Dean Phillips Tech Backers Play Chicken with Election Laws

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** CfA's January 19, 2024 Newsletter
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With your support, Campaign for Accountability is working to expose corruption and hold the powerful accountable.


** This Week's Updates:
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Dean Phillips Tech Backers Play Chicken with Election Laws
A new story in Rolling Stone ([link removed]) has revealed conflict within the Dean Phillips campaign, which eventually spilled into an aligned super PAC with ties to OpenAI CEO Sam Altman. These details might be interesting to those fascinated by political drama, but they also highlight yet another instance of potentially illegal coordination between Phillips’ campaign and dark money financial backers. According to unnamed staffers, the Phillips’ campaign was disrupted by the presence of brothers Matt and Scott Krisiloff—longtime allies of Altman with limited political experience. The brothers participated in a campaign “leadership” groupchat, conducted focus groups, and marked up internal memos. Staffers also said that the Krisiloffs frequently name-dropped Altman, or portrayed themselves as his ambassadors while questioning established tenets of polling and campaigning. After helping
to craft Phillips’ messaging, the brothers left the groupchat and established a super PAC called We Deserve Better, which ran ads in support of the campaign.

Earlier this month, CfA filed a complaint highlighting a similar type of coordination at another PAC associated with Phillips, Pass the Torch USA. Evidence compiled in our complaint ([link removed]) to the Federal Election Commission (FEC) suggests that Phillips worked with veteran campaign strategist Steve Schmidt to develop messaging, before Schmidt left the campaign to launch Pass the Torch. Both Pass the Torch and We Deserve Better ran advertisements that closely mirrored Phillips’ campaign messaging. If that messaging was developed by the PAC’s respective leaders while they were part of the Phillips campaign, they could be considered illegally coordinated communications under FEC rules.
Winter Weather Proves Profitable for Texas Cryptocurrency Miners
An Arctic blast continued to affect Texas this week, bringing freezing temperatures that put extra strain on the state’s power grid and threatened to leave homes without heat. Under these conditions, the Electric Reliability Council of Texas (ERCOT) usually attempts to stabilize the fragile grid by paying large, industrial customers to reduce their power usage through a “demand response" ([link removed]) program. Now, Bitcoin hashrates appear to have plummeted ([link removed]) , as Texas-based cryptocurrency mining operations temporarily shut themselves down and began collecting payment from ERCOT. While a cryptocurrency’s hashrate doesn’t directly translate to the amount of currency mined, it is a good indicator ([link removed]) of computational power – and in this case, a sign that Texas has dominated US Bitcoin production in the aftermath of China’s ban.

So far, it’s impossible to know how much these cryptocurrency companies profited from ERCOT’s program; for reference, West Texas crypto miners made almost $40 million ([link removed]) by powering down their facilities during a heat wave this summer. Ordinary energy customers are left footing the bill, amid rising costs and increased grid instability. For more information about the relationship between ERCOT and the crypto industry, read the 2022 report from CfA’s Tech Transparency Project, here ([link removed]) .
UN Cryptocurrency and Money Laundering Report
On Monday, the United Nations Office of Drugs and Crime (UNDC) published a report ([link removed]) on Southeast Asian money laundering networks, which enable criminal organizations to profit from online casinos, sophisticated fraud, and human trafficking. Cryptocurrencies are an essential part of this system, and their role appears to be growing. The report’s authors focused their analysis on the digital currency USDT (Tether Stable Coin) and its issuance on the TRON blockchain—which criminals apparently prefer for its anonymity and low transaction costs. These traits have also made TRON attractive to terrorist organizations, including Hamas and Hezbollah ([link removed]) . In July 2023, the National Bureau for Counter Terror Financing of Israel issued an asset seizure order targeting the terror group
Palestinian Islamic Jihad that identified 26 TRON wallets consisting of over $93 million in USDT, TRON’s own TRX currency, and USDC, issued by US crypto firm Circle.

In November, CfA urged ([link removed]) Senators Elizabeth Warren (D-MA) and Sherrod Brown (D-OH) to probe TRON’s integrations with Circle to ensure that no domestic cryptocurrency firms may be facilitating harm, at home or abroad.
What We're Reading
WHO releases AI ethics and governance guidance for large multi-modal models ([link removed])
Cable firms to FTC: We shouldn’t have to let users cancel service with a click ([link removed])
The Supreme Court Is Now Complicit in Texas’ Armed Standoff With the Feds ([link removed])


** Follow Our Work:
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We thank you for your continued support. Without people like you, our work would not be possible.

Here is how you can stay involved and help us accomplish our mission:
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Be on the lookout for more updates about our work in the upcoming weeks. Thanks again for signing up to be a part of CfA!

Sincerely,

Michelle Kuppersmith
Executive Director, Campaign for Accountability

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