C (4:50)

I think there's a lot of damage that can potentially happen to everyday people through crypto.

B (4:56)

Molly White is a software engineer and researcher. She writes the newsletter Citation Needed, which focuses on the crypto industry and the intersection between finance and tech. Molly, for listeners who aren't steeped in finance or who are just unfamiliar, how do you describe what crypto is and how do you explain how it's different from traditional banking?

C (5:18)

Well, crypto is really a form of a digital asset. So there's no paper currency. Broadly speaking, people are not using crypto for buying their groceries or paying their rent or those types of things. Most people buy and sell them for speculative purposes.

B (5:35)

Speculative purposes, meaning they invest in it and they hope the price will go up?

C (5:38)

Correct.

B (5:39)

And how can unregulated crypto hurt ordinary consumers?

C (5:45)

So there is the risk when it comes to the asset itself, in the sense that these assets are highly volatile, many of them. You don't know who has created the asset. You don't know who is running the business. You don't know their credibility or their background. They aren't required to disclose it. Under the current law, regulatory regime, there have been many, many cryptocurrencies that are known as rug pulls, where essentially the creators of these assets inflate the price artificially and then sell all their tokens, profiting immensely themselves, but at the expense of everyone they convinced to purchase the tokens. You know, there is very little regulation preventing that type of activity, whereas you would expect that activity to be quickly shut down in more regulated ends of the financial system. So there's the sort of asset level risk, but then there's also the broader risk, which is that if you buy a stock today through your brokerage account, the price of the stock might go up and down, but you know fairly confidently that that stock is still going to belong to you when you open up your brokerage in a month. When it comes to the cryptocurrency industry, we've seen repeated examples of crypto firms that have gone bankrupt, that have run off with all the money, that have just vanished into thin air, practically. We saw the collapse of FTX in.

B (7:12)

2022, Sam Bankman Fried's company.

C (7:14)

Correct. Where it turned out that people were trusting this company that was actually taking their money and then using them to trade or to make investments in other companies or to purchase real estate for the executives of that company. And people ended up losing a lot of money when FTX went bankrupt. And, you know, now its CEO is spending a long time in jail. And I think a lot of people don't understand that there is very little protection against that type of activity, especially in the United States. I think we've all become very comfortable with banks or regulated financial institutions where, you know, there is some degree of oversight, where you expect that, you know, a company is not going to just run off with all your money without any recourse, or, you know, if your bank fails, you expect that you don't have to worry about your deposits because they are insured up to a fairly large amount. And I think a lot of people who are being sucked in by the marketing and the promises of getting rich overnight, frankly, don't understand that there is that amount of risk that they're getting into.

B (8:22)

So it's a little bit like the banking industry before deposit insurance, before banks were regulated. It's as if you could have had your money in a bank and then the bank could go bankrupt or disappear overnight, and then you would just lose everything.

C (8:35)

Right, Exactly. I mean, that is when we saw crypto collapses throughout the past handful of years. There were many instances where people lost their funds. And they said, I thought I had the same protections as a bank. You know, I thought the FDIC would step in and reimburse me. And now we've seen. We're actually seeing the regulators being pulled back and told to step away from the crypto industry. And we're seeing legislation being passed that would essentially enable the crypto industry to expand its business activities without any additional consumer protections.

B (9:09)

You keep a running tally of money that's been lost in schemes and scams since 2021. Where are we now, approximately?

C (9:19)

Let me take a quick look. The running total on my website for the money that's been lost is almost $80 billion. And that's actually a very conservative estimate. So that's really the lower bound, I would say.

B (9:35)

So, to be clear, this is $80 billion lost by ordinary consumers.

C (9:40)

Yeah, it's a mix of everyday people and institutions.

B (9:45)

Let me shift now to the current administration. Maybe we could start with World Liberty Financial. Can you explain what it is and how it works and how it could be used, in effect, to bribe the president?

C (9:59)

So World Liberty Financial is a cryptocurrency platform that was created by Trump, some of his sons, and a handful of external partners in August 2024.

B (10:10)

And one of those external partners is Zach Witkoff, who is the son of Trump's Middle east and Russia envoy, Steve Witkoff.

C (10:18)

Right. And this has been a very lucrative project for the Trump family. They've earned hundreds of millions of dollars just from selling WLFI tokens that currently don't really do much but allow people to buy favor with the President, essentially.

B (10:35)

Can we just focus on that for a second? People are buying tokens, but then there's nothing they can use those tokens for. Right. I mean, they can't be used to buy anything else, and they can't be traded easily, and they can't be sold Easily. So the only reason to buy them is to be able to show the President that you spent money on his company.

C (10:54)

I agree that it really is just a way to buy favor with the president. And we've seen that being done through people like Justin sun, for example, who is a foreign national, is not permitted to contribute to Trump's campaign, but was making a $75 million purchase of these WLFI tokens. And Trump and his family take a 75% cut of that.

B (11:19)

So Justin's son invested in World Liberty Financial. And what did he get in exchange?

C (11:26)

He ended up being rewarded with an advisory position at the World Liberty Project, which gives him close access to the Trump family.

B (11:36)

And at the time, he was under an investigation as well. No, Correct.

C (11:40)

Justin sun was actively fighting a civil lawsuit from the securities and Exchange Commission that alleged fraud in addition to the usual unregistered sales of securities.

B (11:52)

And since then, those charges have been removed or we're not investigating him anymore.

C (11:58)

The securities and Exchange Commission lawsuit has been paused pending resolution, so essentially dropped. And so, yes, I mean, he essentially has nothing to worry about anymore in terms of both criminal and civil litigation.

B (12:11)

I mean, obviously we can't prove the connection, but there is a series of strange events. So Justin sun made an investment in World Liberty Financial. Subsequent to that, the investigation into him was lifted, although his investment was locked and frozen later on by World Liberty Financial. So obviously there's more to this story.

C (12:33)

Correct? You know, we've seen other examples where companies have partnered with Trump's companies in ways that are very lucrative for the Trump family. And then they've seem to, you know, suddenly enjoy relief from legal concerns. We've seen, for example, Coinbase spending millions of dollars on political contributions, whether it was to crypto focused super PACs that were supporting pro crypto congressional candidates, or if it was sponsorship of the Trump military parade, or, you know, a million dollars to Trump's inauguration fund. And then shortly after Trump, the SEC enforcement case against them was dismissed with prejudice, meaning it can't be refiled. I mean, the list really goes on.

B (13:23)

Some of this doesn't sound that new. It just sounds like classic lobbying. The difference it seems to me, though, is both in the scale, in the amounts of money being thrown around, in the fact that people seem to be paying to get rid of their legal problems. And of course, the huge difference is the personal involvement of the President and his family.

C (13:43)

They are involved in almost every aspect of the crypto industry. At this point. The Trump family is profiting from cryptocurrency businesses and crypto investments. And President Trump is essentially directing the regulation and legislation around the crypto industry.

B (14:01)

Can you estimate how much money the president, his family, have made through this line of business?

C (14:06)

We're talking billions of dollars at this point.

B (14:09)

This seems to me the genuinely unusual new piece of this, actually, which is that you have an industry that is directly benefiting the president, so he is directly, personally, and immediately benefiting from his own regulatory decisions. What stopped that before? Was it just our norms? Presidents just didn't do that.

C (14:31)

It's probably fair to say that some presidents have profited to some extent from the office, but this is certainly a dramatic escalation of directly profiting and in quite enormous amounts. I think some of it comes down to norms. I think some of it comes down to an unwillingness or inability to investigate and prosecute corruption. You know, there have been multiple lawmakers calling for investigations into these clear conflicts of interest, and those have largely not gone anywhere due to the unwillingness of, you know, the rest of Congress to step up and look into this type of activity.

B (15:11)

It seems to me the other big difference, other presidents profited after leaving the presidency. They made money from speeches. But I can't think of, in modern times, at least, of a president who has earned this kind of money this fast while in office.

C (15:28)

That's absolutely correct.

B (15:33)

We've been talking about the tangled web of the crypto world and how Trump and his family have personally benefited, but it feels like hardly anyone is talking about how this new source of money, billions of dollars, is also giving the presidency new levels of autonomy and power.

C (15:52)

It's sort of a chicken and an egg question, you know, to what extent has the authoritarianism enabled the policies that have allowed him to acquire so much cryptocurrency? And then the other way around.

B (16:06)

That's after the break. Molly, there is one country that has made crypto a central part of its financial system, and that is El Salvador. It's led by Nayib Bukele, a democratically elected president who has, like Trump, also sought to centralize power and eliminate checks and balances. We know the Trump family admires him. Don Trump Jr together with Tucker Carlson, went to Bukele's inauguration in 2024. How has El Salvador's experiment with crypto worked out?

C (16:45)

Yeah, so El Salvador took a very similar approach, frankly, to bitcoin a number of years ago, where the president essentially unilaterally determined that they were going to create this national fund of bitcoin. They were going to take money belonging to the country and put it into purchasing bitcoin. This was not something that was particularly popular among the populace, but it was sort of a unilateral decision by Bukele to sort of foist bitcoin upon the everyday people in El Salvador who were told to download crypto wallets. Businesses were instructed to begin accepting bitcoin in their day to day operations. And it was ultimately not very beneficial to Salvadoran people. This was government money that could have been used in much more socially beneficial ways that was instead being stockpiled away in crypto investments. There were technical problems with the bitcoin wallet and the rollout that resulted in people's assets being stolen from them. It was frankly, fairly disastrous. And so, you know, it was a very challenging time for El Salvador.

B (18:00)

So it's not as if El Salvador has created this beautiful model that we can just follow.

C (18:06)

Well, I mean, it sort of seems like Trump and his family have been emulating El Salvador in many ways. But, you know, El Salvador is not a great example of, you know, I think, where this country should be going. But it, you know, unfortunately has strong parallels to Trump, where the president has consolidated power in very alarming ways. He, you know, runs the government in a fairly authoritarian way, and he has gone all in on crypto.

B (18:33)

Moving back to the United States, how would you describe the Trump administration's regulatory approach in this second term?

C (18:41)

Well, the strategy so far has been to completely defang financial regulators. You know, there have been executive orders instructing the SEC and CFTC to essentially back off from the cryptocurrency industry and the Department of Justice as well. And the people that the Trump administration has been installing at regulators and in these other agencies have largely been coming from the cryptocurrency industry. I mean, we've seen, you know, essentially this revolving door happening where many of the people now in charge of regulating the cryptocurrency industry have very direct ties to that industry.

B (19:20)

Let me shift now to ask you about the idea of a cryptocurrency reserve, a bitcoin strategic reserve, or having crypto be part of the deeper bones of the US Financial system. Walk us through what that proposal is and how it would work, and then I'll ask you about how it could go wrong.

C (19:40)

So the bitcoin strategic reserve and the digital assets stockpile were created with sort of an executive order that takes a pile of crypto assets that were already being held by the US Government and pledges to continue to hold them rather than sell them. And so the US Government actually holds a fairly substantial amount of cryptocurrencies, largely that were seized as a result of law enforcement activity. So, for example, if there's, you know, a criminal case against, you know, online drug marketplace or something like that, and they shut that down, they seize the crypto assets. Once that case is finished in court, those assets are forfeited to the government. That means that the government essentially has them in their government crypto wallet. And historically, they have sold them off. But now the idea is that the government will actually hold those assets in kind and essentially hope to profit from increases in, for example, bitcoin price.

B (20:43)

And how could this be damaging, and what's wrong with doing that?

C (20:47)

Well, it's essentially the US Government engaging in crypto speculation. These are assets that historically would have gone towards funding various treasury activities. Now they're being held in reserve, and it's unclear under what circumstances that those assets will be, you know, used for normal government purposes. It also, you know, we're seeing various members of the government, including people who are very active in defining crypto policy, talking about trying to find ways to add to those holdings by purchasing crypto assets. You know, we saw this sort of mad scramble when, when Trump was talking about creating this executive order from various crypto companies that wanted their crypto assets included in this stockpile as well, because they understood that this would be both a endorsement of their crypto assets and would drive demand.

B (21:47)

And would this also not give the President access to funds or to money that he could spend as he wants? Money that hasn't been allocated by Congress?

C (21:59)

I think that's a very serious question. You know, there is not the type of congressional oversight when it comes to spending these types of alternative funds. And it seems to me that this is a way for Trump to essentially create this stockpile of funds that he could then use without much oversight.

B (22:20)

So he would have sort of his own slush fund?

C (22:23)

That's how it seems to me, yes.

B (22:26)

Can you describe the involvement of the crypto industry in the 2024 elections? Was that different from the industry's previous involvement? And what exactly were they trying to achieve?

C (22:39)

Yeah, so the crypto industry became very heavily involved in the 2024 elections in ways that they had really not been previously. We saw the involvement of these massive, single issue, Pro cryptocurrency super PACs that were getting heavily involved in congressional elections. The industry contributed over $150 million to those super PACs. They spent around $130 million influencing congressional races where they were hoping to either install pro crypto candidates or remove people who are viewed to be enemies of the crypto industry. You know, at one point, it was almost half of all corporate spending was coming out of the cryptocurrency industry.

B (23:26)

Wow. So that's even beyond the scale of spending of the oil and gas industry, for example.

C (23:31)

Yeah. I mean, you look at the size of the crypto industry, which is very small comparatively, and they were spending like the pharma industry, like the oil industry, and it was very, very overt around the messaging. You know, basically the industry saying, if you don't support us, we are going to crush you with millions and millions of dollars. In these elections where, you know, these are often states where these crypto companies don't have any real presence, but, you know, they are funneling money to control these elections in ways that the actual residents of those states often have very little say in as a result. And so you end up with these corporations contributing huge amounts of money to essentially raise their interests above those of everyday constituents.

B (24:23)

So crypto companies are making enormous contributions to state, senate and House campaigns, even where they don't have a physical presence, just to be able to have influence in Congress later on. Tell me about the possibility of using crypto for illegal campaign funding. Money is moved around anonymously so easily in that world. For example, if a foreign national wanted to influence a campaign, could they do it via the crypto industry?

C (24:52)

Potentially. I mean, we're already seeing these very sort of indirect ways in which foreign nationals and US people are directing funds towards, you know, the Trump family, for example, and those are not campaign contributions, but they certainly appear to be influencing policy. You know, essentially, crypto could be a conduit for bribery that is challenging to trace. I mean, one of the. The goals of crypto is to be fairly anonymous, you know, to make it challenging for people to know where funds are coming from.

B (25:31)

Do you expect the industry to be involved in the midterms? Do you expect big investments in campaigns once again?

C (25:38)

Absolutely. We've already seen these, these same crypto packs from 2024 raising money for the 2026 elections. We're actually seeing new super PACs being established. I mean, one of them has already committed to spending $100 million in the midterms. And we're seeing politicians and candidates speaking very frankly about wanting to install pro crypto candidates. I mean, the chair of the Senate Banking Committee, Tim Scott, recently said, the number one thing that the crypto industry can do is fire the legislators that are in your way. So we're seeing very aggressive incitement for these crypto PACs to get very involved in the midterms.

B (26:20)

So legislators who support consumer protection, who care about ordinary people not being ripped off, they're the ones who will be the target of the crypto funding in the 2026 elections?

C (26:33)

Absolutely. I mean, we saw Sherrod Brown, for example, in Ohio. The crypto industry spent $40 million to support his competitor to get of office. And you know, Sherrod Brown is going to be running again and we're already hearing people talking about opposing him because he is such a strong advocate for consumer protections or for actions against big banks, big finance. We've seen, you know, calls for the industry to come out in force against him. And I think we'll see very similar strategies against other pro consumer protection candidates that run in 2026.

B (27:16)

Molly White, thank you.

C (27:18)

Thank you for having me.

B (27:22)

Autocracy in America is produced by Arlene Arevalo, Natalie Brennan and Jocelyn Frank. Editing by Dave Shaw. Rob Smirciak engineered and provided original music. Fact checking by Enna Alvarado and Sam Fentress. Claudine Abade is the executive producer of Atlantic Audio and Andrea Valdez is our managing editor. I'm Ann Applebaum. Next time on Autocracy in America.

C (27:49)

In the 50 years I've been doing research, I've never heard of the government.

B (27:54)

Cutting off research funding across the board.

C (27:57)

It's shocking and demoralizing to have to.

B (28:00)

Deal with this in 2025. Unexpected freezes to federal funding created chaos for thousands of labs, research projects, and experimental teams. What does this assault on science have to do with the health of our democracy? That's next time if you want to listen to the whole series. All five episodes are available to Atlantic subscribers on Apple Podcasts. Subscribe to the Atlantic to hear the full third season of Autocracy in America Now.

C (28:35)

Sat.