Crypto lawyer faces uphill battle in New York attorney general race

A former policy lawyer at crypto exchange Coinbase is running for attorney general of New York. His bid to represent the crypto industry’s interests runs against a strong Democratic bias and concerns over industry influence in policymaking.

Khurram Dara, who also worked as a regulatory and policy principal at Bain Capital Crypto, announced his campaign on Nov. 21. In a video accompanying his post on X, Dara said he wants to stop the supposed “lawfare” that current Attorney General (AG) Letitia James is waging against the crypto industry.

Dara said that the reportedly unfair treatment of the industry drives up costs for New Yorkers. New York City Mayor-elect Zohran Mamdani recently won his election with a focus on cost-of-living issues.

Dara’s campaign faces strong headwinds. James won her last two elections by a wide margin, and there are broader concerns over how much the crypto lobby is influencing policymaking.

Former Coinbase lawyer to oppose AG Letitia James

According to Dara, James’ policies hurt New York’s business climate and drive prices higher.

“When you play politics with the law, when you regulate by enforcement. When you use lawsuits to make policy that increases the cost of doing business, that increases legal and insurance costs; that increases prices, which hurts small businesses, new entrepreneurs and working-class New Yorkers the most,” Dara said in his announcement video.

As AG, Dara would curb the powers of the state’s Martin Act. The statute gives the AG’s office broad powers to investigate and prosecute securities and real estate fraud. Critically, it allows the AG to prosecute these activities “detrimental to the public without requiring proof of intentional or negligent conduct.”

Dara and other critics claim that James has used this act for her own political purposes, rather than as a neutral enforcement tool.

Under James, the AG’s office led enforcement actions against several crypto firms, including Bitfinex and Tether’s parent company, iFinex. The AG sued it for commingling client and corporate funds to cover up $850 million that went missing. Her office also secured $50 million for investors who were defrauded in Gemini’s Earn program.

Crucially for the cryptocurrency industry, Dara wants to reexamine the BitLicense, the state’s regulatory regime for companies involved in digital assets. BitLicense holds stricter standards for reporting, licensing and compliance than other states. Dara and other critics claim that these rules have driven crypto companies from the city. In his announcement video, Dara called the BitLicense “unlawful.”

But Dara faces an uphill battle. He’s running as a Republican in a state that hasn’t seen a Republican AG in nearly 30 years. Dennis Vacco, the last Republican to hold the office, lost to Eliot Spitzer in 1998.

In 2018, when James was first elected to the office, she defeated her opponent, Keith Wofford, by almost 20 percentage points. The gap narrowed in 2022, but she still won out over Republican Michael Henry 54.6% to 45.37%.

Historical tendencies aside, overall approval of Republicans has been dropping nationwide, and New York City, a crucial metropolitan area to secure for an AG candidate, just voted for a progressive Democratic mayor, Zohran Mamdani.

Recent: What Mamdani’s mayoral win means for crypto in New York

Dara’s challenge also comes at a time when the interests of the crypto lobby are increasingly represented in politics, with some of its most notable actors becoming overtly political.

Crypto gets more involved in politics

The crypto lobby played a big role in the 2024 federal elections, donating nearly $250 million to campaigns for offices around the country.

Since then, the industry’s interests have become well-represented in Washington. Landmark legislation like the GENIUS Act, which regulates stablecoins, has passed. The industry is also pushing hard for Congress to pass the CLARITY/Responsible Financial Innovation Act by year’s end.

Lobbies are ubiquitous in Washington; crypto is no exception. Crypto lobbying operates with breakneck speed, which has raised concerns over regulatory capture — i.e., when a regulatory body or agency serving the public interest is controlled by the industry that it is supposed to regulate.

US President Donald Trump started his term at the beginning of the year, nominating people with strong ties to the crypto industry to important posts and crucial regulatory agencies. He has also pardoned high-profile crypto executives like former Binance CEO Changpeng Zhao, as well as four BitMEX executives, including Arthur Hayes.

Related: Trump’s crypto pardons raise ethics and corruption concerns

Fundraising has also increased apace. Gemini founders Cameron and Tyler Winklevoss have shelled out tens of millions of dollars this year alone. Their funding has become partisan, with millions going to organizations fighting to keep the Republicans’ slim majority in Congress.

This tendency has some in the industry concerned that, when the partisan pendulum eventually swings back in the Democratic direction, a Republican-aligned crypto industry could find itself in a precarious political situation.

Crypto-friendly Democratic Representative Sam Liccardo told Politico in early October, “I don’t think anybody in this town would recommend that an industry put their eggs in one party’s basket.”

How the crypto connection, complete with its growing political connections, will affect Dara’s campaign remains to be seen. His campaign is still in its early days; it doesn’t appear to have a website, just a donation link with a campaign logo, which resembles the logo Mamdani used in his mayoral race.

Mamdani’s lack of position on crypto didn’t appear to affect his popularity with voters. Nor did ex-Governor Andrew Cuomo’s last-minute crypto Hail Mary help him secure the lead. There’s a good chance New Yorkers’ choice will boil down to other pressing issues.

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