.svg)
Coinbase is accused of making an illegal political donation in the US, Donald Trump proposes a US national strategic Bitcoin reserve, and India’s largest exchange faces an uphill battle to recover stolen user funds.
Coinbase is facing allegations that a recent donation to a pro-crypto lobby group may have violated federal campaign finance laws.
In May, the company donated $25m to FairShake, a super political action committee (PAC) that supports congressional candidates pushing for crypto-friendly legislation.
At the time of the donation, Coinbase was already bidding to become a federal contractor for the US Marshals Service, an agency within the Department of Justice (DOJ) that handles asset seizures.
Last month, the Marshals Service announced that it had selected Coinbase to help with “managing and disposing of large quantities of popular cryptocurrency assets”.
Under Section 115.2 of the Code of Federal Regulations, it is illegal for a federal contractor to donate to any political party, committee or candidate for federal office, or to any person for a political purpose.
On its website, the Federal Election Commission (FEC) notes that this prohibition begins “when the request for proposals are sent out” by a government agency, or when “negotiations have begun” (whichever is earlier).
It adds that the prohibition ends when “negotiations have terminated” or when the contractor completes its duties under the contract.
Molly White, a US-based crypto journalist, levelled the allegations against Coinbase in her blog, Citation Needed, earlier this week.
Speaking to Vixio, White said she is hoping that her research will be used as evidence against the crypto giant in court.
“The authorities should absolutely investigate the circumstances of these donations by Coinbase,” she said.
“I am working on a complaint to the Federal Election Commission, which is mandated to open an investigation if they have reason to believe a violation has occurred.”
White was also advised by Public Citizen, a consumer advocacy group, which has been tracking campaign finance spending by the US crypto industry.
In a report published in May, the group found that crypto industry super PACs had so far raised $102m to spend on the 2024 Congressional elections.
At the time, only two other super PACs had raised more than this: the super PAC behind Ron DeSantis’ failed presidential campaign; and the super PAC backing democratic Senate candidates.
Of the total amount raised by crypto super PACs, more than half of the donations ($54m) came from direct corporate expenditures.
Coinbase was the largest corporate donor to crypto super PACs ($25.5m), followed by Ripple ($25m) and Kraken ($1m).
Of the eight corporate donors to crypto super PACs, Public Citizen noted that four — including Coinbase and Ripple — have either settled or are facing charges from the Securities and Exchange Commission (SEC).
Brian Armstrong, CEO of Coinbase, has also made $1m in personal donations to crypto super PACs ahead of the 2024 elections.
“Money moves the needle,” Armstrong told a reporter from Axios last year. “For better or worse, that’s how our system works.”
Coinbase did not respond to Vixio’s request for comment.
Trump proposes US strategic Bitcoin reserve
US presidential hopeful Donald Trump has promised that, if he is elected in November, his administration will create a US strategic Bitcoin reserve.
Trump made the surprise policy announcement while speaking at the 2024 Bitcoin Conference in Nashville last week.
During his speech, he noted that the US government is one of the largest holders of Bitcoin in the world.
“Americans do not realise,” he said, that the federal government holds almost 210,000 Bitcoin, which is about 1 percent of total supply that will ever exist.
“But for too long, our government has violated the cardinal rule that every Bitcoiner knows by heart: never sell your Bitcoin,” he said.
Trump therefore proposed that, under his administration, the US government will keep 100 percent of the Bitcoin that it currently holds or that it acquires in future.
“This will serve, in effect, as the core of the strategic national Bitcoin stockpile,” he said.
Senator Cynthia Lummis (R-WI), who also spoke at the Bitcoin Conference, endorsed Trump’s proposal and promised to introduce a bill to make the strategic reserve a reality.
This week, Lummis filed the Boosting Innovation, Technology and Competitiveness through Optimized Investment Nationwide (BITCOIN) Act.
In addition to creating a strategic Bitcoin reserve, the bill seeks to implement a 1-million-unit Bitcoin purchase programme, after which the US government would hold about 5 percent of the total Bitcoin supply.
Co-founder of hacked Indian exchange seeks recovery of funds
The co-founder of WazirX, India’s largest crypto exchange, has said he is exploring all possible options for recovery after hackers stole $230m of crypto-assets from the platform last month.
Speaking to CoinDesk, Nischal Shetty said that joint actions with other exchanges “are going to be crucial" as WazirX attempts to salvage the stolen funds.
Shetty also said he could not disclose how much fiat currency WazirX currently holds on its balance sheet, as this could "open up a new attack vector for someone”.
Around 45 percent of user funds were stolen during the hack, primarily from holdings of Shiba Inu and Ethereum.
WazirX has since announced that it is implementing a “socialised loss strategy” to distribute the impact of the hack “equitably” among users.
Under this strategy, 45 percent of all user funds will be converted into Tether and locked, while the remaining 55 percent may be withdrawn.
“This strategy allows immediate access to a significant portion of your assets while maintaining the possibility of further recovery for those who choose to wait,” the company said.
As covered by Vixio last week, if any of the stolen funds are converted into Tether by the hackers, this may be WazirX’s best chance of recovery.
However, blockchain intelligence analysts note that the funds already appear to have been laundered using Tornado Cash, with the attack bearing the hallmarks of North Korea’s Lazarus Group.
“I think that ship has sailed,” one analyst told Vixio, referring to the possibility of Tether recovery.
