I know it’s almost overwhelming — the continuous cacophony of catastrophes brought on by the crackpot in chief. But I suspect what will bring him down sooner than anything is his boundless greed and that of his family.
Monday, Eric Trump and Donald Trump Jr. announced they were joining forces with a bitcoin mining company to create a firm called American Bitcoin. Eric will be co-founder and chief strategy officer.
Anyone want in? It might be possible if you’re a big enough investor and you want to curry favor with the president. And that’s my point about greed being Trump’s undoing. He can’t resist payoffs.
Bitcoin mining is a particularly lucrative branch of the crypto industry in which large companies run energy-guzzling machines that process bitcoin transactions. Perfect for a man that thinks climate change is a “hoax.”
The Trumps’ meme coins soared in value and then crashed.
Let me remind you, in addition, that cryptocurrencies serve no useful purpose other than the purchase of other crypto assets, money laundering, extortion and scams. As economist Paul Krugman has said, their market value rests on nothing but “technobabble and libertarian derp.”
They also use huge amounts of energy — especially for bitcoin mining.
Eric and Donald Jr.’s mining project is the third major crypto venture that the Trump family has started over the past year.
The first came last October when Trump and his sons launched a crypto company called World Liberty Financial — billing it as a decentralized finance, or DeFi, project that would help match crypto investors eager to borrow and lend from, and trade with, one another.
Trump’s World Liberty said recently it had raised $550 million from more than 85,000 U.S. and non-U.S. investors, including Justin Sun, whom the Securities and Exchange Commission (SEC) accused in 2023 of fraud and other securities law breaches. Sun says he has invested $30 million in Trump’s family business.
World Liberty Financial has just announced it’s launching a stablecoin. Stablecoins are the backbone of crypto markets, functioning as digital dollars used widely to store cash or pay for purchases of other tokens. (The most popular stablecoin is Tether, which has been heavily used for illicit activities, including terrorism financing and drug trafficking.)
On the eve of Trump’s inauguration, he and his wife, Melania Trump, each launched a meme coin — a type of cryptocurrency based on an online joke or mascot.
The Trumps’ meme coins soared in value and then crashed — generating enormous profits for the Trumps and other insiders, but a cumulative $2 billion in losses for more than 800,000 other investors. The Trump family and its business partners earned nearly $100 million in trading fees alone on the coins.
The Trump family is now negotiating a financial stake in the U.S. arm of crypto exchange Binance, according to people familiar with the matter. This would put Trump in business with the firm that pleaded guilty in 2023 to violating anti-money-laundering requirements.
These crypto ventures have created some of the most overt conflicts of interest in the history of the American presidency.
Before I get into the details, I want to give you a brief yet frightening recent history of crypto.
All risk, no management
Most of us have no idea what crypto is or how it functions, which is just fine with the wealthy investors and speculators who are putting their money into it with the expectation that more investors and speculators will do so in the future — a classic Ponzi scheme.
The scheme crashed three years ago when cryptocurrency prices plummeted. Celsius Network — a cryptocurrency bank with more than a million customers — announced it was freezing withdrawals “due to extreme market conditions.”
Bitcoin dropped 15 percent over 24 hours. TerraUSD, a stablecoin — a system that was supposed to perform like a conventional bank account but was backed only by a cryptocurrency called Luna — also collapsed, losing 97 percent of its value in just 24 hours and destroying some investors’ life savings.
Then, following the collapse of Sam Bankman-Fried’s crypto exchange FTX — one of the biggest Ponzi schemes in memory — the Biden administration cracked down on crypto fraud and market manipulation.
Bankman-Fried was sentenced to 25 years in prison for fraud. Changpeng Zhao, founder of a rival crypto exchange, spent four months in prison for money-laundering.
Former SEC chair Gary Gensler described cryptocurrency investments as “rife with fraud, scams and abuse.”
He’s right, of course. There were and are no standards for risk management or capital reserves. There are no transparency requirements. Investors often don’t know how their money is being handled. Deposits are not insured. We’re back to the wild west finances of the 1920s.
There were and are no standards for risk management or capital reserves.
Why isn’t this market regulated? Mainly because of intensive lobbying by the crypto industry, whose kingpins want the Ponzi scheme to continue.
In the 2024 election cycle, the industry poured a huge amount of money into political campaigns — including Trump’s.
It also hired scores of former government officials and regulators to lobby on its behalf — including three former chairs of the SEC, three former chairs of the Commodity Futures Trading Commission, three former U.S. senators, one former White House chief of staff and the former chair of the Federal Deposit Insurance Corporation (FDIC).
Former Treasury Secretary Lawrence Summers advises crypto investment firm Digital Currency Group and previously sat on the board of Block Inc., a financial-technology firm that is investing in cryptocurrency-payments systems.
The biggest danger is that crypto infiltrates Wall Street, where it could cause a meltdown that would make the 2008 financial crisis look like child’s play.
The Biden administration tightened rules that made it prohibitively expensive for banks to hold digital assets on behalf of clients — and stopped them from developing their own crypto products, such as stablecoins (as I noted, tokens pegged to the dollar or other assets).
Biden’s FDIC, a watchdog, stopped dozens of such projects.
But the richest people in America with huge power — the oligarchy, including Elon Musk and Trump — are enthusiastic about cryptocurrencies.
Why are they so enthusiastic? Not only can they make fortunes, but crypto advances their long-term aim of shifting financial controls out of a democratically elected government and into their own hands.
How Trump is making his family rich off crypto
Never in history has the family of a president gotten the bribes now being pocketed by Trump’s.
Trump once dismissed bitcoin as a “scam.” Now, he’s seeking to turn the United States into the “crypto capital of the planet.”
Trump says he hopes to see stablecoin legislation on his desk before Congress’s August recess. (Remember, his World Liberty Financial just announced it’s launching a stablecoin.)
He has also relaxed all enforcement of the crypto industry.
He has announced the creation of a government stockpile of bitcoin and other digital currencies. To what end? Unlike oil or other commodities that might need to be stockpiled for a national emergency, bitcoin has no intrinsic value.
Trump has put crypto-friendly people into key federal agencies, further boosting its prospects.
The SEC has rolled back accounting guidance that had deterred banks from getting involved with crypto.
He tapped the venture investor and digital currency enthusiast David Sacks to oversee administration policies on crypto (and artificial intelligence).
He picked Washington lawyer Paul Atkins, a known crypto booster, to chair the SEC, which is America’s main financial regulator.
Since the start of the Trump regime, the SEC has rolled back accounting guidance that had deterred banks from getting involved with crypto, so that financial institutions no longer have to account on their own balance sheets for crypto assets held on behalf of customers.
This week, the SEC formally dismissed its lawsuits against three cryptocurrency giants, the latest retreat from its once-sweeping enforcement campaign against the industry. The agency said the dismissals will facilitate the SEC’s efforts to “reform and renew its regulatory approach to the crypto industry.”
Banks and the crypto industry are now pushing in the same direction and face little resistance. New and enormously profitable forms of risk-taking are emerging for a small group of people able to take such risks and able (like the Trump family) to profit off their own crypto products.
Trump and his family stand to gain substantially. The rest of the economy — including, increasingly, large Wall Street banks — will be subject to large and unregulated risks. Beware.
This post was originally published on here
