Historically, the cryptocurrency industry has mostly stayed out of politicking; however, that all changed when California Democratic Congressman Brad Sherman launched pre-emptive strikes against the soon-to-be $1 trillion-dollar industry. Before witnesses could even testify in last month’s Financial Services Committee hearing, Sherman seemingly classified cryptocurrency users as “narco-terrorists” and advocated that American citizens should not be able to invest their own money as they see fit if that involves cryptocurrency. Within minutes the hashtag UnSeatSherman2018 started flooding social media along with information exposing Sherman’s ties to illegal gambling operations and offers to fund his opponent. Sherman may have struck first, but Crypto is striking back.
Although the Crypto community isn’t taking Sherman’s recent comments lying down, this isn’t the first time Sherman sounded off about cryptocurrency, nor is it the first time he did so during opening remarks of a hearing. Earlier this year Sherman began opening remarks by calling cryptocurrencies a “crock” and attacking his own constituents by saying “They [cryptocurrencies] allow a few dozen men in my district to sit in their pajamas all day and tell their wives they’re going to be millionaires.”
Aside from trying to paint some of his constituents as less than respectable people, Sherman has consistently tried to sell the narrative that cryptocurrency is synonymous with criminal activity; specifically, fraudulent gambling schemes. As many members of the Crypto community started looking into Sherman, it became quickly apparent to them that Sherman hadn’t yet learned that those in glass houses shouldn’t throw stones.
While Sherman purports to be concerned about fraudulent gambling schemes, his opponents allege his campaign contributions would signal otherwise. According to Open Secrets, Sherman’s third largest campaign committee contributor for the current election cycle is Allied Wallet, Inc (Allied); a company that had accounts seized by the FBI and has had to forfeit over $13 million in relation to money laundering and online gambling allegations (Spoiler alert: those funds were in the form of dollars, not cryptocurrency.)
However, the 2018 election cycle wasn’t the first time Sherman was on the same financial disclosure form as Allied. Interestingly, he was one of only six candidates, including then-presidential candidate Hillary Clinton, that received money from Allied in 2016. Although Sherman is being called a hypocrite for taking money from Allied while condemning money laundering and illegal gambling, he’s being called a “shill” for his campaign contributors and lack of valid arguments against cryptocurrency.
Sherman’s disdain for cryptocurrency became so over-the-top that many in the Crypto community began to wonder where his talking points stemmed from and they began to dig for answers. As it turns out, Sherman is considered a “favorite” of an industry that would arguably be displaced if cryptocurrency were to be widely adopted. According to Open Secrets, Sherman was the second highest recipient of money from the Credit Union industry in 2016 and is the fifth highest for the current election cycle.
Given his close financial ties to an industry at odds with the cryptocurrency industry, some are claiming Sherman may have “substantial conflicts of interest.” Simply put, they believe that Sherman would make recommendations and vote in ways that would be in the best interest of his campaign donors and not of those that he was elected to represent…some of whom he has publicly mocked.
Sherman’s comments have drawn national and worldwide attention to his re-election race; specifically, intrigue into who his opponent is. The good news for those looking to #UnSeatSherman2018 – he’s pro-Crypto. Sherman’s opponent is Mark Reed; a small businessman and advocate for constitutional government, who is running to “restore fiscal discipline.”
Although the main issues Reed addresses on his website don’t include cryptocurrency, he’s not short on knowledge or views of the subject. When I asked Reed about his opinions on cryptocurrency, he talked about the “exciting technology” and its potential to “revolutionize everything from finance, law, supply chain, and government.” Reed even highlighted some of the technology’s benefits such as the removal of friction between borders, increased trust in governments, and the ability to combat corruption.
Reed also vastly differs from Sherman’s views on those in the Crypto community. Instead of belittling the community and referring to them as “narco-terrorists” as Sherman has, Reed spoke highly of those involved. Reed dispelled Sherman’s claim that those in the Crypto community “sit in their pajamas all day” as part of a get-rich-quick scheme. He acknowledged that many are working regular full-time jobs outside of the cryptocurrency industry and willingly give up their free time to help improve the technology. As Reed put it, they “…do it because they believe in the decentralized blockchain’s potential to change the world for the better.”
Perhaps the most significant discrepancy between the candidates about cryptocurrency stems from Sherman’s blanket statements about criminal activity. Unlike Sherman, Reed believes cryptocurrency isn’t the currency of choice for criminal activity based on empirical evidence. In articulating his view, Reed compared data from Bitcoin Laundering: An Analysis of Illicit Flows into Digital Currency Services to traditional money laundering statistics. He also discussed the fact that the blockchain ledger records every transaction for all to see which he calls “law enforcement’s dream come true.” In summation, Reed stated, “it’s clear that criminals prefer to use cash for its anonymity.”
What’s unclear is how much of an effect Sherman’s comments will have on his campaign for reelection. Given that Sherman’s seat is considered a safe Democrat hold, the battle to unseat him will be nothing short of easy especially given the election is now about three months away. While Sherman may survive his campaign for reelection this time around, he and those with similar views on cryptocurrency may not be so lucky next time as Sherman has single handedly politically awoken one of the largest and most highly valued industries, the cryptocurrency industry.