How the Tech Bros Bought 'The Most Pro-Crypto US Congress Ever'

Before announcing his run for Senate in April 2023, Bernie Moreno was not a political name. A former Cleveland-area car salesman, his only previous experience in politics was a losing bid for another Senate seat in Ohio in 2022.

Moreno has since achieved the unthinkable.

On November 5, as part of the election that returned Donald Trump to the White House, Moreno defeated incumbent Democratic Senator Sherrod Brown, who was first elected to the House in 1992, before winning his Senate seat in 2006 and chairing the powerful Banking Committee. Committee since 2021.

Moreno's rise from unknown Ohio businessman to prominent political leader was no accident. His campaign was backed by $40 million from the cryptocurrency industry as part of a highly targeted effort to elect friendly candidates and, perhaps more importantly, remove his critics. Moreno's victory was one of the Senate seats that Republicans flipped to take control of the chamber.

In total, cryptocurrency-related political action committees and other groups tied to the industry have generated more than $245 million, according to Federal Election Commission data. Cryptocurrencies accounted for nearly half of all corporate money that flowed into the election, according to the nonprofit watchdog Public Citizen. The advocacy group Stand With Crypto Alliance, which Coinbase launched last year, developed a rating system for House and Senate races across the country as a way to help determine where money should be spent.

Cryptocurrency executives, investors and evangelists saw the election as existential for an industry that has spent the past four years simultaneously trying to grow while being defeated repeatedly. Nearly 300 pro-crypto lawmakers will hold seats in the House and Senate, according to Stand With Crypto, giving the sector unprecedented influence over the legislative agenda.

The cryptocurrency political lobby has been successful this cycle because it makes something complicated, like campaign finance, simple: raise a lot of cash from a handful of donors and buy ad space in hotly contested states to either support candidates who support cryptocurrencies or smear candidates who support cryptocurrencies. Cryptocurrencies. no. It also required thinking about candidates in binary terms: either for the industry or against it.

Cryptocurrency companies and their executives quickly mobilized, and successfully figured out how to distribute their money through a sophisticated advertising machine across the country. They've also taken cues from mistakes made by big tech companies. Instead of spending hundreds of millions of dollars lobbying lawmakers after the election, the cryptocurrency industry has invested in targeting their opponents before the election so they don't have to deal with them at all for the next few years.

For more than a year, Moreno has been grilled by top Silicon Valley officials like Marc Andreessen, Ben Horowitz, and David Sachs about blockchain technology, digital asset policy, and the shifting terrain of global finance.

“They didn’t just jump in,” Moreno said, describing dozens of meetings that spanned his run in the primary. “We had to build a lot of trust.”

He also met Moreno Coinbase Co-founders Brian Armstrong and Farid Ehrasam as well as Head of Policy Faryar Shirzad. Armstrong and Ehrsam did not respond to CNBC's request, through Coinbase, for comment on the meetings.

Coinbase is the largest digital asset exchange in the United States, and has been fighting the SEC in court for more than a year. The company was the cryptocurrency maker of the 2024 cycle, giving more than $75 million to a super PAC called Fairshake. It was one of the largest spending committees of any industry this cycle and provided exclusively to pro-crypto candidates running for Congress. Fairshake's candidates won almost every race it funded in the general election.

“Anti-crypto is simply bad policy,” Coinbase’s Armstrong wrote on X after Moreno’s win.

As the price of bitcoin has multiplied nearly six-fold in the past four years, SEC Chairman Gary Gensler has taken major cryptocurrency players like Coinbase and Ripple to court on charges of selling unregistered securities and avoiding working with companies to develop new specialized regulations.

Meanwhile, Senator Brown sided with Senator Elizabeth Warren, Democrat of Massachusetts, an outspoken anti-cryptocurrency advocate, in targeting cryptocurrencies for allegedly funding terrorist organizations, including Hamas. Brown has become more aggressive in calling for tough action against the industry following the failure of cryptocurrency exchange FTX in late 2022.

As FTX headed toward bankruptcy, on November 10, Brown retweeted a post from the Senate Banking Committee calling the event a “loud warning bell that cryptocurrencies could fail” and could have a “ripple effect on consumers and other parts of our financial system.” “

Fairshake's bipartisanship won all but three races in the general election, spending heavily on Republicans and Democrats seeking key seats. Protect Progress, Fairshake's political action committee, has given more than $10 million each to Democratic Senate candidates in Arizona and Michigan. They both won. Defending American Jobs, another one of Verchick's political action committees, spent more than $3 million supporting West Virginia Republican Jim Justice, who will hold Democratic Sen. Joe Manchin's former seat when the new session begins in 2025.

In California, Democratic Representative Katie Porter lost the Senate primary after Vershake spent more than $10 million on ads against her.

“I was wondering, ‘What the hell is a Fairshake?’” Porter told The New Yorker.

The senator-elect told CNBC in an interview that those vetting Moreno wanted to understand what he would do differently from the current administration and regulatory system.

“These are people who know how to vet investments, they know how to vet people, and they followed the same discipline” with me, Moreno said.

This helped him create a blockchain startup, Champ Titles, that digitizes and registers car tickets.

“What they didn't want to do was put time, effort and energy behind someone who would ultimately be a disappointment,” Moreno said.

A spokesman for Andreessen and Horowitz, co-founders of the company bearing their names, declined to comment. Sacks, founder of Craft Ventures, did not respond to CNBC's request for an interview.

Coinbase's Shirzad met Moreno over breakfast in Washington in the spring. Moreno was not an expert in the details of the policy issues he was pursuing, but he had a clear understanding of cryptocurrency technology and how it could be applied, Shirzad told CNBC in an interview.

“It was a really great meeting between me as a politician and him as a businessman who saw the potential of technology,” Shirzad said.

David McIntosh, an early supporter of Moreno's Senate bid and president of the Club for Growth, a conservative organization focused on American economic issues, said Moreno had no money after spending everything he had on a difficult and expensive primary. McIntosh said Fairshake played a crucial role in Moreno's campaign starting in the summer.

Moreno's victory over Brown “sent a really strong signal to Washington that voters will support pro-blockchain candidates,” McIntosh said.

McIntosh noted that the Club for Growth spent $6.5 million to help Moreno advertise in the primaries through various political action committees, including the Bitcoin Freedom Fund.

Brown's office did not respond to multiple requests for comment.

Brown told Politico he has not ruled out running for Vice President-elect J.D. Vance's open Senate seat in Ohio, which will be filled by a special election in 2026.

Shirzad said Moreno benefited from describing himself as a candidate for “change” while Brown became “an advocate for the status quo.”

“Cryptocurrencies thematically are an issue of change,” Shirzad said. “Not only does it appeal to the younger demographic, it also appeals to voters who want change.”

Fairshake declined to comment on whether she would spend to prevent Brown from running again for Senate, but the super PAC has already raised $78 million for the 2026 midterms.

“We stuck to our core strategy from day one, supporting pro-crypto candidates and opposing those who played politics with jobs and innovation, and we won,” Fairshake told CNBC in a statement.

The past two election cycles have been marked by spending from the now-bankrupt cryptocurrency exchange FTX and its founder Sam Bankman-Fried, who was sentenced to 25 years in prison in March for stealing more than $8 billion in customer funds through FTX.

This year's list of shareholders has been more robust but has seen large amounts of funding come from companies that have been at odds with SEC Chairman Gensler for years. This includes Coinbase and blockchain giant Ripple Labs. Prominent investment fund Andreessen Horowitz, which owns a large portfolio of cryptocurrency companies, was another major shareholder.

Several big names in the cryptocurrency space have also made major donations in 2024.

Federal Election Commission filings show that Cameron and Tyler Winklevoss were among the largest individual cryptocurrency donors this election cycle, giving a combined $10.1 million. Ripple's top executives contributed millions, led by billionaire founder Chris Larsen, who gave about $12 million this round.

Coinbase CEO Armstrong gave more than $1.3 million to a mix of political action committees including Fairshake and J.D. Vance for Senate Corporate. He also gave directly to Democrats and Republicans running for House and Senate seats. Paul Grewal, chief legal officer at Coinbase, attended at least two Trump fundraisers, including one in Nashville, Tennessee, on the sidelines of the year's largest bitcoin event.

Kraken Chairman Jesse Powell donated more than $1 million to the Trump campaign.

Other individual cryptocurrency contributors include former Bitfinex chief strategy officer Phil Potter ($1.6 million+), Multicoin Capital's Kyle Samani ($878,600), Paradigm co-founder Farid Ehrsam ($735,400), and Union Square Ventures partner Farid Wilson ($1.4 million) and Paxos. CEO Charles Cascarella ($198,500), BitGo CEO Mike Beleschi ($119,825), Solana co-founder Anatoly Yakovenko ($67,100), and Xapo Bank founder Wences Casares ($374,899).

Armstrong reportedly met this week with the president-elect to discuss the appointments. Within a day, there were talks about the possible appointment of the first cryptocurrency czar in the White House. By the end of the week, SEC Chairman and longtime cryptocurrency opponent Gensler, whose term does not end until June 2026, announced that he would retire on Inauguration Day.

One of Trump's promises to cryptocurrency enthusiasts during his election campaign was that he would fire the head of the SEC and choose crypto-friendly regulators if elected. Gensler may have taken a look at the pressures facing him across Washington and decided it wasn't worth trying to hold on to.

“Welcome to the most pro-crypto US Congress ever,” Armstrong wrote on X on November 5.