Paul Grewal, Coinbase’s chief legal officer, has denied accusations that the cryptocurrency exchange violated campaign finance laws by donating $25 million to a super political action committee (PAC). Grewal addressed the claims in response to a report by Molly White, a well-known crypto skeptic, who suggested that Coinbase’s donation might have been unlawful.
Background of the Allegations
On July 31, White alleged that Coinbase potentially violated campaign finance regulations by contributing to the Fairshake crypto super PAC while in active negotiations for a federal contract. According to White, the donation occurred during a prohibited period, as Coinbase had submitted a request for proposal (RFP) on March 4, 2024, and was under contract until at least June 30, 2025.
Coinbase’s Defense
Grewal refuted these claims in an August 1 post on X, stating that Coinbase is not classified as a federal contractor under the “plain language” clause of the Code of Federal Regulations 111.51. He clarified that the funds associated with the RFP were paid from the Assets Forfeiture Fund, which consists of proceeds from the sale of property forfeited to the U.S. Government, managed by the Department of Justice. Grewal emphasized that the funds were not appropriated, thus exempting Coinbase from the regulations that apply to federal contractors.
He further described White’s claims as “misinformation,” asserting that there was no violation of campaign finance laws. Grewal’s statement aimed to dispel concerns and clarify that the company’s actions were within legal boundaries.
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The Fairshake Super PAC and Its Contributors
The Fairshake super PAC, which has received substantial contributions from several major cryptocurrency firms, aims to support blockchain innovators by advocating for a clearer regulatory and legal framework. With over $202 million raised in 2024, the PAC is currently the largest for the upcoming election. Coinbase’s donations included $5 million in November 2023, $15.5 million in December 2023, and the contested $25 million on May 30, 2024.
Legal Considerations and Implications
Government affairs lobbyist Dr. Craigh Holman commented that it is illegal for a federal contractor to make campaign contributions to any federal committee, including a super PAC. He suggested that a complaint could be filed with the Federal Election Commission (FEC) to investigate the matter. However, given Grewal’s clarification, the legal status of Coinbase’s contributions remains a subject of interpretation based on the source of the funds and the nature of the contract involved.
