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This is part of a broader effort by the crypto industry to influence Congress ahead of the 2024 elections as a variety of crypto-related bills make their way through Washington.
The crypto market is trying to recover after a scandal-filled year that included the conviction of FTX founder and political mega-donor Sam Bankman-Fried on fraud charges in November, followed by a plea deal for Binance founder Changpeng Zhao.
Crypto groups spent over $18 million on lobbying last year, according to a Portal analysis. The Cedar Innovation Foundation does not publicly disclose its donors, nor does it say on its website who runs the organization or where it is based.
Cedar Innovation is heavily funded by crypto industry players, with Coinbase likely to write a check for the group by the end of the year, according to people familiar with the matter, who asked not to be identified because discussions about the funding are confidential. The group recently hired Mindset Advocacy, a lobbying shop that has worked for Goldman Sachs, Amazon Web Services and Barclays, according to a recent disclosure report and data from the nonpartisan organization OpenSecrets.
Dennis Kelleher, the CEO of the nonprofit Better Markets, told CNBC that he expects the industry to spend big this year to fend off crypto-critical lawmakers.
“What we will see in 2024 is a massive increase in crypto-funded ‘dark’ money campaigns against anyone who is not a crypto expert,” Kelleher said. “At the end of the year, when you add it all up, I think the crypto industry is going to spend hundreds and hundreds of millions of dollars trying to defeat people who actually want to represent the voters and not 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., did not answer questions about the group's supporters. In a statement to CNBC, he took aim at Kelleher and Better Markets.
“It is not surprising that a Washington think tank funded by big banks and hedge fund managers is trying to destroy cryptocurrencies in order to maintain its monopoly on access to all Americans’ money,” Vlasto said.
Kelleher responded that Cedar Innovation lied about Better Markets and called his organization an “independent nonprofit.”
A Coinbase spokesperson declined to comment on possible funding for the Cedar Innovation Foundation, referring CNBC to public statements from executives. In a post last month on PAC.
According to Meta's ad archive, Cedar Innovation has been actively advertising on Facebook and Instagram since the end of last year. The nonprofit spent just over $27,000 on ads on the two meta platforms, including spots urging voters to call Senate Banking Committee Chairman Sherrod Brown, D-Ohio, to encourage him , taking on SEC Chairman Gary Gensler, a crypto skeptic. The organization has also targeted industry critics Sens. Elizabeth Warren, D-Mass., and Roger Marshall, R-Kan.
“Anyone who knows my record knows that I will never bow to special interests or industry pressure, no matter how well funded I am with dark money from shady sources,” Brown, who is up for re-election this year, told CNBC. “That’s why I’m working on the committee to protect families’ money from the scams, scams and abuses that are rampant in this industry and to prevent it from being used to finance terrorism and other illegal activities.”
Brown's office said neither the senator nor his staff had heard from the Cedar Innovation Foundation. Representatives for Warren and Marshall did not respond to requests for comment.
“We hope that Senator Brown and others will not bow to Wall Street banks and their special interests, especially when crypto innovation holds the key to thousands of good jobs in Ohio, Kansas and across the country,” Vlasto said in response to Brown. “The Cedar Innovation Foundation, a nonpartisan organization, is committed to helping policymakers and the public understand the risks while providing regulators the tools they need in a time of transformative change.”
The foundation says in a press release that it is “dedicated to supporting congressional staff and policymakers by providing them with the tools and resources they need to better serve the American people and build America's innovation economy.”
However, Kelleher said the ads he reviewed suggest the group is more focused on targeting the re-election efforts of Brown and other crypto critics.
“This is not an awareness campaign,” said Kelleher. “This is a political hit against Senator Brown because they want to defeat him in the upcoming election.”
Cedar Innovation is turning to experienced strategists to help with its influence campaign, according to records and people familiar with the matter.
With the hiring of Mindset Advocacy, the group is hiring four lobbyists with previous ties to current and former members of Congress, according to LegiStorm.
Charlie Schreiber, a principal at Mindset, which supports the foundation, previously worked for House Financial Services Chairman Patrick McHenry. One of the three bills the foundation plans to oppose is the Clarity for Payment Stablecoins Act of 2023, a law sponsored by McHenry that would change the regulation of stablecoins.
A spokeswoman for McHenry's office did not respond to a request for comment.
The foundation has also hired Bullpen Strategy Group, a consulting firm founded and led by longtime Republican strategist Joe Pounder, according to a person familiar with the matter. Bullpen says on its website that it specializes in crisis communications, research and media education.
Pounder did not respond to an email seeking comment.
Cedar Innovation also has other political strategists working on its behalf, records show.
In Meta's promotional report for Cedar Innovation, a phone number for the promoter matched a cell phone number for Eric Coats, a longtime Illinois political consultant, according to a public database. Coats did not respond to questions about his role at Cedar Innovation.
According to Federal Election Commission records, Coats previously worked for Massachusetts Democratic Rep. Seth Moulton's congressional campaigns and his leadership's political action committee.
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