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The Crypto Kings Are Making Big Political Donations. What Could Go Wrong?

Sam Bankman-Fried may have lost in Oregon, but he and other crypto big shots have discovered politics. What will Democrats do for them in return?

Sam Bankman-Fried, the CEO of FTX US Derivatives
Tom Williams/CQ-Roll Call, Inc/Getty Images
Sam Bankman-Fried (second from right), the CEO of FTX US Derivatives, and other financial executives testified during a House Agriculture Committee hearing on May 12.

Sam Bankman-Fried has been looking to make a splash of sorts in the 2022 midterms. Oregon’s Democratic primary was supposed to be part of that. Bankman-Fried, the 30-year-old crypto billionaire, had poured $12 million in support of Carrick Flynn, one of a handful of candidates competing for the Democratic nomination in Oregon’s 6th congressional district. If Bankman-Fried’s candidate had won, his support would immediately be seen as a key factor in Democratic primaries going forward. He’d be a player.

In the end, Flynn lost. Badly. Andrea Solinas beat him roughly 2-to-1. But Bankman-Fried’s spending through his super PAC, which was record-breaking for any single congressional primary, still acted as a wake-up call to cryptocurrency skeptics: The crypto billionaires have begun playing hardball in federal races.

For Bankman-Fried, Flynn’s loss was a setback, but by no means is it the end of his interest in congressional races across the country. That goes for other emerging crypto donors as well, a new class of megadonor that made their fortune through cryptocurrency, the digital currency traded online that doesn’t depend on a bank or government.

An analysis of donations by crypto billionaires (specifically the ones listed on the Forbes 2021 list of the wealthiest Americans) shows that they have donated to a range of Democratic and Republican congressional candidates across the country, as well as state parties and national allied groups.

The list is long and spans the geographical and political spectrum: Bankman-Fried has donated to both Senator Susan Collins of Maine and Senator Cory Booker of New Jersey. Fred Ehrsam, the co-founder of the successful cryptocurrency investment firm Paradigm, has donated to Oregon Senator Ron Wyden’s campaign and Nevada Senator Jacky Rosen’s reelection campaign as well (both are Democrats). Cameron and Tyler Winklevoss (of Facebook and The Social Network fame) have also poured thousands into Senate and congressional races. Somewhat paradoxically, they’ve donated both to Arizona Senator Kyrsten Sinema’s reelection campaign and the campaign of Arizona Republican Senate candidate Blake Masters, who is seeking the GOP nomination to face Senator Mark Kelly and is a Peter Thiel protégé. The Winklevoss brothers have also donated to Donald Trump’s Save America PAC.

Major political committees have also benefited from crypto-billionaire donations. Bankman-Fried has given the Democratic Senatorial Campaign Committee over $60,000 in 2022 alone so far. In the past, he donated to state parties like the Texas Democratic Party, the Nevada State Democratic Party, the Democratic Party of Wisconsin, and the Democratic National Committee Services Corps, among others.

What sets these donors and their support apart from the hordes of other wealthy contributors looking to sway campaigns or just distinguish themselves as political players is that the cryptocurrency field is comparably uncharted ground. Within the Democratic Party, there’s an emerging debate over how much regulation of the cryptocurrency industry there needs to be. Leading the pro-regulation charge are Senators Elizabeth Warren and Sherrod Brown, two of the loudest voices urging caution and sounding warnings about the riskiness of the cryptocurrency industry. (In what might be a fitting twist, Warren endorsed the candidate who beat Bankman-Fried’s preferred choice and won the Democratic nomination in Oregon’s 6th congressional district.)

Then there are other well-known Democrats who have suggested more openness to the industry and regulations. New York Congressman Ritchie Torres penned an op-ed with the headline “A liberal case for cryptocurrency” and has argued that “Crypto is the future. It could enable the poor to make payments & remittances without long delays and high fees. It could enable artists & musicians to earn a living. It could challenge the concentrated power of Big Tech & Wall Street.” New York Democratic Senator Kirsten Gillibrand has teamed up with Senator Cynthia Lummis, the Wyoming Republican, to craft a regulatory framework for the cryptocurrency industry. Lummis has been described by Roll Call and Reason magazine as the “crypto queen” of the Senate.

On the campaign trail, these debates and the spending by deep-pocketed donors who have a vested interest in how the federal government shapes cryptocurrency policy mean the candidates crypto billionaires back get extra scrutiny on their positions on crypto. Flynn and Bankman-Fried have both had to bat away rumors and suspicions that the billionaire was only backing Flynn because he would push for favorable crypto laws if elected to Congress. Bankman-Fried says his motivation in backing Flynn, an otherwise unremarkable candidate, is based on their shared views on altruism.

Every time Bankman-Fried or another billionaire who made his fortune in the still new and mostly unregulated industry backs a candidate, the motivation comes up. “You just can’t help but think, yeah, they’re weighing in to curry favor with members of Congress and to influence the regulations that are being proposed right now,” Congresswoman Carolyn Bourdeaux told NBC News in a recent interview. Bourdeaux is facing Congresswoman Lucy McBath, a fellow Democrat, in Tuesday’s primary for Georgia’s new 7th congressional district. McBath has the benefit of Bankman-Fried’s super PAC, which is spending $2 million in support of her candidacy.

It’s still early, and the battle lines are very much muddled, but it’s more than a little likely that many progressives will see crypto donors as nefarious shills from the wrong part of the Democratic Party. For example, earlier in the cycle in one of the most heated congressional primaries on the Democratic side to date, Bankman-Fried, through the Protect Our Future super PAC he bankrolls, poured $1 million into backing Shontel Brown, roughly the establishment-backed candidate, over former Ohio state Senator Nina Turner, a longtime ally of Senator Bernie Sanders. In that race, Bankman-Fried’s preferred candidate got the nomination. To be fair, Brown was also the Cuyahoga County Democratic chairwoman and thus had a lot of local support.

More primaries are ahead where Bankman-Fried, the Winklevoss twins, Ehrsam, and other crypto donors have a stake. Protect Our Future rolled out almost a dozen endorsements in late April, among them Michigan Congresswoman Haley Stevens, who is in a heated primary against Congressman Andy Levin—another member-on-member fight like the one in Georgia.

Democrats are still figuring where to position themselves on crypto—whether to cast the whole thing as too financially risky or embrace it (and by proxy, its donors and maybe even donations in Bitcoin). The uniting factor is not party affiliation. It’s something else: influence. These donors are not trying to win over a party; they’re trying to win over lawmakers with power or who might owe them. That means senators who are often on the fence in tight votes, such as Collins, Sinema, and West Virginia Senator Joe Manchin—or who chair relevant committees. Wyden, for example, happens to chair the Senate Finance Committee—which handles taxes and revenue-related topics.

Crypto companies have spent $100 million on lobbying on behalf of the crypto industry. Former Senator Max Baucus, a Democrat of Montana, is now also lobbying on behalf of the industry. He’s a former Finance Committee chair himself. So whenever you hear a Democrat singing crypto’s praises, you’ll understand a little more about how that came to be.