How scammy, polluting cryptocurrency hijacked the 2024 election

Donald Trump was right.

Well, briefly.

In June 2021, the former president did an interview with the Fox Business Channel’s Stuart Varney in which he declared that Bitcoin — the most popular form of cryptocurrency, as the electronic alternative to traditional money was then surging in value — looked to him like “a scam.”

“The currency of this world should be the dollar,” Trump said. “And I don’t think we should have all of the Bitcoins of the world out there. I think they should regulate them very, very high.” At the time, POTUS 45’s comments felt like — for the man who’d foisted Trump University and Trump Vodka on the world — game was recognizing game.

Trump’s comments seemed prescient some 18 months later when crypto’s best-known evangelist — Sam Bankman-Fried, founder of the FTX cryptocurrency exchange — was arrested and later convicted on fraud charges, amid mounting concerns for “little guy” investors. Although it was probably not on Trump’s mind that day, other critics seized on the damage created by electronic “mining” of cryptocurrency — with the industry said to require as much electricity as a European nation like Greece or the Netherlands, with much of that coming from burning fossil fuels.

But less than three years after calling crypto a scam, and now running to become the 47th president, Trump suddenly wanted in. He spoke this summer in Nashville at a Bitcoin conference in which he declared that he would make America “the crypto capital of the world,” and promised that if he becomes president, he would only appoint regulators who “love” the industry. Trump’s comments came as he was successfully wooing pro-crypto billionaire big donors like Silicon Valley’s Marc Andreessen and Tyler Winklevoss of The Social Network fame. Indeed, Trump and his sons Donald Jr. and Eric last month unveiled their own crypto venture, called World Liberty Financial, which seemed much in line with other recent gambits like $399 sneakers or $100,000 watches — which can be bought with cryptocurrency.

So you might expect that pro-consumer, pro-environment Democrats and their standard-bearer, Kamala Harris, would counter Trump as the party pledging to crack down on the worst abuses. Not so. To the contrary, Harris — aggressively seeking Silicon Valley cash to finance a campaign that didn’t launch until July — has sent signals to Big Crypto that she might be kinder and gentler to the industry than the Biden administration. After aides reportedly reached out to crypto industry officials, Harris held a fundraiser on Wall Street and told wealthy attendees that as president, she’d “encourage innovative technologies like AI and digital assets while protecting our consumers and investors.”

What we are witnessing in the 2024 election is the worst nightmare of the good-government groups who’ve been warning for decades about the corrupting influence of Big Money in American politics. The $119 million the crypto industry has poured into U.S. politics this year — so far — is believed to be the most money one industry has ever spent in one cycle. And the nature of this plot is clear: A handful of billionaires and lucrative corporations who owe their wealth to what its harshest critics call “a pyramid scheme” are seeking to prevent regulations that would protect everyday citizens.

“It’s pretty unprecedented,” Rick Claypool, senior researcher for the good-government group Public Citizen, told me. He said what’s also noteworthy about this tsunami of campaign money is that the TV ads backed by the industry — which, in the primaries, helped defeat pro-consumer candidates like U.S. Senate hopeful California Rep. Katie Porter and New York Rep. Jamaal Bowman — attack the candidates without even mentioning crypto at all. “It’s more the standard focus group message,” he said, “that this politician can’t be trusted.”

The reason the crypto industry — including large donations from corporations like Coinbase and Ripple Labs, made possible by the U.S. Supreme Court’s controversial 2010 Citizens United v. FEC ruling — isn’t talking about cryptocurrency in its ads is probably because the overwhelming majority of U.S. voters just don’t care. Research shows that only about 7% of Americans invest in crypto, although its popularity seems to be greatest with young men who are being targeted by Trump.

Thus, the surge of crypto donations looks like the textbook example of an issue that could mean millions of dollars for an extremely narrow class of wealthy donors but means next to nothing to average voters. Cynically, the chance to woo large donations without losing votes is catnip to both Republicans like Trump — who also promised Big Oil owners he would deregulate their industry for $1 billion in donations — but also Democrats like Senate Majority Leader Chuck Schumer, who told a Crypto4Harris town hall and fundraiser in August that “crypto is here to stay!” The estimated $30 million-plus spent by crypto to help Ohio Republican Bernie Moreno unseat the populist Democratic Sen. Sherrod Brown could flip the Senate, with the fallout on everything from abortion rights to the next Supreme Court justice.

Crypto may be here to stay, but the need for aggressive regulation seems clear. While crypto advocates aren’t wrong that the rise of Bitcoin and other currencies has exposed inefficiencies in traditional banking, the risks still seem to outweigh any stated benefit. These include the ongoing risks for fraud like the one that took place with FTX, the chance that unsophisticated small investors will get harmed by the huge price swings in the value of crypto, the reality that crypto seems popular with criminals and bribe-givers, and its senseless levels of pollution.

Those are some of the key reasons why top officials in the Biden administration, including Securities and Exchange Commission chair Gary Gensler and Federal Trade Commission chair Lina Khan, have more aggressively regulated crypto, especially since the Bankman-Fried scandal. Nearly $120 million later, the billionaire boys of crypto have already won when both parties are making promises to go lighter on their industry.

As the brilliant new podcast Master Plan reveals, this disturbing state of affairs has been more than 50 years in the making, since the captains of capitalism saw establishing corporations as people with free speech rights to spend unlimited dollars on elections as their way to stave off the social and political revolutions of the 1960s. The series of conservative court rulings, culminating in Citizens United, that cleared the way for corporations and billionaires to spend freely through political action committees has already deeply warped our politics. But for one industry to spend $119 million and counting to influence its narrow issue is a dangerous new frontier.

» READ MORE: The other giant threat to U.S. democracy is a conspiracy hatched 53 years ago | Will Bunch

“Every corporate CEO is watching this crypto money-in-politics playbook right now,” Public Citizen’s Claypool said. His fear is that other industries with even more financial resources — for example, Big Oil wanting the government to approve more offshore drilling leases — will soon be spending unlimited dollars on similar political crusades. Such spending “by an industry with more substantial resources could get pretty ugly,” he said.

It’s not a pretty picture now. Who is lobbying the leaders of the GOP and the Democratic Party on behalf of regular folks who don’t want to get scammed and who don’t understand why we’re burning so much energy for a product that arguably isn’t even needed? Even Trump got it right when he said crypto regulation should be “very, very high.” How ironic if U.S. democracy doesn’t collapse under a ton of political dollars, but under a fistful of Bitcoin.

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