Elizabeth Warren calls out crypto’s Washington revolving door

Sen. Elizabeth Warren has a new target as she takes on the cryptocurrency industry: Its growing army of former defense, national security and law enforcement officials.

The Massachusetts Democrat sent letters to Coinbase, the largest U.S. crypto exchange, as well as the Blockchain Association and Coin Center, two leading industry groups, demanding details on their employment of the former officials. Warren cited POLITICO reporting that outlined how the crypto lobby has been flexing its association with the experts as it faces growing scrutiny for the role digital assets play in facilitating financial crime, including funding the Oct. 7 Hamas attacks in Israel.

Warren’s letters identified Coinbase’s recruitment of one-time Defense Secretary Mark Esper and Bush counterterrorism adviser Frances Townsend, as well as retired Republican Sen. Pat Toomey and former Democratic Reps. Tim Ryan and Sean Patrick Maloney, who is nominated to serve as the U.S. representative to the OECD. They serve on Coinbase’s Global Advisory Council. She also noted a recent Blockchain Association letter to Capitol Hill signed by 40 former military officials, ex-intelligence officers and national security professionals, who downplayed illicit activity in crypto and argued against policies that would drive digital asset players overseas.

“This abuse of the revolving door is appalling, revealing that the crypto industry is spending millions to give itself a veneer of legitimacy while fighting tooth and nail to stonewall common sense rules designed to restrict the use of crypto for terror financing — rules that could cut into crypto company profits,” she said. “It also reveals significant gaps in the nation’s ethics laws.”

The requests, which crypto leaders immediately criticized, marked an escalation in Warren’s push for an industry crackdown. She has been building bipartisan support for legislation that would impose new anti-money laundering safeguards on the crypto market and she led more than 100 lawmakers to ask the Biden administration to intervene after the Oct. 7 attacks in Israel.

Crypto firms have tried to argue that the Hamas funding concerns have been exaggerated and that the industry has recruited former officials to bolster its legal compliance. It’s also not alone: Traditional banks and financial firms have long employed ex-officials and policymakers in their lobbying and other operations.

Blockchain Association CEO Kristin Smith said in response to Warren’s letter that “people are drawn to work in the crypto industry because they value freedom, sovereignty of the individual, and permissionless innovation.” Coinbase head of U.S. policy Kara Calvert said the national security and law enforcement experts that the crypto exchange employs “do not deserve to be maligned as they work to keep our nation strong and safe.”

“Engaging like-minded experts to advocate against legislative proposals that one sincerely believes are unconstitutional and detrimental to the nation’s welfare does not constitute ‘undermining bipartisan efforts in Congress,’” Coin Center Executive Director Jerry Brito said, quoting Warren’s letter. “Rather, it is the exercise of the fundamental right to freely associate and petition the government.”

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