Texas AG Ken Paxton Sues ActBlue Over Gift Card Donations and False Claims to Congress

US election news from Texas arrived Monday as Attorney General Ken Paxton filed a lawsuit in Tarrant County district court against ActBlue, the Democratic fundraising platform, alleging it violated the Texas Deceptive Trade Practices Act by continuing to accept gift card donations it had publicly claimed to ban.

US election news sharpened Monday around campaign finance integrity as Paxton accused ActBlue of deceiving Congress and the public about its safeguards against fraudulent and foreign donations. ActBlue has processed more than $16 billion for Democratic candidates and causes since 2004 and processed $1.78 billion in small-dollar donations in 2025 alone.

“ActBlue lied to Congress and to the American people, and I will ensure justice is served,” Paxton said in a statement. “Fair elections are the foundation of our democracy, and I will work to ensure no illegal campaign donation flies under the radar.”

The lawsuit rests on a core factual allegation: ActBlue’s own outside counsel at Covington and Burling acknowledged in early 2025 that the organization’s representations about its donation safeguards to Congress were not true. The New York Times had previously reported that acknowledgment. Despite that, ActBlue did not correct its public statements or inform Congress of the discrepancy.

What Texas Investigators Found and When

The Office of the Attorney General opened its ActBlue investigation in December 2023. In February 2026, investigators made three test donations using false identities and prepaid gift cards. All three cleared the platform and landed in the accounts of the Democratic National Committee and two Texas state officials’ campaigns. The investigation also found that ActBlue made its fraud prevention rules “more lenient” twice during the 2024 election cycle despite documented fraud on the platform.

The lawsuit alleges seven counts against ActBlue, centering on false, misleading, and deceptive business practices under Texas consumer protection law. The state seeks an injunction prohibiting gift card and prepaid debit card donations, civil penalties of $10,000 per violation paid to the state, and full recovery of litigation costs. The complaint states the monetary relief sought exceeds $1 million.

ActBlue’s Response and the Political Context

ActBlue denied wrongdoing through spokesperson De’Andra Roberts-LaBoo, calling the filing politically motivated. “This is a thinly veiled attempt to distract from Ken Paxton’s numerous legal and ethical issues ahead of next month’s runoff,” she said, referencing Paxton’s GOP Senate primary runoff against incumbent Senator John Cornyn. “Our platform has done more than any other, regardless of party, to prevent improper donations and protect donors.”

The timing is notable. Paxton is in an active Senate primary runoff. House Administration, Judiciary, and Oversight Committees have been investigating ActBlue separately for nearly two years over its 2024 practices. A House Republican aide has indicated that all options remain on the table for compelling ActBlue’s cooperation, including hauling its CEO before the panels or initiating contempt proceedings.

What the Lawsuit Means for Crypto and Campaign Finance

The ActBlue case is part of a broader federal and state-level pressure campaign on digital fundraising infrastructure heading into the 2026 midterms. The midterm pressure already compressing the congressional calendar for crypto legislation is compounded by each new political conflict that draws attention and legal resources away from the legislative agenda. Stablecoin regulation, the CLARITY Act, and crypto reform more broadly all depend on a Senate majority that can focus on substantive legislation rather than managing compounding political and legal crises through a midterm election cycle.