Coinbase CEO, Other Crypto Insiders Billions Richer After Seeking to Manipulate Elections

This is the third in a series of stories examining the crypto industry’s high-stakes 2024 entry into politics and campaigning. The first explored the electoral track record of Fairshake PAC’s strategy and its second heavy use of a 2010 Supreme Court ruling.

The heads of the companies responsible for the river of money that flooded US political shores this year have already benefited greatly from the outcome of last month’s election — increasing their personal fortunes by billions of dollars, which more than the huge spending they have allocated to crypto-friendly candidates.

The CEO of Coinbase Inc. (COIN) Brian Armstrong and his company committed about $74 million to the industry’s dominant political action committee, Fairshake, putting Armstrong in a close lead over several other crypto insiders. That’s a huge amount of money from a company that has booked about $95 million in 2023 revenue. But the elections went ahead, and the company’s value has sunk by $21 billion since Nov. 4, a day before in-person voting began and the outcome was clear.

In a pre-programmed series of trades starting less than a week after the election, Armstrong sold $100 million worth of his Coinbase shares. The same shares the night before the election cost about $39 million less. A week after that, he cashed in about $313 million — all part of a selling strategy that would set him in motion if the price rose.

Since then, the co-founder and CEO has sold smaller amounts every week, totaling about $437 million for stock that was worth $308 million before President-elect Donald Trump’s victories and a record of crypto-backed congressional legislator. In other words, the pro-crypto sentiment that was building after the election results that Armstrong helped shape earned him an additional $129 million in wealth for the shares he sold.

He still owns more than 10% of the largest US crypto exchange, and the value of the approximately 24 million shares held in his trust, according to the most recent filing with the Securities and Exchange Commission, is approximately $6.4 billion — up $2 billion since Nov. 5.

Armstrong’s stock sales were planned less than three months before the US election, submitted to a formal strategy intended to distance corporate insiders from accusations of playing the markets. And the sales haven’t reached the halfway point of the SEC’s disclosed goal of offloading as many as 3.75 million shares, depending on the stock price meeting “certain threshold prices specified in the Armstrong Plan. “

He took it from the social media site X to explain the plan days before the election, saying he was diversifying “to make investments in moonshots” but would keep “the majority” of his shares. He said he’s set price targets so high that he doesn’t expect most of them to sell next year “unless we do better than expected.” COIN stock is currently trading around $276, up from around $186 in Nov. 4.

A Coinbase spokesperson referred CoinDesk to that post when asked for comment.

His rivals among the crypto leaders who have devoted similar levels of money to the elections include Ripple Labs CEO Brad Garlinghouse and the investment firm’s namesake chiefs Andreessen Horowitz (a16z). Ripple gave $73 million, and a16z put in $70 million, with large amounts held for the next election cycle in 2026.

Garlinghouse reportedly owns more than 6% of Ripple, the company, and a large but undisclosed amount of tokens tied to it, XRP. Various reports have placed him high on the list of US billionaires as a result. At the end of the election, XRP surged to become the third largest crypto asset by market cap.

While Garlinghouse chose not to weigh in on details on his net worth, he acknowledged excitement over Trump’s return to the White House in a statement to CoinDesk.

“The crypto market is up more than $1 trillion since Trump won — that’s the price of Gensler’s foot on the neck of the market, and he’s not officially gone yet,” Garlinghouse said.

Since the election, Garlinghouse’s holdings of XRP have more than tripled as the token’s price has jumped from $0.50 to $2.32. And even the non-public valuation of Ripple Labs is uncertain and final set around $11 billion earlier this year, the election almost certainly boosted the value of his primary stake. Garlinghouse’s personal wealth likely increased as a result.

The financial status of Mark Andreessen and Ben Horowitz is more obscure, but both men have made notable gains since last month from their multiple stakes in crypto companies, likely exceeding the money they have devoted to politics of the US. But the financial values ​​are not available for a16z’s investments in private companies as they are for the public Coinbase.

The company extensive crypto portfolio including stakes in Coinbase, Uniswap, Solana, EigenLayer and Anchorage Digital and dozens of others. Almost all of them become more important because the US executive branch will be run by Trump, who says he will be the crypto president, and the 535-member Congress includes about 300 who are predicted to support digital assets — including dozens have just been supported. by Fairshake in their election.

But a company spokesman declined to comment on CoinDesk’s analysis of gains for Andreessen and Horowitz as individuals.

A16z’s immersion in US politics aims to “help promote clear road rules that will support American innovation while dealing with bad actors,” according to a post from the firm’s Chris Dixon.

Separate from Fairshake, Andreessen and Horowitz Supported Trump’s election effort. And Andreessen has be an adviser to the pro-crypto president-elect as he prepares to begin his second term next month.

Crypto benefactors from Coinbase, Ripple and a16z have combined to make Fairshake and its affiliates a super PAC in the company’s most powerful campaign finance efforts in the 2024 election, helping 53 members of Congress next year win their races. However, Fairshake did not weigh in on the presidential election, which may have had the biggest impact on crypto market prices.

Garlinghouse, in a post-election interview with 60 Minutessaid, “I think it’s clear that Donald Trump has embraced crypto and crypto has embraced Donald Trump.” While he didn’t claim credit for Trump’s victory, Garlinghouse said crypto PACs “absolutely helped elevate candidates” and influenced outcomes in congressional contests.

His company has pledged $5 million in XRP to Trump’s inauguration — next month’s celebration of his return to the presidency — and Coinbase and fellow US crypto exchange Kraken have also raised their hands to fund it.

During the election, the crypto industry was accused by its critics of being remarkably transactional in its political strategy — putting money in the best places to secure future pro-crypto votes on legislation and buying more than $130 million in congressional campaign ads with framing across the political spectrum (and without mentioning crypto). The gains for the sector mean a boost for the three main companies behind Fairshake and for their individual leaders, who are tied to them financially.

The sector’s political efforts have been “concentrated on industry-specific interests,” said Rick Claypool, the director of research at Public Citizen who analyzed crypto campaign spending. “Short term, it obviously caused a big bump in crypto.”

The return on investment for industries that put money into politics can be “often very good,” said Mark Hays, a senior policy analyst at Americans for Financial Reform, who has also worked on campaign finance issues. “Crypto is newer, so the opportunity for growth is greater.”

While Armstrong and others prefer a political narrative that features a grassroots upswell among crypto voters swinging elections, he and his company were directly behind the founding of Stand With Crypto, the group billed as a grassroots effort to harness the will of crypto voters. And Fairshake’s political influence is mostly based on money from Coinbase and its partner companies, along with smaller amounts from Jump Crypto and Gemini.

The leaders of Gemini, Tyler and Cameron Winklevoss, also belong to Trump loudest fan in crypto.

The day after the vote, Cameron Winklevoss posted on X: “Imagine how much we can do in the next 4 years now that the crypto industry will not bleed $ billions in legal fees against the SEC and instead invest this money in building the future of money. Amazing people waiting.”

On Nov. 11, the day Armstrong began selling large amounts of Coinbase stock, Tyler Winklevoss posted“Shackles off, 100k coming in.” Bitcoin hit that mark one month after the election.