The White House Crypto Revolving Door: Unveiling the Dark Line of the Trump Family's Wealth

Original Title: “How Donald Trump's Crypto Dealings Push the Bounds of Corruption”

Author: Kyle Chayka, The New Yorker

Translation: BitpushNews

Imagine a person with immense political power who creates ten billion lottery tickets and sells them publicly. Participants who purchase these lottery tickets will ultimately receive a certain proportion of "magic beans" as a reward, with each "magic bean" redeemable for one dollar. More critically, if tickets are purchased in advance, their price will be less than one dollar, possibly as low as five cents each. These lottery tickets not only promise future monetary gains for holders but also grant them voting rights in company affairs, allowing them to participate in managing the supply of "magic beans," with greater purchasing power translating to more influence. It should be noted that the lottery's initiator will retain a batch of tickets for themselves, and most of the revenue generated by the "magic bean" economy will flow into their hands.

The above description actually reflects the operational mechanism of a new cryptocurrency created by a company associated with the Trump family, called World Liberty Financial. The company has Donald Trump serving as its "Chief Crypto Advocate." This cryptocurrency is a so-called governance token named WLFI, equivalent to the lottery tickets; while another token called USD1 serves as the "stablecoin" corresponding to the "magic beans."

World Liberty Financial is involved in the emerging field of "decentralized finance," where cryptocurrency tools enable users to bypass traditional, regulated banking ecosystems for the transfer, storage, and lending of funds.

A stablecoin is a cryptocurrency pegged to the value of a single currency, such as the U.S. dollar, but it is not always stable; for example, the once-successful stablecoin Terra lost its peg and collapsed in 2022. As long as stablecoins are not classified as securities (like stocks of publicly traded companies), their legal status remains somewhat ambiguous.

A statement from World Liberty Financial indicated: "World Liberty Financial does not consider these tokens to be securities." In January 2023, the Trump family quietly acquired a controlling interest in World Liberty Financial through a company called DT Marks Defi. Although disclosures indicate that family members are not "executives, directors, or employees" of World Liberty Financial, DT Marks Defi receives 75% of the net income from its subsidiaries. (The remaining 25% goes to Axiom Management Group, associated with the two official leaders of "World Liberty Financial," Chase Herro and Zachary Folkman; notably, Folkman also runs a company called "Date Hotter Girls.")

Trump was once a skeptic of cryptocurrency, explicitly stating in a 2019 tweet: "I am not a fan of Bitcoin." However, in recent years, he has begun to aggressively promote various "magic bean" projects, injecting a dose of public relations into an industry where many startups often fail shortly after inception. In 2022, he launched Trump Digital Trading Cards, a series of non-fungible tokens (NFTs), which continue to release new batches, including a "Big Head" version in January 2024 featuring a photo of him glaring at police. (Buyers who purchased a large number of "Big Head" NFTs received invitations to Mar-a-Lago.)

Three days before his inauguration, he also launched a so-called meme coin, a cryptocurrency based on internet popularity, where early buyers sell it at higher prices to later buyers, essentially a pyramid scheme. Trump Meme Coin ($TRUMP) consists of one billion coins, 80% of which are held by Trump-related companies, with the remainder sold to the public. Reports indicate that its sales generated approximately $350 million in revenue, with a market cap nearing $3 billion; notably, Trump's business entities earn transaction fees from every Trump Meme Coin trade.

The price of Trump Meme Coin has now fallen to less than one-fifth of its historical high, with many buyers experiencing devaluation of their investments. The subsequently launched "Melania Trump Meme Coin" performed even worse.

However, an event hosted by Trump's affiliated organization and its crypto project "Fight Fight Fight" has recently caused a rebound in the price of Trump Coin. In this crypto carnival, where on-chain holdings served as entry tickets, the top 220 holders received the opportunity to dine with Donald Trump—this dinner, to be held at Trump's National Golf Club in Washington, D.C., effectively creates a new channel for political donations; while the top 25 "whale" holders gain access to a closed-door reception. This new lobbying access mechanism, built on token holdings, directly converts cryptocurrency holdings into political contact capital, making Trump Coin an alternative power monetization channel outside the traditional political donation system.

Many meme coin investors come from overseas, with some openly expressing their desire to influence Trump's policy agenda through this means. For instance, an Australian entrepreneur told The New York Times that he hopes to discuss crypto policy with the president; a Mexican buyer stated that he wants to draw Trump's attention to tariff issues. On Tuesday, a small company operating TikTok e-commerce in China announced plans to purchase $300 million worth of Trump Coin and Bitcoin, while the Trump administration is considering whether to advance a ban on TikTok.

However, the influence of World Liberty Financial extends far beyond Trump Meme Coin. Its stablecoin can be easily and reliably exchanged for dollars, effectively creating a Trump-sponsored underground economy, akin to opening a new bank under the current president's name, with numerous foreign businesses and political elites around the world funneling substantial funds into it. Major buyers of WLFI include Chinese crypto entrepreneur Sun Yuchen, who purchased $75 million worth of WLFI, and Abu Dhabi-based cryptocurrency trading company DWF Labs, which bought $25 million worth of WLFI.

In March of this year, World Liberty Financial announced it had sold over $500 million worth of tokens. Earlier this month, another Abu Dhabi-based investment company announced it would use the stablecoin USD1 controlled by World Liberty Financial to invest $2 billion in Binance, the world's largest cryptocurrency exchange.

Buying Trump-style "magic beans" is akin to how foreign dignitaries would stay at the Trump International Hotel in Washington, D.C. during his first term as a means of gaining influence. However, compared to this, the actions of World Liberty Financial make hotel rentals seem trivial. The more funds that flow into WLFI and USD1, the more legitimate and valuable these currencies appear, and their market cap will rise accordingly. The world's largest stablecoin, Tether, has a market cap nearing $150 billion, with daily trading volumes exceeding $30 billion. World Liberty Financial aspires to create similar influence.

For a long time, the American public has been inundated with news about the Trump family's pursuit of personal gain, to the point where many of their actions now barely raise an eyebrow.

Just this week, reports surfaced that the government is preparing to accept a luxurious Boeing 747-8 gifted by the Qatari royal family to use as the new "Air Force One," at least until Boeing completes the new "Air Force One." The Department of Defense will receive the aircraft, but it has been reported that when Trump leaves office, the plane will be donated to his presidential library, making this $400 million aircraft private property—despite this arrangement seemingly violating the foreign gifts clause that prohibits U.S. officials from accepting gifts from foreign leaders and governments. (Trump has dismissed ethical concerns by stating that refusing gifts is "foolish.")

However, in the realm of cryptocurrency, opposition to Trump's business activities is growing within Congress. Last week, some Democratic senators refused to pass a widely supported pro-crypto bill due to the president's blatant profit-seeking behavior. Wyoming Republican Senator Cynthia Lummis recently told The New York Times: "The negative impact of this behavior is evident." Yet, so far, the Trump family seems to have accurately bet on one fact: no one can truly stop them.