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Although some of Farage's opponents are muttering about quid pro quo, that isn't really what the argument is about. "The UK should build on our existing strength in financial services by becoming a crypto hub" is obviously correct unless you think that the cryptofinance industry is inherently malignant, so to someone who doesn't already hate Farage it looks like "crypto money finds crypto-friendly politician" rather than "politician becomes crypto-friendly in exchange for crypto money". The argument is (in theory) about transparency and (in practice) about aggravated spivvery.
Newly-elected British MPs are required to declare certain types of payment received in the 12 months before they were elected. Farage didn't. And when caught, rather than trying to spin it as "outsider gets caught on a technicality and is punished overly harshly for a paperwork violation" he tried to double down. First he tried to claim that the gifts were personal and didn't need to be declared*, then he went for the "enforcing generally applicable laws against a Man of the People just proves how much the establishment hates you" approach, and eventually to calling for a criminal investigation into whoever leaked to the media. (Remember that this is information that was supposed to be on the public record anyway).
Farage will be censured when the investigation is complete, because he uncontroversially broke the rules. And given the large amount of money involved (£5 million when the scandal started, now £6-7 million across multiple undeclared donors), he will be suspended from Parliament for long enough to trigger a recall petition. The current by-election automatically suspends the investigation, but it will restart when Farage is re-elected, and there will almost certainly be a second by-election after Farage is censured and recalled.
Even before this became Farage vs Binface, the politics of this don't make sense to me. Calling this by-election means that an what would otherwise have been an inside-baseball funding scandal is going to be the current thing for several months. I can see that the "It's not the £5 million in dodgy overseas** crypto money, it's the persecution" line working in Clacton where 70% of the voters are right-populist, but it isn't going to land with swing voters in the seats Farage needs to win if he wants to be Prime Minister in 2029. It could (low probability, but potential high impact) also sink him if Rupert Lowe finds a good local candidate - something that is more likely now that delaying the process gives Lowe more time to do so. (Restore can land the "I'm work for you, Farage works for foreign billionaires" attack even if the establishment parties can't.) And even if the other parties had run in the by-election and being trounced, "Farage can still win in Clacton" doesn't shift the narrative.
The best theory I am seeing is a Bulverist one, which makes me doubt my own judgement. But "Farage is high on his own supply with the persecution narrative" seems very plausible, because politicians getting high on their own supply happens all the time. Farage says that he is at such high risk of left-wing political violence that he needs a bigger security detail than Prince William***, and that the taxpayer ought to provide it. That he actually thinks this is entirely plausible and the leap to thinking the voters will agree with him is not a large one. If you accept that narrative (and Farage's online supporters do) then "I only needed to take money from foreign crooks and criminals because the police denied me the level of protection I clearly deserve" makes sense.
* This doesn't pass the laugh test. The explanatory notes to the rules say that the exemption for personal gifts is about things like Christmas and birthday presents from family and close friends. This was a £5 million gift where both Farage and the donor have said the money is linked to his political activity.
** The donations aren't legally foreign donations because the people writing the cheques are British citizens living abroad. But the ultimate source of funds is foreign and everyone knows this.
*** The only British public figures who get £5 million in taxpayer-funded security are the King and the Prime Minister.
I recall Bezos was only having his security detail funded by Amazon to the tune of $1 million USD.
Prince William's and Princess Katherine's security cost £1.4 million a year back in back in 2010 (the breakdown of Royal security isn't public, but that number leaked), which would be £2.2 million adjusting for inflation. Other full-time working royals who are not the Sovereign probably get something similar. The cost of providing security details to nine living ex-PMs is £13 million pa in direct costs and £24 million pa including a contribution to police overhead. So a cabinet minister/ex-PM/mid-level royal tier security operation costs about £2 million a year. The leader of the official opposition (currently Kemi Badenoch) gets this level of taxpayer-funded protection as a matter of course. Other opposition politicians only get taxpayer-funded security details if there is intelligence of a specific, individualised threat - and "People like to throw milkshakes at me when I go out in public" doesn't qualify.
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