“There’s millions and millions of Americans who own this stuff. We need
to prove they’ll vote to protect it.”

The Federal Reserve has said that in 2023 fewer than twenty million
Americans owned cryptocurrencies. Polling indicates that the issue is
not an electoral priority for many voters. One Coinbase staff member
pointed out this discrepancy to Lehane, saying, “I don’t know if there
is a crypto voter.”

“Then we’re going to make one,” Lehane replied.

Coinbase began loudly promoting the results of surveys reporting to
show that fifty-two million Americans owned cryptocurrencies, and that
many of them intended to vote to protect their digital pocketbooks.
Those polls indicated that sixty per cent of crypto owners were
millennials or Gen Z-ers, and forty-one per cent were people of
color—demographics that each party was trying to woo. Lehane also
quietly helped launch an advocacy organization, Stand with Crypto,
which is advertised to Coinbase’s millions of U.S. customers every time
they log in, and which urges cryptocurrency owners to contact their
lawmakers and sign petitions. The group says that it currently has more
than a million members. The Coinbase employee told me that Stand with
Crypto would identify a city with a significant population of crypto
enthusiasts, like Columbus, Ohio, and then inundate them with push
notifications aimed at organizing town halls and rallies. The employee
explained, “If you can get fifty or sixty people to show up, with good
photo angles you can make it look like hundreds. In small states or
close elections, that’s enough to convince a candidate they should be
paranoid.”

This supposed army of crypto voters fed directly into the next stage of
the assault: scaring politicians. Stand with Crypto built an online
dashboard that assigned grades to U.S. senators and representatives—and
to many of their challengers—which reflected their support for crypto.
The scores seemed to inevitably be either “A (Strongly supports
crypto)” or “F (Strongly against crypto),” though the data undergirding
the grades were sometimes specious. “Most of them hadn’t really taken a
side,” another Coinbase staffer told me. “So we’d, you know, look at
speeches they’d given, or who they were friends with, and kind of make
a guess. If you were friends with Elizabeth Warren, you were more
likely to get an F.”

Nevertheless, Lehane insisted that Fairshake maintain a nonpartisan
tone. The super PAC was careful to support an equal number of
Democratic and Republican candidates, and, following Lehane’s advice,
it planned to stay out of the 2024 Presidential race altogether. A
venture capitalist who has advised the crypto industry told me that the
group’s nonpartisan stance was essential, because, “if we want to get
the right regulations in place, we have to get a bill through Congress,
which means we need votes from both parties.” Moreover, Fairshake’s

[continued in next message]

--- SoupGate-Win32 v1.05
 * Origin: you cannot sedate... all the things you hate (1:229/2)