Last year, Silicon Valley venture capital giant Andreessen Horowitz announced a new endeavor: It would begin donating to the political campaigns of candidates who are ideologically aligned with the firm’s “techno-utopian” outlook.That did not include Democratic Rep.Katie Porter, a populist from Orange County, who has developed a firebrand reputation for grilling corporate executives.
In 2022, Porter criticized the energy consumption used for Bitcoin mining operations.And she may have paid a price for it, after a new Super Political Action Committee called Fairshake–comprised of many of the tech world’s biggest names in cryptocurrency–spent more than $10 million in an effort to defeat her bid for the U.S.Senate in California’s Super Tuesday Primary.
Among the more prolific donors to Fairshake are Ben Horowitz and Marc Andreessen, co-founders of Andreessen Horowitz (known by the abbreviation a16z).When the firm announced its foray into politics, Horowitz wasted no time in clarifying that in campaign finance, there are allies and enemies.”If a candidate supports an optimistic technology-enabled future, we are for them.If they want to choke off important technologies, we are against them,” he wrote in a blogpost announcing the directive last December.
Fairshake filed its initial paperwork with the Federal Election Committee last March, and in less than a year amassed a $92 million war chest, outstripping MAGA Inc., the main Super PAC supporting Donald Trump’s 2024 presidential campaign, according to the campaign finance tracker OpenSecrets.
In terms of money raised, Fairshake is the second richest Super PAC entering election season, only behind Never Back Down Inc., the group that bankrolled Florida governor Ron DeSantis’ ill-fated presidential campaign.
So far, Fairshake has used its capital sparingly but to great effect, deploying over $10 million on a combination of online and TV ads to help defeat Porter, who blamed the loss on “an onslaught of billionaires spending millions to rig this election.” Congressman Adam Schiff, who has mentioned cryptocurrency and blockchain among the core areas that can bolster the state as an innovator, triumphed in the race.
In the runup to the primary, an online ad campaign paid for by the group urged “crypto owners, vote no on Katie Porter,” but none of the three TV commercials Fairshake paid for mentioned Schiff or cryptocurrency.Schiff hasn’t accepted crypto PAC money in support of his Senate run.Porter finished third, behind Republican Steve Garvey, the former Los Angeles Dodger.Schiff and Garvey will square off in the general election in November.
Garvey’s website makes no mention of crypto or the blockchain technology that enables connection between peer-to-peer networks.
One of the key questions in the wake of the California ad blitz, is whether crypto will feature as a marquee issue in future television spots financed by Fairshake.The Super PAC’s spokesman Josh Vlasto declined to comment on future television strategy, but added “we’ll have the resources to affect races and the make-up of institutions at every level.”
There is also the question of whether there are enough voters switched on to crypto who can help Fairshake’s influence campaign.”Candidates are going to start looking for policy positions that are going to win them votes.
And crypto does not look like it’s going to be on anyone’s top of the radar in that context,” Yesha Yedav, a department chair at Vanderbilt University Law School, previously told Inc.
Fairshake emerged in the aftermath of the FTX implosion last year, which invited heavy industry scrutiny from the Securities and Exchange Commission and public denunciations from members of Congress.As the 2024 campaign picks up steam, Fairshake and two other crypto-affiliated PACs–Defend American Jobs and Defend Progress–intend to target races in states they believe can tip the balance of Congressional power towards regulation that industry power brokers prefer.In some respects, the group is also picking up where FTX founder and CEO Sam Bankman-Fried left off: The convicted executive was a prolific donor to Democratic politicians.
Recent lawsuits have hounded some of Fairshake’s most generous donors, including blockchain developer Ripple, which the SEC accused of selling unregistered securities in 2020, and Coinbase, which the agency said last year was operating illegally in the U.S.Coinbase petitioned the agency to create rules for crypto regulation last week, and accused it of neglecting its responsibility to standardize the industry.
Both companies have donated a combined $35 million to Fairshake.Through its investment arm Ah Capital Management, a16z has contributed $33 million in various donations, plus another $5 million in individual gifts from Horowitz and Andreessen, OpenSecrets shows .
A16z declined a request for comment.
Crypto insiders insist there is a voting bloc dedicated to the issue of advancing favorable regulation, and cite as evidence a recent get-out-the-vote-rally in Los Angeles, orchestrated by Coinbase’s non-profit advocacy group, Stand With Crypto.On the national scale, however, resonance with voters may pale in comparison to the amount of money raised by Fairshake.
“What we don’t know is whether or not there are registered voters who are single issue crypto voters,” Hermine Wong, the former head of policy at Coinbase and a lecturer at the University of California, Berkeley.
The biggest question that voters will have to consider is if an industry engulfed by scandal in recent years should be trusted to help craft its own rules.For example, Tyler and Cameron Winklevoss, twin brothers and co-founders of the crypto exchange Gemini, donated $5 million to Fairshake in February–the same month Gemini was ordered to return $1.1 billion to investors affected by the collapse of its Earn program, an interest-generating loan scheme that defaulted amid a market collapse in 2022.The company was also fined $37 million as part of its settlement with the New York State Department of Financial Services.
Normally, the emergence of crypto Super PACs would be problematic, says Frank Emmert, a business law professor at the University of Indiana Law School, because special interest groups are one-sided by design.
But he points to the recipients of Fairshake’s money as evidence of bipartisanship in a fractured political landscape.
“You get nothing done in Congress that doesn’t have a certain amount of bipartisan support,” says Emmert.”I have seen maybe a little bit more [support for crypto] on the Republican side, but there are also Democratic Representatives and Senators who are open to this.”
Fairhsake has backed eight Democrats and five Republicans running for the House in 2024.So far, however, the bulk of its expenditures have been allocated toward defeating Porter.”It feels almost like a revenge deployment,” argues Wong, “because it was all anti-ads, as opposed to for-ads.I’m not exactly sure why that was their priority.They spent $10 million on it, which is a lot of money to spend to defeat a primary candidate.”
It’s still early in the 2024 campaign, but Emmert doesn’t see the handful of candidates supported by Fairshake as a potentially transformative group.”A few candidates alone are not going to swing this,” he says.”What we hopefully will get out of this is a more open and broader discussion.
And finally, some action in Congress, because Congress has been sitting on their hands for years.”
Around 20 percent of registered voters own cryptocurrency, according to a poll released Thursday by the crypto investment firm Paradigm.Research from Pew last year found that 75 percent of Americans don’t trust crypto as a safe and reliable investment.As Fairshake prepares to deploy more of its funds, it remains unclear whether its television ads will mention the group’s primary motivator: Advancing cryptocurrency regulations that industry insiders deem appropriate..
