Coinbase faces campaign finance violation allegations over $25m super PAC donation

Coinbase faces allegations of violating campaign finance laws with a multi-million donation to the Fairshake super PAC, though the exchange labels these claims “misinformation.”

Coinbase, the U.S. public cryptocurrency exchange, is under scrutiny for a potential breach of campaign finance laws following a $25 million donation to Fairshake, a super political action committee.

The donation, made on May 30, has been flagged by crypto critic Molly White, more known as the founder of the “Web3 is Going Just Great” website, who alleges that the timing of the contribution coincides with Coinbase’s bid for a federal government contract.

White says the donation to Fairshake might violate federal laws prohibiting contributions from entities engaged in federal contract negotiations. She notes that the U.S. Marshals Service had issued a request for proposals on March 4 for a contract to manage and dispose of crypto holdings, with Coinbase being awarded the $32.5 million contract on July 1.

“This $25 million contribution […] appears to be in violation of federal campaign finance laws that prohibit contributions from current or prospective federal government contractors. This would be by far the largest known illegal campaign contribution by a federal contractor.”

Molly White

Coinbase says it complies with all applicable laws

In response, Coinbase’s chief legal officer Paul Grewal dismissed the allegations as “misinformation” in an X post on Aug. 2. He emphasized that Coinbase “is not a federal contractor under the plain language of 11 CFR [Code of Federal Regulations] 115.1” and asserted that the company complies with all applicable laws, including those related to campaign finance.

The controversy underscores growing tensions between the cryptocurrency industry and regulatory bodies as the sector seeks greater political influence and clarity on regulatory issues ahead of the November elections.

Fairshake has emerged as one of the most funded super PACs of the 2024 election cycle, raising over $200 million, with significant contributions from prominent donors like Andreessen Horowitz and Ripple, and a leading $45.5 million from Coinbase, according to data from campaign finance researcher OpenSecrets.