A Crypto Coup?
How Billionaires Are Threatening
Democracy & Rewriting the Rulebook of American Politics

By Casia Thompson

Crypto tycoons are storming into U.S. politics and attempting to reshape how we choose our elected officials. And the industry remains mostly controlled by a small group of very wealthy people even though fewer than one-sixth of people have ever owned any cryptocurrency. But crypto tycoons are pouring money into politics, aiming to bypass regulatory oversight, consolidate their power, and restructure American politics for their own benefit.

The crypto industry promotes itself as a high-tech, futurist alternative to banks and stock brokers that offers decentralized and democratized finance. In reality, it is often a cesspool of crypto scams, market manipulation, and cyber breaches that have enriched a few crypto bros and fleeced a lot of unsuspecting crypto-curious investors. But this year’s push into political spending only distorts the truth and poses a serious threat to American democracy.

The idea that cryptocurrency is decentralized — theoretically one if its foundational promises — is laughable. A tiny number of crypto insiders control the industry, the cryptocurrencies, and the crypto markets. According to a 2021 ​​National Bureau of Economic Research study, the top 0.01% of the Bitcoin holders (one out of ten thousand) control 27% of the 18.9 million Bitcoins in circulation.

Not Decentralized

And, the top 1% of members controlled 90% percent of the voting shares of ten big decentralized crypto platforms, according to a 2022 Chainalysis report. The crypto industry exhibits the same oligarchic structure as the rest of big finance – think of too-big-to-fail Wall Street banks or private equity billionaires – ultimately a system where the majority of the wealth is hoarded by a few crypto moguls rather than a system distributed to many.

This small group of crypto tycoons are exploiting America’s age-old problem of big money in politics. They say they are simply engaging in the democratic process, but many of them are driven to reestablish a new Gilded Age of cryptocracy that is fundamentally different from the type of broadly shared prosperity the United States enjoyed after the New Deal. For example, both former Coinbase chief technology officer, Balaji S. Srinivasan, and current Coinbase CEO Brian Armstrong, have called for “network states” to exist outside of and replace nations and democratic systems. The wealthy tech executives would control these are pro-crypto cities and states that aim to bypass all national laws and minimize democratic oversight to create a futurist and unregulated paradise for big tech overlords.

Amplifying Billionaire Voices

Crypto political spending amplifies a few corporate voices over those of ordinary citizens. A very small number of crypto firms and executives have supplied nearly half of the $248 million of all corporate money donated to influence the 2024 presidential election. Crypto-funded Super PACs, like Coinbase-backed Fairshake, are supporting pro-crypto Bernie Moreno in the Ohio Senate race over Sen. Sherrod Brown, a longtime voice for fairer finance.

While crypto billionaires purport to be proponents of financial freedom and inclusion, the industry is plagued by fraud that punishes smaller and more vulnerable consumers.. Regulatory safeguards, such as basic government oversight of crypto products and markets, are essential to protecting people and stabilizing the financial system. Crypto industry advocates, like Armstrong and the Blockchain Association, have consistently challenged existing regulations and essential guardrails as barriers to innovation.

Despite crypto’s limited influence in the everyday life of most Americans — only 17 percent of people have ever invested in crypto, according to a recent Pew poll — it is having an outsized influence on the election. Maybe some big investors and crypto enthusiasts buy the industry’s currency of the future nonsense, but nearly two-thirds (63%) of people doubt the safety and reliability of crypto. But the actual “crypto voter” is largely illusory; the nation’s concerns about inflation, affordable healthcare, and drug addiction remain paramount.

False Promises of Inclusion

The promise of crypto as the gateway to financial inclusion doesn’t hold water. Crypto markets are highly volatile, lack consumer protections, and rife with predatory practices that disproportionately impact vulnerable populations. The industry promises a path to more accessible financial services, wealth-building opportunities, and financial demarginalization. But the U.S. Treasury Department found that crypto risks may actually exacerbate existing inequalities, leaving these populations ill-equipped to navigate crypto’s hidden costs and volatility.

Crypto billionaires are trying to create a political environment that serves their agenda, relying on financial loopholes in U.S. campaign finance laws to spend lavishly to prevent needed regulatory oversight. This trend threatens to reshape American democracy by further concentrating power into a new class of wealthy individuals — crypto billionaires. If these tycoons get their way, this small, fraud-ridden industry could rewrite the rulebook of our democracy, with regulations and policies shaped not by the public interest but by private finance.

Crypto’s foothold in American politics is no win for the everyday American. But this new industry is digging in for the long haul; Coinbase has just pledged another $25 million to the biggest crypto super PAC. It’s a move by the new rich to privatize the democratic process.

Casia Thompson is a communications intern at Americans for Financial Reform