US Senator Pat Toomey has spoken about what he sees as the promise of cryptocurrency.
“Crypto has the potential to be the future of the internet,” he tweeted last August.
That same month he spoke out against over-regulation of cryptocurrencies, saying it could hurt innovation, hurt investors, and put the United States at a disadvantage against perceived global competitors, like China.
What Toomey didn’t mention, at the time, is that he himself is a crypto investor. Less than two months prior, the senator purchased between $2,000 and $30,000 worth of Bitcoin and Ethereum cryptocurrencies through a trust known as Grayscale, according to his financial informations. By November, the value of both currencies had more than doubled.
But unlike other investors, Toomey is the most senior member of the Senate Banking Committee, where he can actively help shape cryptocurrency regulation. And, in December, while Bitcoin and Ethereum values started to fallthat is exactly what the senator has done — asking for legislation to help stabilize the notoriously volatile crypto markets.
While there’s nothing illegal about members of Congress investing in these assets — or the stock market — a growing chorus of critics say it should. In places like Pennsylvania, it’s not hard to find congressmen, both Democrats and Republicans, whose trade raises ethical issues or potential conflicts of interest, or sheer hypocrisy.
Critics, such as Dylan Hedtler-Gaudett of the Project On Government Oversight, which advocates tougher rules on business activities by lawmakers, have lambasted Toomey’s investment.
“The highest ranked Republican on a committee that deals with cryptocurrency is there to boost cryptocurrency. And, oh, by the way, he has a lot of his own money invested in cryptocurrency,” he said. “Even though he didn’t do anything illegal, it looks really sketchy and really corrupt.”
In early January, after a series of scandals involving U.S. lawmakers and their business dealings, U.S. senses Jon Ossoff (D-Ga.) and Mark Kelly (D-Arizona) presented legislation it would effectively prevent the kind of investing lawmakers like Toomey routinely engage in by requiring those dollars to be placed in a blind trust.
Proponents of the legislation say it aims to prevent conflicts of interest, as well as the perception of them – conflicts that extend far beyond cryptocurrency and into a myriad of other sectors of the economy. that members of Congress can influence. It is believed that Toomey himself has heavily invested in other businesses, its committee nominally oversees, from financial giants like TD Bank or Bank of America, to venture capital firms, like the SRI Capital Fund.
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A spokesperson for Toomey countered that the senator does not promote crypto. It warned lawmakers and regulators against “stifling innovation and driving industry overseas,” spokeswoman Amanda Thompson said in a statement. His purchases, she said, are part of a “diversified investment portfolio” and represent less than 1% of his total assets, although she declined to say exactly how much he holds – the forms Federal disclosures only show a range of values for sales and purchases. .
Through his spokesperson, Toomey said he doesn’t think Americans want members of Congress to make policy decisions in the stock market without knowing what it’s like to invest in stocks. .
“It’s like telling senators from farm states that they can’t own a farm if they want to sit in Congress,” the spokesperson said in a statement. “Do you really want a senator who has no experience in the agricultural industry to write legislation on agricultural issues?”
While trading for the Republican, a former Wall Street investment banker who is not seeking re-election this year, is about $4.9 million on $7.2 million traded by Pennsylvania congressional lawmakers since the disclosure laws took effect, Toomey is not alone. While most members of the delegation refrain from trading altogether, some of those who do have raised their eyebrows along the way——or have already found themselves in hot water.
Nearly half of the estimated $2.2 million exchanged by four members of the Pa. House came from U.S. Representative Mike Kelly, a Republican from a district in the northwest of the state. Last October, a report by the Congressional Ethics Office argued that Kelly’s wife relied on nonpublic information obtained through her husband’s position to buy up to $50,000 in stock in an Ohio-based steel company.
Its April 2020 purchase preceded Kelly’s efforts to stave off a threat from the company to shut down a plant in his district unless the Trump administration toughens enforcement of foreign steel tariffs. The Congressional office reported that Victoria Kelly bought shares at $4.70 a share days before the company announced it had reached an agreement with the administration. She later sold the shares at almost four times that value.
Kelly did not respond to a request for comment.
Legislative trade is the rare issue attracting bipartisan support in Washington DC — Democratic House Speaker Nancy Pelosi is a prolific trader who has championed the practice — and the same is true in Pennsylvania.
US Representative Dwight Evans, a Democrat from Northwest Philadelphia, is the most robust trader on the House delegation in terms of pure trades – he is estimated to have traded some $572,000 via 57 transactions in less than two years.
And Evans, who was elected to Congress in 2016, has often engaged in investments that seem at odds with his public positions. Even as he campaigns for re-election to progressive plaudits like a 100% rating from environmental groups like Clean Water Action, his financial disclosures show he’s sunk up to $140,000 in corporate stocks such as Exxon-Mobil, Canadian tar sands miner Suncor, energy logistics company Oneok and the Williams companies, which process natural gas. Each ended up on lists of big polluters.
Notably, the progressive Democrat said he opposes efforts to ban fracking.
Evans has also invested in several defense contractors such as Raytheon and Lockheed Martin – and while he’s not the only one, he’s voted in multiple times in favor of defense spending bills. He also bought and sold shares of the Carlyle Group and Apollo Global Management, the kind of private equity giants that some of his progressive colleagues have describe as predators and sought to repress.
Evans defended his actions by saying all of his transactions were made through a private wealth planner.
“I do not make any active stock decisions,” Evans said in a statement. “I put money in an account each month for retirement and leave all decisions on what stocks to buy or sell to the financial advisor.”
He said it was “pretty much the same” as other members of Congress putting money into a Thrift Savings Plan account, a retirement plan offered to federal employees that is similar to a 401( k).
Hedtler-Gaudette called it a peculiar comparison.
If Evans put money into an indexed fund like the Thrift Savings Plan, there would be little doubt that he was actively involved in trading, Hedtler-Gaudette said. But because he uses a private financial adviser, the public should take Evans’ word that he doesn’t help guide those investments.
And while Evans downplayed his business, he and a senior executive were cited for failing to disclose stock purchases on time. Evans declined to discuss individual investments. And, like Toomey, he declined to disclose exactly how much he invested in specific companies.
In recent years, the business activity of members of Congress has come under increased scrutiny as confidence in the legislature has fallen. Four senators were investigation by the Department of Justice for selling stocks after obtaining private COVID briefings. The investigation did not result in charges against lawmakers, who denied wrongdoing. House Speaker Nancy Pelosi became the target of viral memessome featuring disinformationdue to her husband’s lucrative stock market decisions.
Pelosi and her husband, venture capitalist Paul Pelosi, beat the S&P 500 by 14% in 2020, according to analysis by fine print, which tracks politicians’ investments, for the New York Post. Based on its last financial disclosure filed in August, Pelosi estimated net worth is $106 million. This figure is calculated by taking the average of the minimum and maximum estimated value of its assets and liabilities, the methodology used by the Center for Responsive Politics.
Just last month, Pelosi scoffed at the idea of barring Congress from negotiating. “We are a free market economy,” she told a news conference. “They should be able to participate in that.”
But a trade ban has bipartisan support.
Last week, 27 U.S. Representatives — including U.S. Rep. Conor Lamb, a Democrat from Pennsylvania running for Toomey’s open Senate seat, and four others from the Commonwealth — called on House leaders to “swiftly” present a stock market prohibition bill.
Two of Evans’ main challengers – Michael Cogbill and Alexandra Hunt – who are running to his left, have said they support Congress’ stock trading ban legislation.
“When you have reps playing the stock market with oddly good timing, it destroys trust and raises the question of that rep’s intention to hold office,” Hunt said in a statement.
And some of Toomey’s potential Republican successors, like Dave McCormick, himself a hedge fund trader, also endorsed a trade ban.
“When elected officials like Nancy Pelosi beat the stock market by double digits, the people are rightly suspicious that the system is rigged,” he wrote in a statement. “Voters deserve assurances that no member of either party is enriched by inside information received from the public service.”
Writer Jonathan Tamari contributed to this article.