In preparation for the 2022 midterm elections, more candidates have started accepting cryptocurrency donations than ever before. As a result, the major crypto platforms started marketing themselves For candidates as healers of donations. But the platforms deliberately hide the identities of the people using their services, making it difficult for campaigns to know if donors are who they say they are — and to follow campaign finance laws.
The two largest cryptocurrency exchanges in the space, BitPay And the Queen PieceAnonymize transactions by creating a new “wallet address” (a random string of numbers and letters) for each user each time they transfer funds. This is a common feature of cryptocurrency platforms, intended to prevent moderators from using public blockchain explorers to identify the people behind each transaction.
But the feature can also prevent campaigns from verifying that donors are who they claim. The FEC requires candidates to collect and disclose the names, addresses, and employers of donors, which they can usually do by matching the donor’s name to the name on a check or the address on a credit card. But with wallets intentionally blocked and no such verification available through BitPay and Coinbase, campaigns have to rely on crypto givers honestly filling out a simple web form with few mechanisms for accuracy. This poses a risk that cryptocurrency donors could engage in fraudulent or otherwise illegal bids, resulting in campaigns failing to report the cryptocurrency granted to them, whether negligent or infamous.
BitPay offers a file opt-in system For any user who cares about transparency and wants to keep a single consistent and auditable wallet address. The campaigns, which are registered with BitPay as “trading accounts,” also have consistent wallet addresses. But since the feature is enabled, it’s possible that few donors have enabled it – which means campaigns won’t be able to confirm a donor’s identity statement with their public blockchain activity.
BitPay spokesperson Jan Jawski declined to answer questions about whether the platform conducts any identity checks on people who donate to campaigns through its platform. By contrast, Mike Naples, a spokesperson for gradual payment processor ActBlue, told BuzzFeed News that the company is “using multiple checks” to “expose financial fraud.” Coinbase did not respond to a request for comment.
Whereas it was legal to donate to campaigns using cryptocurrency Since 2014wide opened last June, when the Republican National Congress Committee announce It will start accepting donations in crypto form. Since then, candidates from across the ideological spectrum have embraced crypto donations, and forefront-encryption PACs They announced ambitious spending targets for 2022. Blake Masters, a conservative candidate for the Senate, recently Tell Supporters on Twitter to “DM me for a donation in cryptocurrency” and have NFTs are sold to support his attempt. Masters did not respond to a request for comment.