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Obligations
A mysterious new nonprofit subsidized through the crypto industry has created a mail network about a hundred miles from Washington, D. C. , and is taking steps to exert force in the nation’s capital.
The Cedar Innovation Foundation, a 501(c)(4) organization chartered in Delaware in April, ran classified ads opposing at least one hard-line lawmaker running for reelection and quietly hired an organization of strategists to fight on his behalf, records show. exposed via CNBC.
This is part of a broader effort by the crypto industry to influence Congress ahead of the 2024 election and as a slew of crypto-related spending begins to trickle through Washington.
The crypto market is set to bounce back after a scandal-filled year that included the criminal fraud conviction of FTX founder and political megadonor Sam Bankman-Fried in November, followed by a plea deal for Binance founder Changpeng Zhao.
Crypto teams spent more than $18 million on lobbying last year, according to a Reuters analysis. The Cedar Innovation Foundation does not publicly disclose its donors or say who runs the organization or where it is located.
Cedar Innovation is largely funded through crypto industry players, and Coinbase is highly likely to write a check to the organization through the end of the year, according to other people familiar with the matter who asked not to be identified because discussions about the investment were private. The organization recently hired Mindset Advocacy, a lobbying firm that has worked for Goldman Sachs, Amazon Web Services and Barclays, according to a recent disclosure report and knowledge by the nonpartisan organization OpenSecrets.
Dennis Kelleher, executive director of the nonprofit Better Markets, told CNBC that he predicts the industry will spend heavily this year to fend off lawmakers critical of cryptocurrencies.
“What we’re going to see in 2024 is a huge build-up of crypto-funded ‘black’ cash campaigns, as opposed to anyone who is rarely a crypto enthusiast,” Kelleher said. “By the end of the year, when it’s altogether, I think the crypto industry is going to invest many, many millions of dollars to try to defeat other people who need to make up the electorate instead of building crypto. “
Josh Vlasto, a spokesman for the foundation and a veteran Democratic strategist who worked for former New York Gov. Andrew Cuomo and Sen. Chuck Schumer, D-N.Y., didn’t answer questions regarding the group’s backers. In a statement to CNBC, he took aim at Kelleher and Better Markets.
“It’s no wonder that a Washington think tank, funded through big banks and hedge fund managers, is looking to destroy cryptocurrencies for their monopoly on all Americans’ access to money,” Array Vlasto said.
Kelleher responded by saying that Cedar Innovation would lie about Better Markets and called his organization an “independent nonprofit. “
A Coinbase spokesperson declined to comment on potential investments for the Cedar Innovation Foundation and referred CNBC to public comments from executives. In a post published last month on X, formerly known as Twitter, Coinbase CEO Brian Armstrong said, “The crypto industry now has a war fund to choose pro-crypto applicants in 2024,” referring to a recent donation the company made to a new super PAC.
Since last year, Cedar Innovation has been actively advertising on Facebook and Instagram, according to Meta’s ad archive. The nonprofit spent just over $27,000 on classified ads on any of the Meta platforms, adding classified ads is not easy for the electorate to call the Senate Banking Committee. Chairman Sherrod Brown, D-Ohio, to inspire him to elect SEC Chairman Gary Gensler, a crypto skeptic. The organization also took aim at industry critics Sen. Elizabeth Warren, D-Mass. , and Roger Marshall, R-Kansas.
“Anyone who knows my track record knows that I will never give in to vested interests or industry pressures, even if the dark money coming from questionable resources is well-funded,” Brown, who is seeking re-election this year, told CNBC. I have worked on the Committee to protect the family from fraud, scams and abuses affecting this industry, and to prevent their use to finance terrorism and other illicit activities. “
Brown’s office said that neither the senator nor his staff have heard from the Cedar Innovation Foundation.
“Cryptocurrency executives need to gain influence in Washington as virtual assets are increasingly used to launder cash for drug traffickers, ransomware hackers, rogue countries, and terrorists like Hamas,” Warren said in a subsequent post.
A representative for Marshall didn’t respond to a request for comment.
“We hope Senator Brown and others don’t pander to Wall Street banks and their special interests, especially when crypto innovation is the key to thousands of smart jobs in Ohio, Kansas, and across the country,” Vlasto said in reaction to Brown. Array “The Cedar Innovation Foundation, a nonpartisan organization, is committed to helping policymakers and the public perceive the issues at stake, while providing regulators with the equipment they need in this time of transformative change.
The foundation says in a press release that it’s “dedicated to helping congressional staff and policymakers by providing them with the tools and resources they need to better serve the American people and build the innovation economy in America.”
However, Kelleher said the ads that he’s reviewed indicate the group is more focused on trying to target Brown and other crypto critics’ reelection efforts.
“This is a schooling campaign,” Kelleher said. “This is a political coup for Senator Brown because they need to defeat him in the next election. “
Cedar Innovation is turning to experienced strategists for its influencer campaign, according to filings and other people familiar with the matter.
By hiring Mindset Advocacy, the organization is bringing in four lobbyists with ties beyond current and former members of Congress, according to LegiStorm.
Charlie Schreiber, a director of Mindset who helps the base, has worked in the past for House Financial Services Chairman Patrick McHenry, R-N. C. One of the three laws the foundation plans to oppose is the Clarity for Stablecoin Payment Act of 2023, a bill sponsored by McHenry that would replace the way stablecoins are regulated.
A spokeswoman for McHenry’s office didn’t return a request for comment.
The base also hired Bullpen Strategy Group, a consulting firm founded and run by veteran Republican strategist Joe Pounder, according to a user familiar with the matter. Bullpen states on his site that he specializes in crisis communication, studies, and media monitoring.
Pounder did not respond to an emailed comment.
Cedar Innovation has political strategists working on its behalf, records show.
In Meta’s advertising report for Cedar Innovation, a phone number for the organizer matches the number of Eric Coats, a former Illinois-based political appointee, according to a public database. Coats did not respond to questions about his role at Cedar Innovation.
Coats has worked in the past for Massachusetts Democratic Rep. Seth Moulton’s congressional campaigns, as well as his leadership political action committee, according to Federal Election Commission records.
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Correction: This story has been updated to reflect that a new mysterious nonprofit group backed by the crypto industry is making moves to exert power in the nation’s capital. An earlier version misstated the nature of its activity.
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