Crypto-billionaires, adept by nature at playing the ponzi game that made them among the richest people on the planet, are spending millions of dollars playing in both the Democratic and Republican primaries, looking to shape a crypto-friendly Washington... and it's working. They're winning some races-- defeating Nina Turner for corporate shill Shontel Brown in Cleveland for example and losing others, like the bid to elect some random guy, Carrick Flynn, in Oregon. Cryptobillionaire-- and Biden's second biggest 2020 donor-- started his own SuperPAC, Protect Our Future, and gave it $23 million, currently being deployed to defeat progressives like Cristina Garcia (CA), Daniel Lee (CA), Nida Alam (NC), Andrea Salinas (OR), Attica Scott (KY)...
But beating challengers is only one part of the strategy. There are a couple of other aspects here as well-- frightening incumbents to do their bidding and ingratiating themselves with the party establishments. I asked one candidate who lost her race by a landslide after Bankman-Fried dropped over a million dollars into the race, why he spent to elect her opponent. Had she ever said anything against crypto? She said she hadn't but that she left that Hakeem Jeffries and the DCCC were directing where these crypto-millions are being spent. "Jeffries wants to be the next party leader so he's trying to help elect candidates like himself," she said. I asked her what that means... "candidates like himself." She said she meant candidates who don't care strongly about a working class agenda, candidates who are willing to play ball with big money, candidates who don't think independently.
"Look at the patterns," she said. "Jeffries is directing money against progressives across the country-- not just crypto money but also right-wing Israeli money and plain conservative Democrat money... What do these special interests all have in common? Nancy Pelosi and Hakeem Jeffries."
And now he's starting to target progressive incumbents as well, working behind the scenes to defeat Rashida Tlaib and Andy Levin in Michigan and Marie Newman in Chicago, three of Congress' best members-- all 3 endorsed by Blue America. (You can contribute to their campaigns by clicking that link or by clicking on the ActBlue thermometer on the left. This morning Judd Legum, in a Popular Information post titled Crypto comes to Washington, focussed on two spineless establishment types shilling for crypto, NY Democrat Kirsten Gillibrand and Wyoming Republican Cynthia Lummis. They are both pushing legislation that will endanger the financial well-being of their constituents to please the crypto-billionaires.
Guests on CNBC, the 2 corporate shills were asked by host Ross Sorkin if they thought it was a good idea to allow people to invest their 401(k) retirement accounts in Bitcoin. No one could have been surprised when Lummis gushed "I think it's a wonderful idea. You want some assets [in a retirement account] that are just a store of value, and I think that's where bitcoin really shines." And no one should have been surprised when Gillibrand agreed. Legum reported that "According to Gillibrand, the legislation she is introducing with Lummis will create imbue crypto with 'safety and soundness' and give investors confidence that crypto is 'here to stay.'"
Had you bought a bitcoin-- this great store of value-- in November of 2021 and held it. You would have lost $44,468.32 as it dropped from $67,617.02 to $23,140.60 as I wrote this post this afternoon. Fidelity is already allowing people to gamble the money in their retirement accounts by buying bitcoin. The Labor Department says it "has 'grave concerns with what Fidelity has done.' The Labor Department says, that While 401(k) accounts are supposed to provide retirement security, cryptocurrency is a 'speculative and volatile investment.' In the last 6 months, for example, Bitcoin has plummeted 43%. The Labor Department notes that 'extreme volatility can have a devastating impact on participants, especially those approaching retirement and those with substantial allocations to cryptocurrency.' Employers that authorize investments in cryptocurrency could be violating their fiduciary duty 'to identify and avoid imprudent investment options.'"
In the CNBC interview, Lummis and Gillibrand rejected the Labor Department's guidance but failed to disclose their financial ties to the crypto industry. Lummis purchased between $50,000 and $100,000 in Bitcoin on August 17, 2021. At the time of her purchase, a Bitcoin was worth $44,671. Today, a Bitcoin is worth $27,978.70. If a portion of the $11 trillion invested in 401(k) accounts were diverted into Bitcoin, it could significantly drive up the price. Lummis previously said that she has been investing in Bitcoin since 2013 and her current holdings are valued between $150,000 and $350,000.
Gillibrand does not report any crypto assets. But Kristin Smith, executive director of the Blockchain Association, the lobbying organization for the crypto industry, reportedly hosted a fundraiser for Gillibrand in Manhattan on May 31. The fundraiser occurred just a week before Gillibrand and Lummis introduced legislation regulating the industry.
The legislation is consistent with the work of two Senators seeking to ingratiate themselves with the crypto industry.
Minutes after Gillibrand and Lummis introduced the bill, it was lavished with praise by the Blockchain Association. Jake Chervinsky, Head of Policy for the Blockchain Association, tweeted that there is "a lot to like" in the bill and the industry was "lucky to have great allies in Senators Lummis & Gillibrand." Chervinsky revealed that the Blockchain Association had been "working with both offices to make this bill the best it can be."
Why is the crypto industry so enthusiastic about this bill? First, it needs a regulatory framework around crypto so that more people feel comfortable investing and using crypto. More investors mean higher prices and bigger profits. Regulation is also seen as inevitable, so establishing a framework reduces uncertainty and makes crypto a more attractive asset.
...The biggest win in the legislation for the crypto industry is giving significant regulatory authority over crypto to the Commodity Futures Trading Commission (CFTC), a chronically underfunded agency without a robust consumer protection mandate. It also ensures a good portion of the industry would be out of the purview of the more powerful Securities and Exchange Commission (SEC). While the SEC has thousands of employees, the CFTC has just a few hundred. There are questions about whether the CFTC, which currently regulates tangible assets like corn and cattle, has the institutional expertise to rein in a digital industry like crypto.
The crypto industry, notably, has hired numerous former CFTC commissioners. The Head of Policy and Lobbying at FTX, a crypto exchange, is former CFTC Commissioner Mark Wetjen. Two former CFTC chairmen, Chris Giancarlo and James Newsome, are members of the board of advisors of the Chamber of Digital Commerce, a crypto industry lobbying group.
...While Gillibrand and Lummis' bill is purportedly about regulating the crypto, their bill includes several valuable tax breaks for the industry. Specifically, the bill would create a new "exemption from gross income for gains of up to $200 on cryptocurrency used to buy goods or services." There is no such exception if you were to sell a stock and use it to buy something. This is a special way for investors in crypto, which is already used as a vehicle for tax evasion, to avoid taxes on their gains. The bill would also "defer initial tax on digital coins earned from mining… until they’re sold."
"You would have a hard time proving that this kind of tax treatment exists elsewhere, or is justified by something else going on in the economy," John Buhl of the Tax Policy Center said.
I have a feeling the crypto-billionaires will be there for the two sleaze-ball senators when they're up for reelection. Or when they need a special favor. Look what they're doing for Hakeem Jeffries-- handing him the leadership of the House Dems on a silver platter. Oh, and look, an evil, deceptive ad in the new New Yorker: