‘Roadmap
for corruption’: Trump dive into cryptocurrency raises ethics alarm
The
president’s hawking of $Trump memecoin has sparked a firestorm of criticism
over potential influence buying
Peter Stone
in Washington
Sun 25 May
2025 13.00 CEST
https://www.theguardian.com/us-news/2025/may/25/trump-crypto-corruption-ethics
Donald
Trump’s push to sharply ease oversight of the cryptocurrency industry, while he
and his sons have fast expanded crypto ventures that have reaped billions of
dollars from investors including foreign ones, is raising alarm about ethical
and legal issues.
Watchdog
groups, congressional Democrats and some Republicans have levelled a firestorm
of criticism at Trump for hawking his own meme coin, $Trump, a novelty crypto
token with no inherent value, by personally hosting a 22 May dinner at his
Virginia golf club for the 220 largest buyers of $Trump and a private
“reception” for the 25 biggest buyers.
To attend
the two events, the $Trump buyers spent about $148m, which will benefit Trump
and partners, according to the crypto firm Inca Digital.
Further, the
Trump family crypto venture World Liberty Financial that launched last fall,
which his two oldest sons have promoted hard, was tapped this month to play a
key part in a $2bn investment deal by an Abu Dhabi financial fund in the crypto
exchange Binance, which in 2023 pleaded guilty to US money laundering and other
violations.
The new WLF
deal was announced at an Abu Dhabi crypto conference that drew Eric Trump two
weeks before Trump’s mid-May visit to the United Arab Emirates capital,
sparking other concerns of improper foreign influence and ethics issues.
Trump’s
ardent pursuit of crypto fortunes was highlighted in a report last month from
the watchdog group State Democracy Defenders Fund that estimated his crypto
ventures as of mid-March to be worth about $2.9bn. That is a striking sum since
Trump’s crypto ventures are less than a year old.
Senate
Democrats led by Jeff Merkley of Oregon and the minority leader, Chuck Schumer
of New York, introduced a bill this month that has garnered sizable Democratic
backing to block Trump from using his office to benefit his crypto businesses.
Watchdogs
say Trump is exploiting his office for personal gain in unprecedented and
dangerous ways.
“There is
the appearance if not the reality of corruption in the upcoming dinner with
Trump on the 22nd at his Virginia golf club for the 220 biggest Trump meme coin
buyers and the private reception he’s promised for the top 25 buyers, plus the
separate $2bn deal between World Liberty Financial and the Abu Dhabi investment
vehicle,” said Richard Painter, a former White House ethics adviser to George W
Bush who co-authored the Democracy Defenders Fund report.
Other
experts are equally troubled by Trump’s manifest conflicts.
“Trump is
marketing access to himself as a way to profit his memecoin,” said the Columbia
Law professor Richard Briffault, an expert on government ethics. Briffault
added: “People are paying to meet Trump and he’s the regulator in chief. It’s
doubly corrupt. This is unprecedented. I don’t think there’s been anything like
this in American history.”
Such
concerns were fueled when Trump quickly chose crypto industry allies to run the
Securities and Exchange Commission and as his “czar” for crypto and AI. Among
other moves, the SEC has dropped or put on hold investigations and prosecutions
of over a dozen crypto firms.
This is
unprecedented. I don’t think there’s been anything like this in American
history
Professor
Richard Briffault
Fears of
possible corruption have also focused on Chinese-born Justin Sun, the biggest
investor in Trump’s crypto ventures. Sun bought about $20m of $Trump to become
its top purchaser before the dinner on the 22nd which he attended. Sun
previously invested at least $75m in World Liberty Financial to become its lead
investor and an adviser.
Sun may also
be benefiting from the SEC’s laxer oversight. Sun was sued by the SEC in 2023
for fraudulent market manipulation and other allegations of misconduct
involving three other crypto enterprises of his, including the Tron Foundation.
As the SEC
eased its crypto oversight, the agency earlier this year paused its case
against Sun, sparking concerns that Trump’s financial ties to Sun might have
influenced the agency’s decision, a matter that Senator Elizabeth Warren of
Massachusetts and the Democratic congresswoman Maxine Waters of California
raised in a letter to the SEC last month.
The SEC has
reportedly been holding talks with Sun about settling the charges, and the
agency’s chairman told a congressional hearing on 20 May that he knew nothing
about Sun’s case.
Other
warnings about Trump’s crypto dealings have also been fueled by recent scandals
that have plagued crypto businesses, many of which are known for their opaque
operations and some illicit dealings including ones tied to North Korean
hackers that helped fund the country’s nuclear and military programs.
Crypto
critics were dismayed at a justice department memo in April announcing the
closure of a national cryptocurrency enforcement team that was established in
2022, which had brought some major crypto cases against North Korean hackers
and other crypto criminals.
The memo
stressed the justice department was not a “digital assets regulator” and in a
political twist lambasted the Biden administration for its “reckless strategy
of regulation by prosecution”. The memo noted that a January pro-crypto Trump
executive order spurred its decision.
For their
part, Trump, his family and White House press statements have dismissed
concerns about conflicts of interest or ethical improprieties with Trump
promoting his crypto business while in office.
The press
secretary, Karoline Leavitt, told reporters before the dinner that Trump was
attending it in his “personal time” and it was not a White House event, but
declined to release names of the attenders.
The Trump
Organization in January said that the president’s business interests including
his assets and investments, would be placed in a trust that his children would
manage and that Trump would not get involved in decision-making or daily
operations. Trump’s family also tapped a lawyer to serve as an ethics adviser.
Those
pledges have been overshadowed by Trump’s enthusiasm for his digital
currencies. In a harbinger of Trump’s two crypto events on the 22nd, in March
he hosted the first-ever White House “crypto summit” for a couple of dozen
industry leaders where he pledged to end the Biden administration’s “war on
crypto”.
“Trump’s
crypto schemes are profoundly corrupt,” Merkley told the Guardian. “He’s
selling access to his administration and enriching himself in the process.”
In response,
Merkley and Schumer introduced the End Crypto Corruption Act, which 20 other
Democrats have endorsed.
Merkley
stressed that the bill would “not only crack down on this corruption but also
prevent other officials – like members of Congress and Trump’s billionaire
sidekick Elon Musk – from betraying public trust”.
Merkley’s
warnings have been echoed by several watchdogs.
“Trump’s
dealings in crypto appear to present the greatest conflicts of interest and
avenues for corruption any president has ever embraced,” said Larry Noble, a
former general counsel at the Federal Election Commission who now teaches law
at American University.
Noble’s
alarms are underscored by the large number of foreign buyers who appear to have
scooped up Trump’s meme coin to win coveted spots at his dinner.
While the
identities of most $Trump purchasers are unknown, several reports from crypto
analysts who track the industry suggest that a large number of foreign buyers
have ponied up tens of millions of dollars to buy $Trump coins and attend the
dinner.
One analysis
by Bloomberg has indicated that 19 of the top 25 crypto wallets are almost
definitely owned by individuals who operate outside the US.
Sun, who
bought $4.5m of his almost $20m in $Trump coins after Trump announced the
events on the 22nd, showed his appreciation by posting on X on 19 May: “Honored
to support @POTUS and grateful for the invitation from @GetTrumpMemes to attend
President Trump’s Gala Dinner as his TOP fan!”
Besides Sun,
the second biggest buyer is reportedly MemeCore, a Singapore-based crypto
network that was vocal about its interest in attending the Trump dinner and
invested $18m.
Trump’s avid
embrace of crypto became palpable last summer at a bitcoin conference where he
pledged to make the US the “crypto capital of the world”, a marked shift from
2021 when he dismissed bitcoin as a “scam”. The change helped his campaign pull
in millions of dollars in crypto industry donations.
Last fall,
Trump and his two older sons, Eric and Don Jr, announced on the
multibillionaire Elon Musk’s X that they were launching World Liberty
Financial.
Trump on X
boasted opaquely that “crypto is one of those things we have to do. Whether we
like it or not, I have to do it.” A white paper for the new business dubbed
Trump “its chief crypto advocate”, and his sons have promoted it aggressively
and helped to lure new investments.
Reuters
reported in late March, that World Liberty Financial had raised more than $500m
in recent months. Trump’s family now controls the bulk of its business and
Reuters revealed that it is entitled to about $400m in fees and 75% of revenues
from WLF’s token sales.
The recent
$2bn investment deal that WLF will be part of with the Abu Dhabi fund and
Binance is the latest big financial coup for Trump and his sons, but one that’s
raised some red flags given legal problems that have previously beset Binance.
The Abu
Dhabi fund MGX , which has backing from the UAE government, according to
reports is slated to use a stablecoin product that WLF is now marketing to help
complete its $2bn investment deal in Binance. A stablecoin is a cryptocurrency
pegged to a traditional currency, or a more stable asset such as the dollar.
The WLF
stablecoin, dubbed USD1, will be used by MGX to invest in Binance, the world’s
largest cryptocurrency exchange that operates in dozens of countries; on 22 May
Binance also announced that it would list WLF’s USD1 for trading.
Previous
legal problems for Binance may attract new attention, say critics including
congressional Democrats. Binance’s ex-CEO and founder, Changpeng Zhao, in late
2023 pleaded guilty in the US to violating the Bank Secrecy Act and failing to
maintain an effective anti-money-laundering program at Binance, which also
copped a guilty plea to criminal charges and paid over $4bn in fines.
Zhao, who
served a four-month prison term last year and still owns 90% of the firm,
revealed on a podcast on 5 May that he was seeking a pardon from the Trump
administration, which several senators raised questions about in a 15 May
letter to top justice department officials.
Before WLF’s
role with the Abu Dhabi fund’s investment in Binance and to grow its crypto
empire, WLF unveiled its first stablecoin in March, as a stablecoin Senate bill
– dubbed “the Genius Act”, which critics say eases regulatory controls too much
– moved closer to passing.
Trump has
taken corruption and self-dealing to a new level
Former
Republican congressman Dave Trott
Watchdog
groups and some Democrats including Warren have warned that the Senate bill’s
regulations are too lax to prevent fraudulent uses, as new studies have noted
that these coins and other digital assets are increasingly being used for money
laundering by Chinese exporters and producers of fentanyl and other synthetic
drugs.
Republicans
in Congress have been largely silent about Trump and his family capitalizing on
their crypto ventures to enrich themselves. But the Wyoming Republican senator
Cynthia Lummis, a lead sponsor of the Genius Act, which on 19 May notched a key
vote towards Senate passage and would also benefit WLF’s stablecoin, has said
the upcoming $Trump events have given her “pause”.
Some former
Republican members are livid about Trump’s crypto dealings.
“Trump has
taken corruption and self-dealing to a new level,” said the ex-Republican
congressman Dave Trott of Michigan. “He seems singularly motivated to
deregulate the crypto industry for the financial benefit of himself and his
family, and few Republicans are calling him out.”
Trott said
he was weighing a run for Congress in 2026 as an independent or a Democrat. “I
wish I was still in Congress so I could vote to impeach the guy,” he added,
referring to Trump.
Further,
leading House Democrats say Trump’s presidency is benefiting his burgeoning
crypto business in dangerous ways.
“Trump’s
personal and family net worth has gone up by billions of dollars this year due
to crypto ventures,” said the Democratic representative Jamie Raskin from
Maryland. Raskin warned that Trump’s crypto ventures offered the “perfect
opportunity for foreign government, corporate and individual funds to be
funneled into Donald Trump’s bank account and his family’s finances”.
Likewise,
Noble foresees national security and other dangers with Trump and his family’s
fast-growing crypto businesses.
“World
Liberty Financial and $Trump appear to allow foreign governments, corporate
interests and wealthy private donors who want something from Trump to secretly
add to his wealth. This is a roadmap for corruption. What they want in return
for their investments may present real dangers to our economy and national
security.”
Sem comentários:
Enviar um comentário