Crypto ‘dark money’ lobbies as industry aims to influence 2024
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A new mysterious nonprofit group backed by the crypto industry has set up a mailing address about 100 miles away from Washington, D.C., and is making movies to exert power in the nation’s capital.
The Cedar Innovation Foundation, a 501(c)(4) that was incorporated in Delaware in April, has launched advertisements against at least one powerful lawmaker who’s up for reelection, and quietly hired a group of strategists to fight on its behalf, according to records uncovered by CNBC.
It’s part of a broader effort by the crypto industry to influence Congress ahead of the 2024 elections and as a variety of crypto-related bills begin to weave their way through Washington.
The crypto market is trying to bounce back after a scandal-filled year that included the criminal fraud conviction of FTX founder and political megadonor Sam Bankman-Fried in November, followed by a plea deal for Binance founder Changpeng Zhao.
Crypto groups spent over $18 million on lobbying last year, according to an analysis by Reuters. The Cedar Innovation Foundation doesn’t publicly disclose its donors or say on its website who runs the organization or where it’s located.
Cedar Innovation is being heavily funded by crypto industry players, with Coinbase likely to write a check for the group by the end of the year, according to people familiar with the matter who asked not to be named because discussions about financing were private. The group recently hired Mindset Advocacy, a lobbying shop that’s worked for Goldman Sachs, Amazon Web Services and Barclays, according to a recent disclosure report and data from the nonpartisan organization OpenSecrets.
Dennis Kelleher, the CEO of the nonprofit Better Markets, told CNBC that he predicts the industry is going to spend big this year to try to fend off lawmakers who are critical of crypto.
“What we’re going to see in 2024 is a massive ramp up in crypto-funded ‘dark’ money campaigns against anybody who isn’t a crypto shill,” Kelleher said. “By the end of the year, when it’s all added up, I think the crypto industry is going to put hundreds and hundreds of millions of dollars in trying to defeat people who want to actually represent the voters, rather than represent crypto.”
Josh Vlasto, a spokesman for the foundation and a veteran Democratic strategist who worked for former New York Gov. Andrew Cuomo and Sen. Chuck Schumer, D-N.Y., didn’t answer questions regarding the group’s backers. In a statement to CNBC, he took aim at Kelleher and Better Markets.
“It’s not surprising that a Washington think tank funded by the big banks and hedge fund managers is trying to destroy crypto to retain their monopoly on access to the money of all Americans,” Vlasto said.
Kelleher fired back saying Cedar Innovation was lying about Better Markets and called his organization an “independent nonprofit.”
A Coinbase spokesperson declined to comment about potential funding of Cedar Innovation Foundation and referred CNBC to public remarks by executives. In a post last month on X, formerly known as Twitter, Coinbase CEO Brian Armstrong said “the crypto industry has a large war chest now to elect pro-crypto candidates in 2024,” referring to a recent donation the company made to a new super PAC.
Since late last year, Cedar Innovation has been actively advertising on Facebook and Instagram, according to Meta’s ad archive. The nonprofit has spent just over $27,000 on ads on the two Meta platforms, including spots demanding voters call Senate Banking Committee Chairman Sherrod Brown, D-Ohio, to encourage him to take on SEC Chair Gary Gensler, a crypto skeptic. The organization has also targeted industry critics Sens. Elizabeth Warren, D-Mass, and Roger Marshall, R-Kan.
“Anyone who knows my record knows I will never bow to special interests or industry pressure, no matter how well-funded by dark money from shady sources,” Brown, who is up for reelection this year, told CNBC. “That’s why I’ve been working in the Committee to protect families’ money from the fraud, scams, and abuse rife in this industry, and to stop its use to fund terrorism and other illicit activities.”
Brown’s office said that neither the senator nor his staff have heard from the Cedar Innovation Foundation. Representatives for Warren and Marshall didn’t respond to requests for comment.
“We hope Senator Brown and others don’t bow to the Wall Street banks and their special interests, especially when crypto innovation holds the key to thousands of good jobs in Ohio, Kansas, and across the country,” Vlasto said in response to Brown. “The Cedar Innovation Foundation, a non-partisan organization, is committed to helping policymakers and the public understand the stakes at play, while giving regulators the tools they need during a time of transformative change.”
‘Political hit job’
The foundation says in a press release that it’s “dedicated to helping congressional staff and policymakers by providing them with the tools and resources they need to better serve the American people and build the innovation economy in America.”
However, Kelleher said the ads that he’s reviewed indicate the group is more focused on trying to target Brown and other crypto critics’ reelection efforts.
“This isn’t an education campaign,” Kelleher said. “This is a political hit job on Senator Brown because they want to defeat him in the upcoming election.”
Cedar Innovation is turning to experienced strategists to help with its influence campaign, according to records and people familiar with the matter.
In hiring Mindset Advocacy, the group brings on four lobbyists with past ties to current and former members of Congress, according to LegiStorm.
Charlie Schreiber, a principal at Mindset who’s helping the foundation, previously worked for House Financial Services Chairman Patrick McHenry. One of the three bills the foundation plans to oppose is Clarity for Payment Stablecoins Act of 2023, a McHenry-sponsored a piece of legislation that would change how stablecoins are regulated.
A spokeswoman for McHenry’s office didn’t return a request for comment.
The foundation has also hired Bullpen Strategy Group, a consulting firm founded and run by longtime Republican strategist Joe Pounder, according to a person familiar with the matter. Bullpen says on its website that it specializes in crisis communications, research and media intelligence.
Pounder didn’t respond to an email seeking comment.
Cedar Innovation has other political strategists working on its behalf, records indicate.
On Meta’s ad report for Cedar Innovation, a phone number for the organizer matches a cell phone number for Eric Coats, a longtime Illinois-based political consultant, according to a public database. Coats didn’t respond to questions asking about his role with Cedar Innovation.
Coats previously worked for Massachusetts Democratic Rep. Seth Moulton’s congressional campaigns as well as his leadership political action committee, according to Federal Election Commission records.
