In FEC complaint, Public Citizen and crypto critic Molly White allege Coinbase violated campaign finance laws

Consumer advocacy group Public Citizen and writer Molly White, who has been critical of crypto, filed a complaint with the Federal Elections Commission alleging that Coinbase violated campaign finance laws.

The complaint says that Coinbase donated $25 million to the pro-crypto group Fairshake Super PAC while also negotiating with the U.S. Department of Justice over government contracts, and therefore broke campaign finance laws. The U.S. Marshals Service, which is a part of the DOJ, announced this summer that it was paying $32.5 million for a contract with Coinbase Prime to provide custody. 

Crypto has quickly become part of the election landscape, and millions of dollars continue to flood into super political action committees, including Fairshake. The majority of Fairshake's receipts recently appear to have come from Coinbase, which announced a $25 million donation on June 3. Other firms, such as a16z crypto and Ripple, have also donated millions. 

“Among all big businesses that have aggressively exploited Citizens United since 2010, Coinbase’s conduct stands out as especially shocking and egregious,” said Rick Claypool, a Public Citizen research director, in a statement. “The crypto corporation’s eye-popping contributions — made in apparent violation of longstanding pay-to-play prohibitions — demonstrate how lax enforcement emboldens corporate lawbreaking. The FEC must step up.”  

The U.S. Supreme Court ruled in 2010 in Citizens United v. Federal Election Commission that corporations and other outside entities can spend unlimited amounts of money on elections. 

In their complaint filed on August 1, White and Claypool argue that Coinbase is a federal contractor because the company is "holding a current government contract with the United States Marshals Service (USMS), a federal agency within the United States Department of Justice." According to the complaint, the Federal Election Campaign Act bans a "federal contractor from making contributions, directly or indirectly," to any political committee, party, or candidate.

Coinbase Chief Legal Officer Paul Grewal reacted last week on X after the complaint was filed and said that the exchange was not a federal contractor. 

"Whether intentional or not, this is misinformation. Coinbase is not a federal contractor under the plain language of 11 CFR 115.1.  USMS [U.S. Marshals Service]  isn’t paying us with appropriated funds—something it made clear in the public RFP [request for proposal]," Grewal said.

A supplement to White and Claypool's complaint was filed later on Aug. 5, stating that Grewal was not correct. 

"Since the Assets Forfeiture Fund is a Congressional appropriation, Coinbase was paid for the performance of a contract from funds appropriated by the Congress, and is thus a federal contractor," they said in the supplement.

Grewal said criticized the complaint in a post on X later on Monday. Seized crypto are not "Congressionally appropriated funds," he said. 

"It’s also worth noting that Coinbase has donated to Dem and GOP super PACs equally with $500K to House and Senate funds for each party, respectively, for 2024," Grewal added. "White and Public Citizen appear to want to report a political bias which does not exist. Very simply, the world view these researchers espouse in this document is not the law, as much as they wish it was."

Update: Aug. 5, 9:57 p.m. UTC to include comments from Paul Grewal