The Ambassador for Crypto – The American Prospect
The Revolving Door Project, a Prospect partner, scrutinizes the executive branch and presidential power. Follow them at therevolvingdoorproject.org.
It’s been more than three months since Sen. Bob Menendez (D-NJ) temporarily stepped down as the chair of the Senate Foreign Relations Committee in light of his indictment for allegedly taking cash and gold bars in return for political favors. Now, Sen. Ben Cardin (D-MD) has the difficult task of restoring credibility to a committee that was led for years by a man alleged to have been accepting bribes from a foreign nation.
But Cardin will face another lingering conflict of interest, one that he could nip in the bud, though he has so far failed to do so. President Biden’s nominee for U.S. ambassador to the Organisation of Economic Co-operation and Development (OECD), Sean Patrick Maloney, is waiting to be discharged from the committee for a vote by the Senate. In a clear conflict of interest, Maloney has used his time outside of government to cash out from the crypto industry.
Like Menendez, Maloney is a prominent Democratic insider with all the same opportunities to receive special privileges and favors. Most recently, Maloney was a member of the House who led the Democrats’ campaign arm in the 2022 midterms, in which the party narrowly lost control of the chamber—including Maloney’s own seat. Like Menendez, Maloney could easily advance his career in the Democratic Party if he could simply avoid the temptation of payouts. But instead, his consolation prize for years of party loyalty—a cushy ambassadorship in Paris—has become a means of making money from the shady crypto industry.
On the same day that Biden publicly announced Maloney’s nomination last May, cryptocurrency trading platform Coinbase announced their appointment of Maloney to their five-person “Global Advisory Council.” Less than a month later, the Securities and Exchange Commission charged Coinbase with operating as an unregistered securities exchange.
Along with Maloney, the advisory board also includes former congressman Tim Ryan and former senator Pat Toomey, both of whom have spent their time on the board as outspoken crypto proponents. Ryan joined a “Stand With Crypto” event in Columbus, Ohio, in September, while Toomey has habitually decried the SEC’s regulatory power over his new employer.
Now, Maloney is poised to head to the OECD, which Coinbase has actively lobbied as recently as last October.
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For those unfamiliar with the OECD, it’s essentially a Paris-based think tank that publishes economic research and policy recommendations for its mostly European and North American member states. Like any think tank, the OECD is funded through donations, in this case from its member nations. The U.S. provides 19.1 percent of the organization’s budget (no other nation even cracks 10 percent) and thus has outsized influence, similar to that of any major donor at any other think tank. But the OECD’s influence is not limited to member states. The organization works closely with other international organizations including the U.N., the IMF, and the African Tax Administration Forum.
The goal of the OECD is to promote economic cooperation, growth, and effective regulation of the global economy—all areas of importance for an emerging international crypto market that has flourished under lax regulation and weak international cooperation. Hence the coordinated effort by crypto firms to influence the OECD’s Crypto-Asset Reporting Framework (CARF), which was published in October of last year.
While Coinbase and the broader crypto industry’s efforts to influence the CARF were largely unsuccessful, the OECD’s governing structure makes the possibility of a crypto insider within the organization particularly pernicious. For the most part, the OECD and its committees operate on a consensus model that requires either unanimous or mutual (meaning without any opposition) agreement on measures. If the American ambassador to the OECD is also literally a crypto employee, it could drastically change the organization’s research and policy recommendations.
Indeed, Maloney’s connections to the industry extend beyond his role at Coinbase. While serving in Congress, Maloney was a major recipient of donations from various crypto figures, including the now-disgraced Sam Bankman-Fried. When Maloney was chair of the DCCC—the campaign arm of House Democrats—the organization received $250,000 from the former FTX CEO. At the same time, Bankman-Fried maxed out contributions to Maloney’s personal campaign account. Maloney also spearheaded efforts to make the Commodity Futures Trading Commission the primary regulator of digital assets in the U.S.—part of an ongoing effort spurred by the industry’s desire to be regulated by the statutorily weaker and smaller agency.
It’s even more disturbing that Maloney chose to associate himself with an industry rife with fraud and securities violations even after the facade had fallen. Maloney is not another celebrity or athlete who can vaguely claim to have been beguiled by the industry’s marketing material. Instead, despite being a savvy Washington insider, he somehow allowed himself to ignore the optics of joining the industry after all of the recent legal troubles.
In November, the Foreign Relations Committee held a nomination hearing for Maloney, where he testified that “the needs of American families will always be my priority at OECD.” Only five of the 21 members of the committee (four of them Democrats) even bothered to show up for the hearing, and none of them asked Maloney anything about crypto. Sen. Cardin didn’t attend. Maloney remains an active nominee despite this potential conflict.
Ironically, Maloney secured the nomination to ambassador as a reward for faithful service to the Democratic Party, but he has now used the nomination to enrich himself at the cost of the party’s well-being. In the grip of a massive ethics scandal already, the Senate Foreign Relations Committee cannot afford another.
