Coinbase denies violating campaign finance laws with $25M donation Coinbase denies violating campaign finance laws with $25M donation
The crypto exchange said the allegations were misinformation because it is not a federal contractor.
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Updated: Aug. 2, 2024 at 10:27 am UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Crypto exchange Coinbase has rejected claims that it breached campaign finance laws.
Alleged violations
On July 30, crypto researcher Molly White alleged that the crypto trading platform’s $25 million donation to Fairshake, a crypto Super Political Action Committee (PAC), might have violated campaign finance rules.
According to the researcher, the donation occurred around a period when the exchange was in active negotiations for a federal government contract with the US Marshals Service (USMS). The contract, assigned to Coinbase in July, required a platform to provide custody and trading services for the digital assets seized during law enforcement investigations.
White pointed out that federal laws prohibit political contributions from entities involved in federal contracts to prevent influence over the contract awarding process.
So, White stated:
“If the contribution is indeed a violation of campaign finance law, it would be the largest such violation by a huge margin — with past violations maxing out with contributions of around $1 million.”
Coinbase response
Coinbase’s Chief Legal Officer, Paul Grewal, has labeled White’s report as misinformation.
Grewal clarified that Coinbase was not a federal contractor under 11 CFR 115.1 and that USMS wasn’t paying the firm with appropriated funds. He wrote:
“Whether intentional or not, this is misinformation. Coinbase is not a federal contractor under the plain language of 11 CFR 115.1. USMS isn’t paying us with appropriated funds—something it made clear in the public RFP.”
Grewal further shared images that showed that the cited regulations defined a government contractor as an entity paid with Congress-appropriated funds. Coinbase’s payment, he explained, comes from the proceeds of forfeited assets, not USMS funds.
Another image from Grewal added:
“All funds related to this RFP will be drawn from the Assets Forfeiture Fund, which collects proceeds from the sale of forfeited property under the Department of Justice Asset Forfeiture Program.”
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Coinbase
Coinbase is a digital currency exchange and wallet service that allows individuals to buy, sell, and store digital currencies, such as Bitcoin, Ethereum, and Litecoin.
Paul Grewal is the Chief Legal Officer of Coinbase where he is responsible for Coinbase’s legal, compliance, global intelligence, risk management and government relations groups.
