One of the problems facing cryptocurrency promoters since asset classes first appeared is their reputation worsening.
Cryptocurrency transactions have been identified in the minds of regulators and the public as a heaven of fraud, theft and other inspiring practice. In its latest annual report on cryptocurrency, the FBI discovered that crypto-related fraud has exploded. Criminality is “broad” in this area, the agency warned.
Elusive use cases of crypto assets appear to have been narrowed down to promote criminal fraud, ransomware attacks, drugs and human trafficking.
Then came Donald Trump. During and after the election, the code promoters thought they would enter the officially recognized Nirvana.
Trump cited an executive order he issued on January 23, “to promote US leadership in digital assets and financial technology while protecting economic freedoms,” signaling that he “ends government regulatory initiatives on crypto,” in order to effectively wipe out federal regulations for the class.
Things don’t go as well as they wanted. Since Trump returned to presidency, his and his family’s involvement in crypto-related transactions has had critics accusing crypto as a whole new pathway for official corruption and conflicts of interest in the White House.
“Trump’s cryptocurrency venture was Sen. Richard Blumenthal, a D-Connecticut Sen. tweeted on May 7th. Promoted by Trump and his family.
The price of the coin surged to around US$74 (RM315) on January 19, the day before Trump took office. That price is supported by dinner and tour offers, but soon fell in value. The latest quote makes it about USD 13 (RM55). According to Reuters estimates, the top 220 Trump Coin owners eligible for dinner spent about 148mil (RM630mil) for their privileges.
More than half of the largest holders appear to be foreign entities, according to a Bloomberg analysis. That means purchases may be designed to avoid federal laws that prohibit foreigners from making political contributions in the United States.
Adam Schiff, a Democrat in California and Elizabeth Warren of Massachusetts, demanded that the Federal Bureau of Government Ethics, an independent secretariat, “to commit “corruption” by selling presidents like the president, by “involving President Trump and other officials, by “paying wages” by selling presidents, by including foreigners and for-profit actors.
Last month, DWF, a UAE-based crypto company, announced that it had announced US$2.5 million (RM106.7mil) in coins issued by World Liberty Financial, a Trump-related company, would “enhance regulators’ engagement with US policymakers.” Freight Technology, a Houston logistics company, announced on April 30 that it had borrowed USD 200,000 (RM85.35mil) to buy Trump Coin, calling the transaction “an effective way to defend fair, balanced and free trade between Mexico and the United States.”
The anxiety spreads to Republicans on Capitol Hill, fearing that Trump’s crypto transactions will undermine efforts to enact crypto-friendly regulations.
“This gives me a pause,” Sen. R-Wyoming, the leader of the legislative movement passing the pro-cryptography law, told NBC News. “Even what you might think of as ‘clingies’ when it comes to meme coins is legal and we need to do is have a regulatory framework that makes this even more clear, so there’s no Wild West scenario. ”
Trump’s activities have temporarily derailed the so-called genius behavior. This regulates the form of cryptocurrency known as “stablecoins.” Schiff and eight other Senate Democrats who supported the measure have bailed it out, making it virtually impossible to pass its current form.
Democrats in both rooms have introduced the “final crypto corruption law.” This has introduced issuance, sponsorship or endorsing the president, members of Congress, and appointees of high-level administrative divisions to “sell cryptocurrencies, meme coins, tokens, tokens, non-capacity tokens, stubcoins or other digital assets.”
Even some code promoters are not as happy as politicians. “They are plumbing new depths of stupidity with the launch of Memecoin,” crypto investor and Trump supporter Nick Carter told Politico.
As a cryptographic category, memokine is even neglected by many participants in this field. They generally have even less practice or credibility than mainstream cryptocurrencies, but often come as a joke investment, resulting in a wave of pure hype. Trump coins have no identifiable value except for their identity with Trump himself.
I asked the White House to comment on the corruption accusations and received this reply from spokeswoman Karoline Leavitt.
Memecoin isn’t just Trump’s adventures into the crypto, but some of his arrangements seem to be designed to give him a plausible denial when legal or ethical questions are raised. World Liberty Financial, which sells Crypto Token with designated $WLFI and USD1 and designated Stablecoin, is 60% owned by Trump and his family members, earning up to 75% of $WLFI’s sales.
The company’s website features an image of Trump hitting heroic poses, and says the WLFI token was “inspired by Donald J. Trump.” However, in small print, it argues that “references or references to or images to or related to Donald J. Trump or his family should not be construed as endorsement or representation or warranty.”
Crypto investors actually stepped up to the plate with political donations during the 2024 election cycle. Fairshake, the class’s representative super PAC, spent nearly 41mil (RM175mil) on his contributions. This included US$1.3 million (RM55.5mil) to defeat two Congressional candidates in the Democratic primary, Rep. D-California and Rep. Jamaal Bowman of D-New York. Both are known to support stricter regulations in their asset classes, and both have lost their races.
The biggest crypto companies spent lavishly in 2023 and 2024, Fattening the fairshake war chest. Coinbase has donated US$46.5 million (RM198.8mil), Ripple Labs, 45mil (RM192.4mil), and leading crypto investor Andreessen Horowitz, 44mil (RM188.1mil). Federal election records show that much of the total has been poured into two other crypto-related political action committees.
After the election, many companies, like more traditional companies, contributed more than US$100 million (4.27mil) to Trump’s inauguration fund.
There is little denying that Crypto Camp has ever gained value for money from the Trump administration. The Securities and Exchange Commission has abolished or postponed more than a dozen enforcement lawsuits against Ripple, Coinbase, Gemini, Kraken and other code promoters.
The biggest win will undoubtedly belong to Coinbase, the largest crypto trading platform in the United States in 2023. The lawsuit reflects the SEC’s position that what the crypto company is marketing is securities and therefore must be registered as securities in order for buyers and sellers to obtain the same legal protections as stock investors.
A federal judge in New York cleared enforcement action to move forward in 2024 after realising that the SEC had created a plausible case of Coinbase being illegally operating. The SEC dropped the lawsuit in February. Coinbase claimed that the SEC was “incorrect about facts and laws” and that “the case should not have been filed in the first place.”
Earlier this month, the agency settled a lawsuit against Ripple, accusing him of raising US$1.3 billion (RM555 billion) in 2020 through unregistered securities. As part of the settlement, the SEC has agreed to return to the 75mil (RM747mil) Ripple (RM747mil) held in escrow, with a penalty of 12.5 million US$ (RM533.62mil). The settlement elicited a vivid responsibilities from Commissioner Caroline A. Crenshaw, a member of the committee’s Democratic minority.
Crenshaw pointed out that the deal is part of an effective waiver of the SEC’s crypto regulations and a parcel. “This settlement, along with a programmatic breakdown of the SEC’s crypto enforcement program, is causing significant damage to the investment public,” she wrote.
This is not the end of the deregulation drive. On April 7, Trump’s defense attorney in a New York criminal case, Deputy Attorney General Todd Blanche convicted of 34 felony counts forgerying business records — put an end to a Department of Justice Regulation Case based on interpretations of crypto assets securities or commodities. It shut down the government’s major regulatory initiatives on code promoters.
Blanche has directed the DOJ market integrity and major fraud units to “stop cryptocurrency enforcement” and disbanded the national cryptocurrency enforcement team.
Even if he dismantles government regulatory capabilities through crypto ventures, there appears to be no indication that Trump will slow his involvement with crypto.
World Liberty Financial recently announced that Abu Dhabi will invest USD 2 billion (RM8.54bil) in Binance using Stablecoin. Binance’s CEO Changpeng Zhao also pleaded guilty and spent four months in a US prison.
Last month, the SEC filed a civil lawsuit pending the vinanence for at least 60 days.
On the Investor Advice webpage, the SEC was used to post warnings on Crypto websites. “Note that trendy investments are especially ripe for scammers, so there is a real risk of scams,” it said. “Cryptocurrency may be a new glossy opportunity today, but it has serious risks involved.”
The page has been deleted. – Los Angeles Times/Tribune News Service
