New York Attorney General Raises Concerns Over Crypto Expansion
New York Attorney General Letitia James has issued a warning regarding the rapid and unregulated growth of the cryptocurrency sector. Meanwhile, a former attorney from Coinbase is considering a longshot campaign to succeed her, openly identifying himself as a candidate who supports the crypto community.
Former Coinbase Attorney Seeks AG Position
Khurram Dara, a 36-year-old Buffalo native and former regulatory lead at Bain Capital Crypto, is embarking on a campaign to become New York’s Attorney General. He has started to engage with local Republican Party chapters across the state. Dara has prior experience from his time at Coinbase and Fluidity, the firm behind the decentralized exchange AirSwap.
State-Level Regulation Gaining Momentum
As federal agencies take a step back from enforcing regulations in the crypto space, state attorneys general are stepping in to fill the gap. Recently, Oregon Attorney General Dan Rayfield initiated legal action against Coinbase, claiming the exchange was selling unregistered securities. He emphasized that states must take on enforcement roles as federal regulators withdraw their oversight under the current administration.
New York’s Crypto Landscape
New York holds a pivotal role in the cryptocurrency industry, often considered the unofficial crypto capital of the United States. Significant companies such as Solana Labs, Uniswap Labs, and Chainalysis have established their presence there. However, the relationship between the state and crypto entrepreneurs has been complicated. Industry allies include Congressman Ritchie Torres, U.S. Senator Kirsten Gillibrand, and New York City Mayor Eric Adams, who has taken steps to integrate crypto into city services, such as attempting to receive his first paycheck in cryptocurrency and forming a digital assets advisory council. In contrast, his likely successor, Democratic socialist Zohran Mamdani, has voiced criticism over former Governor Andrew Cuomo’s advisory role with crypto exchange OKX. Additionally, current Governor Kathy Hochul enacted a unique moratorium on Bitcoin mining in 2022, and New York mandates that companies secure a specific business license to operate in the crypto space, with only 35 licenses granted since 2015.
Dara’s Challenging Path to Candidacy
Dara’s ambition to run for the Attorney General position faces significant hurdles. The Republican Party has not seen a statewide victory since 2002 and hasn’t elected a Republican Attorney General since 1994. Dara, however, believes that his background in venture capital equips him to identify unique opportunities in the political landscape, stating, “I’ve made a living by trying to see where the puck is moving.” He argues that the dynamics that once helped propel Donald Trump to victory could similarly benefit him in New York.
Opposition from the Current AG
Many in the crypto sector view Letitia “Tish” James as an adversary. In 2023, she initiated a lawsuit against the crypto exchange KuCoin for failing to register as a securities and commodities broker-dealer, claiming that Ether should be classified as a security, which would subject it to strict federal regulations. The crypto community has consistently argued for the classification of most digital tokens as commodities, asserting that their decentralized characteristics do not align with U.S. securities laws. Furthermore, James has expressed concerns that the unregulated growth of digital assets could threaten the dominance of the U.S. dollar, financial stability, and national security while exposing consumers to potential fraud.
Shifting Political Dynamics in New York
Dara asserts that the political landscape may be more favorable for his candidacy than generally perceived. With changes in funding structures for candidates, including public matching funds for the first time in 2026, he sees this as an opportunity. Additionally, the state has shifted politically to the right recently, with James’s reelection margins indicating a decline in support, as she won her initial election with over 62% of the vote but secured only 54% in her recent campaign. Dara points to a trend of independent voters leaning towards Republicans as a potential advantage.
Civic Engagement in the Tech Community
Moreover, individuals in the tech and crypto sectors are becoming increasingly involved in politics. A report by watchdog organization Public Citizen found that crypto-related entities and individuals were the leading political donors, contributing $119 million in 2024. This financial backing has translated into stronger bipartisan support for crypto legislation in Congress, and regulators appointed during Trump’s administration are pursuing deregulatory initiatives. Dara remarked, “The next phase of the battle is going to be shifting to the state AG offices,” highlighting the engagement of the crypto community in upcoming elections.
Concerns Over Regulatory Practices
Dara has criticized James for what he terms “lawfare”—using legal avenues to undermine political adversaries. He pointed to her successful lawsuit against Trump, alleging that he misrepresented his wealth to secure favorable banking terms. In retaliation, Trump has launched an investigation against James. Dara contends that many of her legal pursuits focus on national issues rather than the immediate needs of New Yorkers, suggesting that she has taken on the role of a regulator rather than a representative.
The Road Ahead for Dara
Before he can confront James in a general election, Dara must first secure the Republican Party’s nomination, with a primary scheduled for June 2026. The party’s influence in determining a preferred candidate could shape the race’s outcome. In 2022, the GOP selected attorney Michael Henry, who is currently raising funds for a potential rematch with James. Dara expressed confidence in his decision to run, stating, “I wouldn’t have left my role if I wasn’t serious,” and acknowledged the importance of building relationships with local party leaders ahead of the convention.
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