Who bought the 2024 election?

We all know about Elon Musk. But there was another huge source of election cash – cryptocurrency (it’s not really currency) firms and their wealthy owners.

Crypto Political Action Committees (PACs) spent $265 million on the elec- tion, the most of any “industry.” What did they get for their money? FairShake, a crypto PAC, helped defeat critic Katie Porter in the California Democratic primary. FairShake, along with AIPAC, helped defeat progressives Cori Bush and Jamaal Bowman in their primaries.

Crypto money’s biggest win was taking down Ohio’s Sherrod Brown, the Democratic leader on the Senate Banking Committee. They also helped Trump, who, back in the day, derided crypto as “thin air,” But recognizing a good scam, Trump and family are now all in.

Besides Musk, Trump is surrounding himself with crypto parasites, from J.D. Vance to Paul Atkins (SEC appointee) and Howard Lutnick (Commerce). And who knew we needed an AI and Crypto Czar (David Sacks)?

Rug Pulls and Wash Trading

If it’s not currency, what is it? Currency, or money, is a social construct we have developed to buy and sell things and services. This may sound weird, but money is based on trust – trust that the bank where you deposited your pay will make payments when you write a check (old school) or use a card or a digital payment system.

Or trust that the government will accept payment in the currency it prints and make depositors whole if a bank goes belly-up. In addition, the central bank will rescue the financial system as a whole if private banks or finance institutions threaten a collapse or depression.

That’s what happened in 2008. Neo- liberal deregulation allowed bankers to create and speculate (“innovate,” they call it) on a whole slew of risky financial derivatives. These crashed in value, and the private banks were bailed out by central banks buying their bad assets.

Financial fraud was revealed, but no one went to jail. Banks and bankers were bailed out, and homeowners were not. So in 2008, a private group created Bitcoin, a digital currency that was supposed to bypass the corrupt top-down financial institutions and allow users to make payments directly to each other.

Did that work? Well, not really. Extremely complicated computer verification of transactions makes it impossible to use crypto to buy a cup of coffee or your groceries. It is not money.

But hundreds and thousands of companies now issue cryptocurrency and crypto tokens. So what are they? They are “investments” of a very peculiar kind. They are not shares of stock in a company that produces or owns some thing. They are just pieces of digital code that are being traded back and forth in what is a gambling economy.

Crypto shills said it would go up in value forever. Influencers pushed it. This became a perfect opportunity for fraudsters to create a token, get inter- net posters to push it, then pull the rug out by selling at the top, leaving small investors to take the loss. Or buy and sell tokens back and forth from one account to another, driving up values, then getting out.

Casino Capitalism

Covid meant too many folks were isolated in front of their computer screens, trying to make the big score. This culminated in the Super Bowl ads of 2022, with Matt Damon and Kim Kardashian helping to push crypto to $3 trillion. Then, the inevitable crash came in May of that year and wiped out $2 trillion of that value.

Of course, the “whales” were not wiped out; smaller investors were. From 2015 to 2022, 75 percent of crypto investors lost money. Speculative investments enrich only the already wealthy.

We do have to recognize what crypto actually is good for. Because crypto holdings are pseudo-anonymous, trans- actions are hidden. So it is useful to opioid traffickers, tax avoiders, money launderers, ransomware hackers, gun runners, and anyone trying to avoid international sanctions.

We have plenty of reasons to want to limit crypto and its scammers and criminals. But crypto businesses want more, and the incoming administration is poised to give it to them. They want “light-touch” regulation that would mainstream them.

They do not want to be prosecuted for fraud, as many of them should be. They want crypto to be designated as a special asset, not a security with all the investor protections that implies. With very light legitimizing regulation, they could draw in millions from our pension funds and other traditional investment funds.

That would mean their booms and crashes and fraud would have a more significant impact on the traditional financial system, the one we use. Yes, we need to reform that system with stricter regulation and new initiatives like postal accounts and public banks. But we also have to protect it from fraudsters and casino capitalists.