U.S. Senator Pat Toomey has been vocal 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 railed against excessive cryptocurrency regulation, saying it could harm innovation, investors, and disadvantage the United States against perceived global competitors, like China.
What Toomey did not mention, at the time, is that he is a crypto investor himself. Less than two months prior, the senator had bought somewhere between $2,000 and $30,000 worth of cryptocurrencies Bitcoin and Ethereum through a trust known as Grayscale, according to his financial disclosures. By November, both currencies had more than doubled in value.
But unlike other investors, Toomey is the ranking member of the Senate Banking Committee, where he can have a hand in actively shaping cryptocurrency regulation. And, in December, as both Bitcoin and Ethereum values began to tumble, that’s exactly what the senator did — calling for legislation to help stabilize the notoriously volatile crypto markets.
While there is nothing illegal about members of Congress investing in these assets — or the stock market — an increasing chorus of critics says there ought to be. In places like Pennsylvania, it is not hard to find members of Congress, both Democrats and Republicans alike, whose trading raises ethical questions or potential conflicts of interest, or simple hypocrisy.
Critics, like Dylan Hedtler-Gaudett from the Project On Government Oversight, which advocates for stricter rules around trading activity by legislators, blasted Toomey’s investing.
“The top ranking Republican on a committee that deals with cryptocurrency is out there being a booster for cryptocurrency. And, oh, by the way, he has a bunch of his own individual cash invested in crypto currency,” he said. “Even if he did nothing illegal, it just looks really sketchy and really corrupt.”
In early January, after a series of scandals involving U.S. lawmakers and their trading activity, U.S. Sens. Jon Ossoff (D-Ga.) and Mark Kelly (D-Ariz.) introduced legislation that would effectively bar the type of investing legislators like Toomey routinely engage in by requiring those dollars placed into a blind trust.
Advocates for 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 myriad other sectors of the economy that congressmen may influence. Toomey himself is estimated to have invested heavily in other companies his committee nominally oversees, from financial giants like TD Bank or Bank of America, to venture capital firms, like the SRI Capital Fund.
A Toomey spokesperson countered that the senator wasn’t promoting crypto. He was warning lawmakers and regulators against “stifling innovation and driving the industry overseas,” spokesperson 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 — federal disclosure forms only show a range of values for sales and purchases.
Through his spokesperson, Toomey said he did not think Americans wanted members of Congress to make policy decisions about the stock market without knowing what it’s like to invest in stocks.
“That’s like telling senators from agricultural states that they can’t own a farm if they want to serve in Congress,” the spokesperson said in a statement. “Would you really want a senator who has no experience in the agricultural industry drafting legislation on agriculture issues?”
While exchanges by the Republican, a former Wall Street investment banker who is not seeking reelection this year, accounts for an estimated $4.9 million out of $7.2 million traded by Pa. congressional legislators since disclosure laws took effect, Toomey is not alone. While most of the delegation abstains from trading altogether, some of those that do have raised eyebrows along the way —— or already landed themselves in hot water.
Nearly half of the estimated $2.2 million traded by four Pa. House members came from U.S. Rep., Mike Kelly, a Republican from a district in the northwest corner of the state. Last October, a report from the Office of Congressional Ethics contended that Kelly’s wife had relied on nonpublic information obtained through her husband’s position to buy as much as $50,000 in shares of an Ohio-based steel company.
Her April 2020 purchase came ahead of efforts by Kelly to stave off a threat by the company to shutter a plant in his district unless the Trump administration toughened tariff enforcement on foreign steel. The congressional office reported that Victoria Kelly purchased stock at $4.70 a share days before the company announced it had reached an accord with the administration. She later sold the shares at nearly quadruple that value.
Kelly did not respond to a request for comment.
Legislative trading is the rare issue that draws bipartisan support in Washington D.C. —— Democratic House Speaker Nancy Pelosi is a prolific trader who defended the practice —— and the same is true in Pennsylvania.
U.S. Rep. Dwight Evans, a Democrat from Northwest Philadelphia, is the most robust trader among the House delegation in terms of sheer transactions — estimated to have traded some $572,000 through 57 transactions in under two years.
And Evans, who was elected to Congress in 2016, has often engaged in investments that seem at odds with his public stances. Even as he campaigns for reelection on progressive plaudits, like a 100% rating from environmental groups like Clean Water Action, his financial disclosures show that he has sunk as much as $140,000 into shares of companies like Exxon-Mobil, Canadian oil sands extractor Suncor, energy logistics company Oneok and the Williams Companies, which processes natural gas. Each has wound up on lists of major polluters.
Notably, the progressive Democrat has said he is opposed to efforts to ban hydraulic fracking.
Evans has also invested in several defense contractors such as Raytheon and Lockheed Martin — and although he is hardly alone, has voted repeatedly in favor of defense spending bills. He has also bought and sold shares in The Carlyle Group and Apollo Global Management, the sorts of private equity giants that some of his progressive colleagues have described as predatory and sought to crack down on.
Evans defended his actions by saying that all of his transactions had been conducted through a private wealth planner.
“I don’t make any active decisions on stocks,” Evans said in a statement. “I put money into an account every month for retirement and I leave all decisions on which stocks to buy or sell to the financial adviser.”
He said this was “much the same” as others in Congress putting money into a Thrift Savings Plan account, a retirement plan offered to federal employees that’s similar to a 401(k).
Hedtler-Gaudette called that a peculiar comparison.
Were Evans putting money into an indexed fund like the Thrift Savings Plan, there would be little question about whether he had active involvement in trading, Hedtler-Gaudette said. But because he uses a private financial adviser, the public must rely on Evans’ word that he is not helping to guide those investments.
And while Evans downplayed the significance of his trading activity, he and a senior staffer have been cited for failing to disclose stock purchases on time. Evans declined to discuss individual investments. And, like Toomey, he refused to disclose exactly how much he had invested in specific companies.
In recent years, the trading activity of Congress members has come under increased scrutiny, as confidence in the legislature has dropped. Four senators were investigated by the Justice Department for selling stock after getting private briefings about COVID. The investigation did not result in charges against the lawmakers, who denied wrongdoing. House Speaker Nancy Pelosi has become the target of viral memes, some featuring misinformation, because of her husband’s lucrative stock decisions.
Pelosi and her husband, venture capitalist Paul Pelosi, beat the S&P 500 by 14% in 2020, according to an analysis by FinePrint, which tracks investments by politicians, for the New York Post. Based on her most recent financial disclosure filed in August, Pelosi’s estimated net worth is $106 million. That figure is calculated by taking the average of the minimum and maximum estimated value of her assets and liabilities, the methodology used by the Center for Responsive Politics.
As recently as last month, Pelosi has scoffed at the idea of banning Congress from trading. “We are a free-market economy,” she said at 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 Pennsylvania Democrat who’s running for Toomey’s open Senate seat, and four others from the Commonwealth — called on House leadership to “swiftly” introduce a stock trading ban bill.
Two of Evans’ primary challengers — Michael Cogbill and Alexandra Hunt — who are running to his left, said they support the Ban Congressional Stock Trading Act.
“When you have representatives playing the stock market with oddly good timing, it destroys trust and raises the question of that representative’s intention of holding office,” Hunt said in a statement.
And some of Toomey’s would-be Republican successors, like Dave McCormick, himself a hedge fund trader, also endorsed a trading ban.
“When elected officials like Nancy Pelosi are beating the stock market by double-digits, the People rightly become suspicious that the system is rigged,” he wrote in a statement. “Voters deserve assurances that no members of either party are enriching themselves off of privileged information received from public service.”
Staff writer Jonathan Tamari contributed to this article.