New York’s top lawyer said Ethereum is a security. A crypto lawyer is coming for her job

A Coinbase alum is eyeing a longshot bid for New York Attorney General, a race that could test the crypto industry’s burgeoning political clout.

Khurram Dara, a 36-year-old attorney and Buffalo native, recently left his position as the regulatory lead at Bain Capital Crypto to crisscross New York and court local chapters of the state’s Republican Party.

Before joining Bain, Dara held roles at Coinbase and Fluidity, the company behind decentralised exchange AirSwap.

As federal regulators step back from crypto enforcement, attention has turned to state-level regulators and attorneys general. In April, Oregon Attorney General Dan Rayfield sued Coinbase, alleging the exchange sold unregistered securities.

In a news release, Rayfield said states must “fill the enforcement vacuum being left by federal regulators who are giving up under the new administration.”

Perhaps no state is as important to the industry as New York.

New York City is often referred to as the US’ unofficial crypto capital, and major crypto companies, including Solana Labs, Uniswap Labs, and Chainalysis, have offices there.

But the state has had a fraught relationship with its crypto entrepreneurs.

Congressman Ritchie Torres, US Senator Kirsten Gillibrand, and New York City Mayor Eric Adams are considered industry allies. Adams attempted to take his first paycheck in crypto and recently announced a “digital assets advisory council” that would help integrate blockchain technology into city services.

But his likely successor, democratic socialist Zohran Mamdani, has criticised former Governor Andrew Cuomo for advising crypto exchange OKX after leaving office.

Kathy Hochul, the current governor, signed a first-of-its-kind moratorium on Bitcoin mining in 2022. And New York is one of the few states where companies must obtain a crypto-specific business license to operate. Only 35 companies have obtained that license since 2015.

The ‘crypto candidate’

Dara’s candidacy is a long shot. New York voters haven’t elected a Republican to a statewide office since 2002. They haven’t elected a Republican attorney general since 1994.

“I’m coming from a venture capital firm, and in venture a lot of the exercise is to spot those opportunities that might not be super obvious,” Dara told DL News.

“I’ve made a living by trying to see where the puck is moving.”

Less than a year after the crypto industry helped propel Donald Trump to a second, nonconsecutive term in the White House, Dara says the same dynamic can deliver an upset victory in New York.

Many in the industry consider incumbent Attorney General Letitia “Tish” James an opponent. In 2023, she sued crypto exchange KuCoin for its failure to register as a securities and commodities broker-dealer. In that lawsuit, she alleged Ether was a security, more like company equity than a commodity, such as gold or oil.

Securities are subject to strict federal oversight. The crypto industry has long fought to have most tokens classified as commodities, arguing their decentralised nature is incompatible with US securities laws.

More recently, James sent a letter to congressional leaders in which she said the “unchecked proliferation of digital assets” would undermine US dollar dominance, financial stability, and national security while exposing Americans to rigged markets and fraud.

“I’m not shying away from being seen as the crypto candidate,” Dara said.

“Crypto is a community and a space that knows about lawfare firsthand, has really experienced it and can speak to the consequences.”

The New York Attorney General’s office did not immediately respond to DL News’ request for comment. In 2023, the office published statements from more than a dozen state lawmakers praising James’s efforts to regulate the crypto industry.

Republican swing

Several factors make the race more competitive than most people assume, according to Dara.

In 2026, candidates for attorney general will, for the first time, have access to public matching funds, a program meant to limit the outsize influence of wealthy donors in municipal and state elections.

Perhaps more significantly, New York swung sharply to the right in the 2024 presidential election.

But that swing is part of a broader trend in state politics: James won her first election for attorney general with more than 62% of the vote. But she won reelection in 2022 with just 54% of the vote.

That’s partly because many independent voters in New York are breaking for Republicans, according to Dara.

While the opposition party often does well in midterm elections, Dara is betting Mamdani’s likely victory in the New York City mayoral election later this year will cause its own state-level backlash that will benefit Republicans in 2026.

Moreover, people in the tech and crypto industries are more politically active than ever before.

Watchdog group Public Citizen found that crypto companies, executives and investors were “by far the dominant political spenders” in 2024, having contributed $119 million to their preferred candidates.

That investment appears to have borne fruit. This year, crypto legislation has received strong bipartisan support in the House of Representatives. And Trump-appointed regulators have embarked on a deregulatory blitz.

“The next phase of the battle is going to be shifting to the state AG offices,” Dara said.

“There is going to be a large community that I have credibility with, [a community] of people that are going to be paying attention to these races and potentially putting resources towards some of these races.”

‘Lawfare’

Dara says the issues facing New York’s crypto community can resonate with a broad swath of disaffected voters. He has accused James of “lawfare” — using the law to kneecap political opponents.

In 2022, James successfully sued Trump, alleging he had lied about his net worth to obtain favourable terms from banks. In return, Trump has opened his own investigation targeting James.

“She brings far too many cases that are focused on national political issues that maybe don’t directly impact New Yorkers,” Dara said. “She sees her role as being a kind of regulator.”

Before Dara can face James in a general election, he has to earn the Republican Party nomination. There will be a primary election in June 2026, but the party can influence the outcome by picking a preferred candidate.

In 2022, it chose attorney Michael Henry, who has been fundraising for a potential rematch with James.

“I’m not expecting to be in a crowded race, and if I thought there was someone in the race that was super credible, that would certainly factor in my decision making,” Dara said.

“I wouldn’t have left my role if I wasn’t serious,” he continued, “but there is a process of getting to know county and local party leadership ahead of the convention.”

Aleks Gilbert is DL News’ New York-based DeFi correspondent. You can contact him at aleks@dlnews.com.