Astroturfing

I seem to be stuck on the theme of cryptocurrency gaslighting with two weeks ago More Cryptocurrency Gaslighting and one week ago Greenwashing. Now I look at cryptocurrency gaslighting in the political arena, where it is termed astroturfing:

it is defined as the process of seeking electoral victory or legislative relief for grievances by helping political actors find and mobilize a sympathetic public, and is designed to create the image of public consensus where there is none. Astroturfing is the use of fake grassroots efforts that primarily focus on influencing public opinion and typically are funded by corporations and political entities to form opinions.

Donald Trump, 2019

Currently, the crypto-bros have poured money into primaries, defeated several incumbents deemed to be insufficiently crypto-friendly, and have accumulated an immense war-chest for November's general election. This pot of gold was enough to turn Trump from crypto-skeptic to telling Maria Bartiromo:

Who knows, maybe we’ll pay off our $35 trillion dollar [national debt], hand them a little crypto check, right? We’ll hand them a little Bitcoin and wipe away our $35 trillion

Below the fold I discuss the gaslighting the cryptosphere is using in their massive attempt to purchase "regulatory clarity", and what the scale of this investment suggests about the profits they expect to garner if it succeeds.

Why does astroturfing exist? Lobbyists going to politicians and saying "I know your constituents don't want you to vote X, but if you do I'll give you a boiat-load of money" make the politicians uncomfortable. The lobbyists need to cover this unpleasant reality with a fig-leaf. So on 10^th May Crypto Attitudes in Swing States, a poll by Harris for the Digital Currency Group appeared. It polled 1201 registered voters in April. Jasper Goodman's Crypto is Trump’s new weapon against Biden reported that:

A poll released by crypto industry groups this week showed that more than 20 percent of voters in six key swing states identify crypto as a major issue. A separate nationwide survey of registered voters commissioned by the crypto firm Paradigm found that crypto ownership is higher among communities of color and young people — key constituencies that helped boost Biden in 2020 but are now proving to be challenging for him to win over.

Crypto has gained support from politicians on the right who tout it as an alternative to the mainstream financial system. The Paradigm poll found earlier this year that crypto owners favor Trump over Biden, 48 percent to 39 percent, with 13 percent undecided.

Source

Three weeks later Molly White had had time to analyze the poll and in Cryptocurrency companies have raised over $135 million to influence US elections this cycle, and they’re just getting started she wrote:

In reality, their poll of 1,201 American voters in six swing states is a masterclass in spin. 69% of the people surveyed had “very” or “somewhat” negative opinions towards crypto, but DCG is crowing that “Among a sizeable contingent of voters, crypto attracts a level of interest that translates into pro-crypto sentiments across the board” and advising political candidates to adopt pro-crypto stances to attract voters. Many of the questions were framed ambiguously — such as the “Crypto is a major issue I’m considering during the next election” one — which allowed DCG to put “21% agree” in big letters while obfuscating the fact that those who agreed were not necessarily crypto supporters. In fact, if you do the math, more than 100 of the 252 people (~40%) who said they felt crypto was a major issue in upcoming elections do not feel positively towards crypto — in other words, there's a contingent of fellow skeptics among that 21%, who are likely hoping for candidates who might support more aggressive approaches against the industry.

White extracted the agree/disagree data from the Harris poll and generated a useful chart. From it I extracted the questions that two out of three respondents somewhat or strongly disagreed with in this table.

Disagreement	Question
80%	Crypto is a major issue I'm considering in the next election
74%	Crypto is more equitable than the traditional financial system
73%	Crypto is meant for people like me
73%	I pay attention to political candidates positions on crypto
71%	It is easier for people to be financially successful with crypto ...
65%	Crypto is the future of transacting
65%	I'm concerned about legislation that would interfere with crypto

This is not a pro-crypto sample. I have to agree with White that DGC is gaslighting the results. She concluded:

Frankly, it just doesn't seem likely to me that a substantial number of people are single-issue crypto voters and would be swayed to vote for a candidate they might not otherwise support because of it. Many of the people celebrating Trump's recent crypto U-turn were probably already planning to vote for him, and I doubt there were many crypto-skeptical people out there previously who didn't otherwise support Trump, but who intended to vote for him because of his former position on the industry.

The most worrying answer is that 73% of the sample are not paying attention to candidates' positions on cryptocurrencies; this gives the candidates license to ignore their constituents' anti-crypto views.

Source

Covered by this bogus fig-leaf, the tsunami of money started flowing. May 30^th saw some of the first reports of money with Hannah Miller and Olga Kharif's Andreessen Horowitz Donates $25 Million to Fairshake PAC and Molly White's Cryptocurrency companies have raised over $135 million to influence US elections this cycle, and they’re just getting started. White went on to start Follow the crypto, a site devoted to tracking the cryptosphere's political fundraising and donations. Much of this post is based on White's research.

Initially, the crypto-bros had consideable success by pouring money into defeating crypto-skeptics in primaries, as the Emily Wilkins' Crypto industry super PAC is 33-2 in primaries, with $100 million for House, Senate races reported on 26^th June:

A super PAC bankrolled by a small group of crypto companies has backed the winning candidate in 33 of the 35 House and Senate primary races it entered.

Fairshake PAC kicks off the general election season with a strong track record and at least $100 million to spend on crypto-friendly candidates for Congress.

Wilkins made two important observations:

The PAC has spent tens of millions already on ads that rarely mention crypto. Instead, the messages they deliver are about “fairness” and “integrity.”

Note that the crypto-bros aren't fooled by their gaslighting; they know that the vast majority of the voters are anti-crypto. Molly White's Pointing its arsenal at our friends makes the point:

I’ve noted before that, despite the industry’s attempts to convince incumbent politicians, candidates, campaign managers, and anyone else who will listen that there is a major bloc of single-issue voters who will vote for people with pro-crypto policy stances, the people in charge of actually running strategy don’t seem to truly believe it. Ads run by the Fairshake PAC and related crypto-focused super PACs make no mention of cryptocurrency, for example, suggesting that those behind them understand that it’s not an issue that’s likely to sway voters.

Wilkins' second observation is:

Of the $160 million in total contributions Fairshake has raised since it was founded, around $155 million — or 94% — can be traced back to just four companies: Ripple, Andreesen Horowitz, Coinbase and Jump Crypto.

And note the classic astroturfing; a PAC funded by a few huge companies claiming to represent the "40% of American adults now own crypto". This is more gaslighting. Other crypto-friendly sites claim "14% of US adults own cryptocurrencies".

Grifters like Trump know which side their bread is buttered. Already by 7^th June Alexandra Ulmer was writing Trump pitches himself as 'crypto president' at San Francisco tech fundraiser:

Republican presidential candidate Donald Trump presented himself as a champion for cryptocurrency and slammed Democrats' attempts to regulate the sector during a San Francisco fundraiser on Thursday, three sources present told Reuters.

Trump raised $12 million from the fundraiser hosted by tech venture capitalists David Sacks and Chamath Palihapitiya at Sacks' home in the swanky Pacific Heights neighborhood.

Four days later David Pan reported Trump Meets Bitcoin Miners in His Latest Pro-Crypto Overture:

Several Bitcoin miners met with former president Donald Trump at Mar-a-Lago on Tuesday night, according to Matthew Schultz, executive chairman at crypto mining company CleanSpark Inc.

Trump told attendees that he loves and understands cryptocurrency, adding that Bitcoin miners help to stabilize energy supply from the grid, according to Schultz. Trump said he’d be an advocate for miners in the White House, Schultz added.

This culminated on 27^th July at the recent Bitcoin2024 gathering of the faithful with a bizarre 48-minute rambling monologue that was mostly a rehash of his stump speech.

Six days earlier, Joe Biden had dropped out of the race, disrupting the crypto-bros plans. Molly White observes:

But it does seem that some of the more gullible executives and figureheads within the crypto world have themselves been bamboozled by the questionable numbers and creatively interpreted polls. The feeling among that group is not that they need to pursue a positive relationship with a possible future Harris administration, but rather that this supposed crypto vote will decide the election, and that they are its gatekeepers.

Like me, Cory Doctorow leverages White's research in The largest campaign finance violation in US history:

But the real whale that's backstopping the crypto campaign spending is Coinbase, through its Fairshake crypto PAC. Coinbase has donated $45,500,000 to Fairshake, which is a lot:

https://www.coinbase.com/blog/how-to-get-regulatory-clarity-for-crypto

But $45.5m isn't merely a large campaign contribution: it appears that $25m of that is the largest illegal campaign contribution by a federal contractor in history, "by far," a fact that was sleuthed out by Molly White:

https://www.citationneeded.news/coinbase-campaign-finance-violation/

At issue is the fact that Coinbase is bidding to be a US federal contractor: specifically, they want to manage the crypto wallets that US federal cops keep seizing from crime kingpins. Once Coinbase threw its hat into the federal contracting ring, it disqualified itself from donating to politicians or funding PACs:

How wonderful is it that this great country enjoys the blessings of democracy? Just imagine how much money the companies donating to these PACs stand to make from obtaining "regulatory clarity" if they are "investing" close to $200M in a chance to get it.

Update 23^rd August

I posted this too soon. Enough has happened in the last few days to justify an update:

• Will a Harris administration provide "regulatory clarity"? I commented on Hadriana Lowenkron's Harris Supports Policies to Expand Crypto Industry, Aide Says:
  

  "Vice President Kamala Harris will back measures to help grow digital assets, a policy adviser to her campaign said, highlighting efforts to court an emerging cryptocurrency industry expanding its political influence.

  But Protos had a skeptical take in Kamala Harris ‘pro-crypto policy’ is yet more fake news:
  

  Another day, another fake Kamala Harris headline. Already this week, we’ve heard all about her non-appointment of Gary Gensler and her non-existent unrealized crypto gains tax, and today we have to point out that the 2024 White House hopeful hasn’t adopted a ‘pro-crypto policy.’
  ...
  Well, rather than Harris suddenly adopting a pro-crypto platform to boost her presidential campaign, Bloomberg published an article.
  
  Specifically, behind its paywall, it ran the quote, “She’s going to support policies that ensure that emerging technologies and that sort of industry can continue to grow.”
  
  That quote related only broadly to the ‘crypto community’ and didn’t come from Harris or her spokesperson. It was actually said by Brian Nelson, a mere campaign advisor.

• Exercising traditional bothsiderism, Bloomberg's Editorial Board weighed in with Harris and Trump Shouldn't Pander to the Crypto Crowd:
  

  Just 1% of Americans say they used them for a payment or money transfer last year. More often crypto is used to move money outside of government oversight. That’s helpful for criminals, terrorists and anyone under sanctions. But these are hardly the constituencies that a presidential candidate should be soliciting. Nor should policymakers be encouraging people to park their savings in digital wallets instead of stocks, bonds and other assets that support the real economy.
  
  Instead, candidates should promise to work with Congress and regulators to ensure that the rules applied to cryptocurrencies are consistent with existing laws on fraud, money laundering and sanctions enforcement.

  What is the chance that this would happen in a Trump administration?
• The answer had come the day before the Editorial Board's vain hand-waving. MacKenzie Sigalos' Trump promotes family’s new crypto platform, ‘The Defiant Ones’ made it crystal clear:
  

  Former President Donald Trump on Thursday promoted a soon-to-launch, Trump Organization crypto platform, “The DeFiant Ones” to his 7.5 million followers on Truth Social
  ...
  “For too long, the average American has been squeezed by the big banks and financial elites,” Trump wrote. “It’s time we take a stand — together.”
  
  The post marks the first time the Republican nominee for president has used his personal platform to promote the as yet unactivated digital bank. Within minutes, his son Donald Trump Jr., shared the post with his 12 million X followers.

  Trump's floundering Truth Social posted a $16.4M loss on revenue of $837K (down 30% year-on-year). The stock is currently down 75% from the peak and Trump is widely expected to pull the rug out from holders by dumping his stock in the next few weeks. Thus he needs to find a new grift to replace DJT, and this is clearly it. The probability that "The Defiant Ones" will be rug-pulled is close to 100%.

I should expand on the last point in the original post. Corporations making large political contributions are making a similar calculation to VCs investing in startups. The return on investment each time is likely to be negative, but the return on the occasional winner is enough to wipe out the losses and leave a healthy profit. This leaves two questions that are rarely asked:

• How much profit will the contributors garner if their wishes are granted?
• Where will this profit come from? In other words, if the contributors are the winners, who are the losers?

The history of cryptocurrencies suggests that the profit will be large and the losers will be the retail "investors".