In the 2024 election cycle, U.S. cryptocurrency companies placed a significant bet on President Donald Trump’s reelection, pouring over $144 million into efforts supporting his campaign. However, a recent report from the Center for Political Accountability (CPA), a nonprofit dedicated to corporate political contribution transparency, suggests this “unchecked political spending” carries “profound risks.”

According to the CPA’s findings, the crypto industry’s “aggressive push for deregulation, coupled with opaque and unaccountable political contributions,” has sent “red flags among regulators.” Perhaps more critically, these actions have reportedly “eroded investor confidence and public trust in the long-term viability of these companies.”

Crypto firms donated heavily to re-elect Trump, and it’s paying off

The report highlights that U.S. crypto firms’ political expenditures surged to “an unprecedented scale” during Trump’s reelection bid, with Coinbase and Ripple leading the charge.

OpenSecrets, a platform tracking political donations, reveals that Coinbase’s political action committee (PAC) contributed more than $79 million to support Trump’s reelection. Ripple emerged as the second-largest crypto donor, with contributions exceeding $63.6 million.

Beyond PAC donations, Coinbase also donated $1 million to Trump’s inauguration committee, while Ripple chipped in $5 million in digital assets. Looking ahead, Coinbase has also pledged $25 million for the 2026 mid-term elections.

Adding to the financial backing, Tyler and Cameron Winklevoss, the founders of the Gemini crypto exchange, personally donated $1 million in Bitcoin (BTC) to support Trump. Interestingly, their individual contributions surpassed the legal limit of $844,600, resulting in them receiving over $300,000 in refunds collectively.

It’s worth noting that all three of these exchanges have faced scrutiny from the U.S. Securities and Exchange Commission (SEC) in recent years. Back in June 2023, the SEC charged Coinbase with operating as an unregistered securities exchange.

Ripple’s legal saga with the SEC has been ongoing since 2020. However, August 2024 brought a partial victory for Ripple in court when a judge ruled that XRP, under certain conditions, did not qualify as a security under the Howey Test. Despite this win, the SEC has appealed the decision, a move Ripple CEO Brad Garlinghouse has publicly called “insanity.”

Gemini also found itself in the SEC’s crosshairs in January 2023, alongside Genesis, for allegedly offering unregistered securities through their now-defunct Earn program. While Genesis opted to settle the case for $21 million after a court upheld the SEC’s claims, Gemini chose to continue its legal fight.

During his campaign, Trump had pledged to remove Gary Gensler as SEC chair. Gensler ultimately resigned upon Trump’s inauguration. Since then, a shift appears to have occurred, and the regulatory outlook for crypto firms seems to have brightened.

Just last month, Cameron Winklevoss announced the SEC had dropped its investigation into Gemini. The exchange has now reportedly filed confidentially for an initial public offering (IPO). Coinbase also saw a positive development with the SEC dismissing its case against them on February 27.

Adding to the perceived shift in crypto policy, earlier this week, President Trump signed an executive order establishing a Strategic Bitcoin Reserve for the United States.

The risks of unchecked political spending could jeopardize the entire industry, CPA report claims

The CPA report argues that crypto companies are leveraging political contributions to accrue political influence. This strategy, however, carries potential reputational, legal, and financial risks, and could ultimately backfire, potentially endangering not only the individual companies involved but the entire cryptocurrency industry.

The report elaborates:

“As the industry persists in seeking influence through substantial contributions and non-transparent financial maneuvers, the dangers of instability, regulatory blowback, and public skepticism are only amplified.”

Furthermore, the report cautions that history shows industries prioritizing short-term political gains at the expense of transparency and regulatory compliance often face severe repercussions. These consequences can include increased regulatory scrutiny and a decline in consumer confidence.

The CPA report also highlights potential conflicts of interest within the Trump administration, raising ethical concerns. For example, David Sacks, a crypto investor and Trump’s proposed ‘crypto czar,’ stands to potentially gain significantly from the creation of a U.S. Bitcoin stockpile.

While Sacks confirmed earlier this week that he divested his personal crypto holdings before joining the Trump administration, he remains a partner at Craft Ventures, an investment firm with stakes in crypto companies. This means Craft Ventures, and consequently Sacks, could still benefit financially from the U.S. government’s Bitcoin holdings.

“This appearance of impropriety does little to alleviate concerns regarding the potential ‘pay-to-play’ dynamic within the cryptocurrency space,” the report points out.

The report also underscores the risks associated with political figures promoting meme coins and fraudulent tokens. As an example, Argentinian President Javier Milei promoted a token called $LIBRA, which reportedly lost around $4.6 billion in value within just hours. Similarly, Trump promoted his own memecoin $TRUMP on January 17th. While this token initially surged to a peak of over $73 on January 19th, it has since plummeted, losing over 83% of its value.

The CPA report concludes with a stark warning:

“Without enhanced transparency and accountability, the very future of crypto’s legitimacy within the financial world remains uncertain.”

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