Coinbase Denies Contractor Classification In Controversial $25 Million Donation Debate

Paul Grewal, the chief legal officer of Coinbase, asserted that the exchange is mistakenly classified as a federal contractor. Grewal responded to Molly White’s claim that Coinbase broke campaign finance regulations by giving a $25 million gift to the cryptocurrency advocacy group Fairshake while the company was employed as a federal contractor by the US Marshals Service [USMS]. Federal government contractors can’t contribute to political organizations. This includes super PACs like Fairshake.

According to the critic, the $25 million donation was the largest of three contributions to the Fairshake PAC and falls within the period prohibited by the FEC. The contributions were: $5 million in November 2023, $15.5 million in December 2023, and $25 million on May 30, 2024.

The FEC website states, “The prohibition begins when the request for proposals is sent out or negotiations have begun (whichever is earlier) and ends when performance under a contract is completed or negotiations have terminated (whichever is later).” This prohibition and similar laws are often called “pay-to-play” laws.

Lawyer Defends Coinbase

Moreover, Denying the charge, Grewal stated that Coinbase is not being paid by the USMS using appropriated government funds. He cited a publicly released Request for Proposal (RFP), which outlines the contract terms. However, The top lawyer argued that the RFP specifies Coinbase won’t be paid with government funds. He disputed classifying Coinbase as a federal contractor under 11 CFR 115.1. He also challenged the payment arrangement with the USMS.

Fairshake PAC, primarily funded by Coinbase and its CEO Brian Armstrong, supports pro-crypto candidates from both parties. Billing itself as “the first super-PAC dedicated to advancing the crypto economy and protecting the rights of crypto users,” Fairshake aims to leverage grassroots support and significant spending to elect crypto-friendly lawmakers and defeat those hostile to crypto. Additionally, it plans to educate voters and policymakers about the benefits of crypto and the risks of overregulation.

Furthermore, the author’s views are for reference only and shall not constitute investment advice. Before purchasing, please ensure you fully understand and assess the products and associated risks.