Source: The New Yorker
Original Title: How Donald Trump's Crypto Dealings Push the Bounds of Corruption
Author: Kyle Chayka
Translator: Bit Push News an
Imagine a person with immense political power who creates and publicly sells one billion lottery tickets. Participants who purchase these tickets will ultimately receive a certain proportion of "magic beans" as a reward, with each "magic bean" convertible to one dollar. More critically, if tickets are purchased early, their price will be below one dollar, potentially as low as five cents per ticket. These tickets not only promise future traditional currency returns for holders but also grant voting rights on company affairs, allowing participation in managing the "magic beans" supply, with voting power increasing proportionally to the number of tickets purchased. It should be noted that the lottery organizer will reserve a batch of tickets, with most of the "magic beans" economy's revenue flowing into their own hands.
The above description actually reflects the operational mechanism of a new cryptocurrency created by World Liberty Financial, a company associated with the Trump family, where Donald Trump serves as the "Chief Crypto Advocate". This cryptocurrency is a governance token called WLFI, equivalent to lottery tickets, while another stablecoin named USD1 corresponds to "magic beans". World Liberty Financial operates in the emerging DeFi field, where crypto tools enable users to bypass traditional, regulated banking ecosystems for fund transfer, storage, and lending. Stablecoins are cryptocurrencies pegged to a single currency's value, such as the US dollar, but not always stable, as demonstrated by Terra's collapse in 2022. As long as stablecoins are not classified as securities, their legal status remains ambiguous. World Liberty Financial stated: "We do not consider these tokens to be securities." In January 2023, Trump and his son quietly acquired a controlling stake in World Liberty Financial through a company called DT Marks Defi. Although disclosures indicate Trump family members are not "executives, directors, or employees", DT Marks Defi receives 75% of the subsidiary's net income. (The remaining 25% belongs to Axiom Management Group, associated with World Liberty Financial's two official leaders Chase Herro and Zachary Folkman, with Folkman notably running a company called "Date Hotter Girls".)
Trump was once a cryptocurrency skeptic, explicitly stating in a 2019 tweet: "I do not like Bitcoin." However, in recent years, he has begun aggressively promoting various "magic beans" projects, injecting a public relations boost into an industry where new enterprises often fail quickly. In 2022, he launched Trump Digital Trading Cards, a series of Non-Fungible Tokens (NFTs) still being released in new batches, including a January 2024 "mugshot" version featuring his photo glaring at police. (Bulk NFT "mugshot" buyers received invitations to Mar-a-Lago.) Just three days before his inauguration, he also launched a meme coin, a cryptocurrency based on internet popularity where early buyers sell to later buyers at higher prices, essentially a pyramid scheme. The Trump meme coin ($TRUMP) consists of one billion coins, with 80% held by Trump-related companies and the remainder sold to the public. Reportedly generating around $350 million in sales with a market value near $3 billion, Trump's business entities earn transaction fees from each Trump meme coin trade.
The Trump meme coin price has now dropped to less than one-fifth of its historical peak, with many buyers experiencing investment devaluation. The subsequent "Melania Trump Meme Coin" performed even worse. However, a recent event organized by Trump's affiliated organization and crypto project company "Fight Fight Fight" helped boost the coin's price. In this crypto carnival using on-chain holdings as entry tickets, the top 220 holders qualified for dinner with Donald Trump—a dinner at Trump's National Golf Club in Washington DC, effectively creating a new political donation channel. The top 25 "whales" could even attend a closed-door reception. This new lobbying access mechanism, built on token holdings, directly converts crypto holdings into political contact capital, making the Trump coin an alternative power monetization channel outside traditional political donation systems. Many meme coin investors are from overseas, some openly expressing hopes of influencing Trump's policy agenda. For instance, an Australian entrepreneur told The New York Times he wanted to discuss crypto policy with the president, while a Mexican buyer hoped to draw attention to tariff issues. On Tuesday, a small company operating TikTok's e-commerce business in China announced plans to purchase $300 million worth of Trump coins and Bitcoin, coinciding with the Trump administration's consideration of a TikTok ban.
However, World Liberty Financial's influence extends far beyond the Trump meme coin. Its stablecoin can be easily and reliably exchanged for US dollars, almost creating an underground economic system sponsored by Trump, like opening a new bank under the current president's name, with numerous foreign enterprises and political elites worldwide channeling substantial funds. Major buyers include Chinese crypto entrepreneur Justin Sun, who purchased $75 million worth of WLFI, and DWF Labs, an Abu Dhabi-based crypto trading company that bought $25 million of WLFI. In March, World Liberty Financial announced token sales exceeding $500 million. Earlier this month, another Abu Dhabi-based investment firm announced using USD1, the stablecoin controlled by World Liberty Financial, to invest $2 billion in Binance, the world's largest crypto exchange.
Purchasing Trump-style "magic beans" is a means of gaining influence, similar to foreign dignitaries staying at the Trump International Hotel in Washington DC during his first term. However, World Liberty Financial's actions make hotel rentals seem insignificant. The more funds flow into WLFI and USD1, the more legitimate and valuable these currencies appear, with their market value rising accordingly. The world's largest stablecoin, Tether, has a market cap near $150 billion with daily trading volumes exceeding $30 billion. World Liberty Financial craves similar influence.
For a long time, the American public has been flooded with news about the Trump family's pursuit of personal gain, to the point where many of their actions no longer cause much of a stir. Just this week, there are reports that the government is preparing to accept a luxurious Boeing 747-8 aircraft gifted by the Qatari royal family, to be used as the new "Air Force One" until Boeing completes a new one. The Department of Defense will receive the aircraft, but reportedly, when Trump leaves office, the plane will be donated to his presidential library, making this $400 million aircraft private property—despite this arrangement seemingly clearly violating foreign gift provisions that prohibit U.S. officials from accepting gifts from foreign leaders and governments. (Trump had attempted to alleviate ethical concerns by suggesting that refusing gifts would be "stupid".) However, in the cryptocurrency realm, opposition within Congress to Trump's business activities is growing. Last week, some Democratic senators refused to pass a widely popular pro-cryptocurrency bill due to the president's blatant profit-seeking behavior. Wyoming Republican Senator Cynthia Lummis recently stated in an interview with The New York Times: "The negative impacts of such actions are obvious." Nevertheless, so far, the Trump family seems to have accurately bet on the fact that no one can truly stop them.
