Coinbase Refutes Allegations of Campaign Finance Misconduct

Crypto exchange Coinbase has dismissed allegations that it violated campaign finance regulations.

On July 30, crypto analyst Molly White claimed that Coinbase’s $25 million donation to the crypto-oriented PAC Fairshake might have breached campaign finance laws. She noted the donation was made during Coinbase’s negotiations for a federal contract with the US Marshals Service (USMS), which the company later secured to manage seized digital assets.

White highlighted that federal law bars entities involved in federal contracts from making political contributions to avoid potential conflicts of interest. She asserted that if true, this would be a significant breach, far exceeding previous violations capped at $1 million.

Paul Grewal, Coinbase’s Chief Legal Officer, countered White’s assertions, labeling them as inaccurate. He explained that Coinbase does not qualify as a federal contractor under the specific regulation (11 CFR 115.1) since the USMS is not paying Coinbase with federal funds.

Instead, the payments come from the Assets Forfeiture Fund, which consists of proceeds from confiscated property, not taxpayer money.

Grewal’s statement emphasized that the regulatory definition of a federal contractor involves entities paid with appropriated funds, which is not the case with Coinbase’s arrangement with the USMS.