Global: Coinbase Denies Allegations of Violating Campaign Finance Laws

Paul Grewal, Coinbase’s Chief Legal Officer, has denied allegations that the cryptocurrency exchange violated campaign finance laws through a $25 million donation to a super political action committee (PAC) made in May of this year.

The allegations, presented in a July 31 report by prominent crypto critic Molly White, suggest that Coinbase’s donation to the Fairshake crypto super PAC might have breached campaign finance regulations due to ongoing negotiations for a federal government contract.

In a statement posted on X on August 1, Grewal refuted these claims, stating that Coinbase did not qualify as a federal contractor under the “plain language” of Code of Federal Regulations 111.51. He emphasized that the U.S. Marshals Service (USMS), which issued the request for proposal (RFP), had clarified that appropriated funds would not be used for payment.

“Whether intentional or not, this is misinformation,” Grewal remarked.

Coinbase’s donations to the Fairshake super PAC included $5 million in November 2023, $15.5 million in December 2023, and $25 million on May 30, 2024. White’s report linked these contributions with Coinbase’s RFP issued on March 4, 2024, and a contract ending no sooner than June 30, 2025, suggesting that the May donation fell within a prohibited period for such contributions.

Dr. Craig Holman, a government affairs lobbyist, advised that it is illegal for federal contractors to make campaign contributions to federal committees, including super PACs, and recommended filing a complaint with the Federal Election Commission (FEC).

However, Grewal later clarified that the funds associated with the RFP were sourced from the Assets Forfeiture Fund, which is funded by the sale of property forfeited to the U.S. Government under the Department of Justice.

The Fairshake Super PAC, which aims to advance blockchain innovation through a clearer regulatory framework, has raised over $202 million this year, making it the largest super PAC of the 2024 election cycle. Its donors include some of the biggest names in the cryptocurrency sector, including Coinbase.