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Ripple’s $25 Million Donation to Fairshake Highlights the Need for Transparency in Crypto Post-FTX

Last Updated May 29, 2024 1:51 PM
Giuseppe Ciccomascolo
Last Updated May 29, 2024 1:51 PM

Key Takeaways

  • Ripple has made a significant financial commitment to pro-crypto politicians by donating $25 million to Fairshake.
  • Ripple’s political efforts are part of a larger initiative within the crypto industry to influence the upcoming November elections.
  • The industry’s substantial political donations have raised concerns about conflicts of interest.

Ripple is leveraging its financial resources to intensify efforts  supporting pro-crypto politicians in the upcoming election cycle. On May 29, 2024, the company behind XRP made a $25 million donation to Fairshake , a crypto-focused Super Political Action Committee (Super PAC).

This open move by Ripple showcases the caution around campaign donations, especially in the wake of the FTX scandal.

Second Ripple’s Donation To Fairshake

This marks Ripple’s second $25 million contribution to Fairshake within the past year, establishing it as the Super PAC’s largest donor and boosting the crypto industry’s war chest to over $110 million, according to Fairshake.

“Our contributions to Fairshake are just one of the many ways Ripple will actively invest in educating voters on the role crypto will play in the future and the dangers of the anti-crypto stance some policymakers are clinging to in Washington,” said  Ripple CEO Brad Garlinghouse.

Ripple’s political efforts are part of a broader industry initiative to amplify crypto voices in the upcoming November elections. Many believe the vote could be pivotal for the $2 trillion crypto industry’s growth and regulatory clarity.

Ripple’s donations constitute approximately half of the over $100 million that Fairshake has raised from major players in the crypto space. Other significant contributors include crypto exchanges Coinbase and Gemini, venture capital firm Andreessen Horowitz, and asset manager ARK Invest.

Conflict Of Interests Concerns

Federal prosecutors revealed during the proceedings that Sam Bankman-Fried used money stolen from FTX customers to make over $100 million in political campaign contributions before the 2022 US midterm elections. This revelation culminated in a 25-year prison sentence for the former FTX CEO.

Despite the fallout from the FTX scandal, the crypto industry continues to finance political parties heavily. Crypto companies have contributed  $94 million to federal political committees since 2023. This figure surpassed the $83 million donated in the previous election cycle. This significant funding supports their allies in Congress.

Among the biggest political donors are several prominent figures from the crypto industry. According to OpenSecrets , Jeffrey Yass of Susquehanna International Group, a major backer whose interests span from ByteDance to Bitcoin, stands out as a top donor. Yass, a libertarian who supports Republicans, has already contributed $70 million, with months remaining before Election Day.

Fairshake and its affiliated super PACs, Defend American Jobs and Protect Progress, have collectively raised $85 million. This figure adjusts for the removal of double-counting in-kind cryptocurrency donations and their dollar conversions.

The cryptocurrency industry’s political influence has grown substantially. Federal lobbying spending reached $21.6 million in 2022, as reported by OpenSecrets . This is more than double the $8.3 million spent in 2021 and over eight times the $2.5 million in 2020. The number of crypto clients lobbying increased from 18 in 2020 to 56 in 2022.

Nearly two-thirds of the crypto industry’s 278 lobbyists are “revolving door” hires. This means they previously held federal government positions before representing the crypto industry. Among them are six former members of Congress. This practice has raised concerns about conflicts of interest. And it prompted calls for greater transparency and better regulation of political donations from crypto companies.

Time To Gain Washington’s Attention

Ripple attributed its contribution to Fairshake as “part of an industry-wide effort to advance policies that support the next generation of financial innovation in the US”. Ripple criticized the US Securities and Exchange Commission’s (SEC) approach of “trying to regulate crypto by enforcement,” stating it has failed, and called for the creation of a “positive regulatory landscape” to foster innovation.

The company emphasized that the 2024 elections will be the “most consequential” in crypto history, impacting the future of financial and technological innovation.

Many in the crypto industry see the 2024 elections as a critical opportunity to elect pro-crypto candidates and oust less-than-friendly ones, such as Congresswoman Katie Porter, an ally of Sen. Elizabeth Warren. Porter’s Senate bid was thwarted by a $10 million campaign from Fairshake.

Public interest in crypto is growing, with nearly a third of voters (32%) expressing more openness to learning about or investing in crypto since the beginning of the year, according to Grayscale . Compared to November 2023, more voters see crypto as a good long-term investment opportunity (23% vs. 19%). And a higher percentage expect their investment portfolios to include crypto (47% vs. 40%).

With increasing voter interest in crypto, the next administration’s approach to digital assets will be crucial. Especially for younger voters. Most Gen Z and Millennial voters (62%) believe crypto and blockchain technology are the future of finance. As we approach November, it is clear that crypto will play a significant role in policymakers’ and candidates’ considerations.

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