Coinbase faces allegations of breaching U.S. campaign finance laws due to a significant donation to a super political action committee (PAC). The controversy centers on Coinbase’s $25 million contribution to the Fairshake PAC in May 2024, a donation that came during the period when Coinbase was in discussions for a federal contract with the U.S.
Marshals Service (USMS). Critics, including crypto critic Molly White, argue that the timing of the donation suggests a potential attempt by Coinbase to influence the contract award process.
Paul Grewal, Coinbase’s chief legal officer, has publicly refuted these claims, asserting that the company is not a federal contractor and thus not subject to the specific campaign finance regulations cited.
Grewal’s response, made via a post on X (formerly Twitter), emphasized that Coinbase’s status as a non-federal contractor exempts it from the 11 Code of Federal Regulations 115.1 clause, which pertains to federal contractors making political donations.
White’s report also highlighted that the USMS selected Coinbase Prime for providing advanced trading services and custody for Class 1 digital assets based on Coinbase’s reputation and security track record.
The USMS contract, which began after Coinbase’s substantial donation to Fairshake, has fueled suspicions about potential impropriety, particularly given the timing of the donation.
The Fairshake PAC, which promotes pro-crypto political candidates, received considerable financial support from Coinbase.
This included a $5 million donation in November 2023, $15.5 million in December 2023, and the latest $25 million donation in May 2024. The donation’s timing, coinciding with Coinbase’s bid for the USMS contract, has led to concerns about whether the donation was intended to secure favorable treatment.
In response to these allegations, Grewal clarified that the USMS’s payments to Coinbase come from the Asset Forfeiture fund, derived from the sale of forfeited property rather than direct federal appropriations.
Grewal’s clarification aims to counter claims that the donation was an attempt to influence the federal contract process and asserts that Coinbase’s actions are compliant with campaign finance laws.
