A new “crypto” super PAC with some wealthy friends has just appeared on the scene, and the group is not messing around.
The “Crypto Freedom PAC” has already thrown nearly a million dollars into ads supporting Arizona GOP Senate candidate and Bitcoin millionaire Blake Masters.
The PAC is openly allied with conservative political powerhouse Club for Growth, which has backed Masters’ candidacy alongside the group’s sometime rival, Donald Trump, who endorsed the Menlo Park entrepreneur earlier this month.
Club for Growth is a conservative nonprofit that advocates for free-market economics. It has long wielded substantial influence in Republican circles, and recently began to wade into the blockchain space.
An official affiliated with the super PAC told The Daily Beast the group is a “bit of a response to GOP establishment crypto PACs” that have recently cropped up.
“It’s an emerging issue, and Club for Growth wants to lead on it,” the official said.
Crypto Freedom will also support candidates beyond Masters, he added, telling The Daily Beast “the group’s reach will be broader in the future.”
Three weeks after it was created, the super PAC plunked down about $900,000 on its first ad, with nearly $875,000 of that total going to TV airtime. The spot slams Masters’ primary opponent, Arizona businessman Jim Lamon, over his corporate ties to China, with an ominous voiceover and Sinophobic graphics that cost a whopping $12,500.
Curiously, there’s no mention of crypto. The official explained that the crypto PAC will focus on crypto messaging in the future.
But Crypto Freedom will have to elbow its way through a raft of new pro-crypto super PACs. Those groups have spent tens of millions of dollars on midterm elections—almost all of it from a handful of investors.
The crypto space can make for strange political bedfellows, with its roots in an ideology that frequently transcends partisanship. But unlike some other pro-crypto outside groups that follow a bipartisan model, Club for Growth is sticking it straight to Democrats. In addition to the support for Masters, Politico reported in May that the nonprofit is going after Senate Democrats for their opposition to crypto mining, which uses astronomical amounts of electricity so that computers can solve complex equations.
Club for Growth, of course, also has billionaire backers. The group’s official super PAC, called “Club for Growth Action,” has raked in nearly $50 million ahead of the 2022 midterms. And the nonprofit arm raised $16.3 million in 2020, according to its tax filing from that year.
But the industry also has an enemy in Masters’ most powerful ally—Trump, who also appears at odds with Club for Growth. Though the former president did take part in a recent (failed) vanity project, he has long viewed cryptocurrency as a threat to the U.S. economy, calling Bitcoin a “scam” earlier this month.
But where Trump’s view has recently been on the right side of the markets; Masters has not.
Masters, 34, has traded on the cultural hype, using the issue to burnish his image as a fresh-faced outsider. Last October, the crypto enthusiast tweeted that the United States should establish a federal Bitcoin reserve.
The markets almost immediately mocked that proposal. Just a month later, Bitcoin went into a months-long free-fall, shedding 70 percent of its value between November and its mid-June low. It’s unclear how much Masters lost in that time.
That irony didn’t escape Lamon. He punched back at the Club for Growth attack ad this week, tweeting that Masters—who recently expressed support for privatizing Social Security—would endanger that program “by having the treasury buy Bitcoin, all the while making a fortune for himself and his friends.”
“Follow the money,” Lamon said.
There might be something to that. Crypto might not motivate many voters, but it does motivate megadonors.
Crypto Freedom’s donations will remain cryptic for a time—the group doesn’t have to file a fundraising report until late July, just before the Arizona primary election.
The group might even be a vehicle for one megadonor. Another Club for Growth super PAC, the similarly titled “School Freedom Fund,” got its $15 million in funding from Club for Growth financier and Bitcoin-backing billionaire Jeff Yass—who has maxed out to the Masters campaign committee.
Crypto Freedom donors will add to a trend that has emerged ahead of the 2022 midterms. Crypto super PACs have raised massive amounts of money from a small group of people. Executives at one company, crypto exchange FTX, are responsible for almost all of the primary spending to date, Roll Call reported.
Craig Holman, a lobbyist for the progressive group Public Citizen, told Roll Call that D.C. was witnessing “a fundamental politicization of the cryptocurrency industry.”
Lobbyists tried to flex some of that new muscle last summer during negotiations over tax provisions in the infrastructure bill, but ultimately came up short. But the industry largely welcomes the new regulatory framework in an ambitious bipartisan bill proposed earlier this month.
A contingent of crypto kingpins have also funded the lion’s share of another super PAC behind Masters—the Peter Thiel-backed Saving Arizona.
Thiel, Masters’ billionaire mentor and a self-described “Bitcoin maximalist,” ponied up $10 million in seed funding for the super PAC, and committed another $3.5 million last month. And the crypto-fevered Winklevoss twins, who lay claim to co-creating Facebook, have contributed $50,000 each—exponentially their largest donations to date. In fact, nearly half of Saving Arizona’s 21 separate donors appear to have some stake in cryptocurrency. This month, another bitcoin mogul, Thiel fellowship-winner Erik Finman, pledged to match Thiel’s $10 million.
The jury is still out on whether crypto messaging is truly intended to motivate voters, or just donors looking to throw some weight around in Washington.
Only 16 percent of Americans say they’ve interacted with virtual currency, according to a Pew Research poll published last November. Weeks after that poll was released, global crypto markets crashed, tripping an ongoing plunge left investors deeply rattled.
At the start of his campaign, Masters used crypto to burnish his image as a fresh-faced outsider. But it’s unclear how much of Masters’ millions in Bitcoin have been wiped out since then. Last month he warned investors to “buckle up” for “exceptionally volatile” days ahead.
He has also availed himself of crypto’s cultural appeal to raise money in creative ways—if not entirely financially sound ones, such as a series of gimmicky NFT promos.
And thanks to the market crash, the gimmicks failed to maximize returns. By the time he cashed out, many of the donations had already lost value.