Loading summary
Transcript26 lines
- [00:00]
Tim Miller
Hey, guys, it's Tim Miller from the Bulwark. I am here with somebody that has written. This is no exaggeration. What I think is maybe the most important thing that has been written out there in the last month or two, because people are having trouble wrapping their head around what is happening with Trump and the crypto world. And it is really unprecedented. So her name is Molly White. She has a substack called Citation Needed that you should check out if you're into crypto news. And, Molly, how's it going? Thanks for coming. I want to start here. You wrote that the Trump crypto grift is the most flagrant violation of presidential authority in American history. That might feel like an overstatement, but I'm with you. It is not. It's not even close to an overstatement, because I don't think that there's a close second. But why don't you kind of explain the contours of what you wrote about.
- [00:49]
Molly White
Yeah. So Trump and his close family are really expanding their business interests into the cryptocurrency world in ways that stand to profit them significantly. I mean, to the tunes of hundreds of millions or even billions of dollars. While Trump is simultaneously influencing policy such that regulators are being called off of the cryptocurrency world. We've seen at least eight enforcement actions against cryptocurrency companies, including those alleging fraud, be dropped or stayed pending resolution. He has dismantled the cryptocurrency investigations team at the Department of Justice. And so he's really shaping policy in such a way that he stands to profit heavily from these businesses that he is simultaneously creating, not to mention the avenues for bribery and corruption more directly using cryptocurrency.
- [01:46]
Tim Miller
Yeah, we've talked a fair amount here about the Trump cryptocurrency, whatever you want to call it, a universe, because all of his various meme coins and products. And so I do want to get to that again as well for folks who have missed it, but the thing that you covered that I think has been underappreciated, that you reference there is, you know, how the policy, the US Policy, has benefited these other big players in the crypto industry. And you have this chart here. We'll put it up on the screen, and I'm just gonna run through a couple of them real fast and have you kind of explain what you've seen. But ripple. There's an SEC enforcement case against them that was stayed. 75 million of a previous fine was returned to the company Coinbase. There was an SEC enforcement case that was dismissed against coinbase Andreessen Horowitz. There are four of the employees that are installed in formal or informal formal positions of influence in the White House. I've talked a lot about Justin sun and Tron and who put 75 million into the Trump coin. There's an enforcement case against him that was stayed. This goes on and on. People can see the full list here. Binance. I want to mention at the bottom. SEC enforcement case state crypto.com SEC enforcement case dismissed with prejudice. I mean, what. So, so talk about what that means for those companies and how, you know, treating those companies well and giving those companies favorable treatment might benefit the Trump crypto corporate efforts.
- [03:19]
Molly White
Well, it's sort of multifold. So for one, he has profited directly from many of those companies in the sense that many of those companies were major donors to his political campaigns. You know, millions of dollars from, from various entities listed there who received a very direct benefit for those contributions in the sense that they're now not having to face these enforcement cases. But then there's also the general regulatory stance in the US towards cryptocurrency, which has taken a complete turn since Trump was installed in office. You know, as I mentioned, those cases have been dropped. But that also is reflective of a policy from the securities and Exchange Commission that is, you know, no longer treating these crypto assets under the securities laws that prevent previously were were considered to have applied. And as the SEC has backed off from these cases, there's really no indication of who would step in to oversee these markets. It's sort of a wild west right now, even more than it previously was, which is saying something. I mean, the regulation that we did have was actually quite minimal, despite what the industry likes to say. And so, you know, this is really laying the groundwork for companies in the crypto world to act with impun without any regulators or oversight or consumer protections, which is, of course, very beneficial to those companies who don't have to take on the costs associated with those types of actions. They don't have to limit the types of products that they might provide to their customers thanks to those regulators. And of course, Trump now is seeking to very directly profit not just from these political contributions from crypto companies, but from his own crypto companies that he's launching. That, again, will be, you know, engaging these in these activities where regulators previously were starting to pay more attention.
- [05:23]
Tim Miller
Yes, let's talk about the direct business interest, because you're right to mention that you received a lot of donor money from these organizations. But there have also been some reports recently, some of those companies I mentioned, Binance and others, that there might be direct business arrangements then with the Trump family and that Trump might want to put his coin on some of these platforms. And like, just give a couple of examples of like the direct financial relationship between Trump and these companies that they're. That the SEC is letting off the hook.
- [05:52]
Molly White
Absolutely. So first, for example, recently there's been reporting that the Trump Associated World Liberty Financial Project, which is a crypto platform that is majority owned by Trump and he receives 75% in protocol revenues, they've recently launched a stablecoin and they've reportedly been in talks with Binance to list the stablecoin on the Binance platform. That's happening simultaneously with the SEC case against Binance being stayed with talks with Binance to remove a compliance monitor that was installed at the company because the company pleaded guilty to criminal violations of anti money laundering laws and sanctions. And so there's sort of this two way relationship happening there with finance. It seems the same types of activities are happening with partnerships between the Trump media Group and crypto.com they just announced a partnership with crypto.com to launch some exchange traded products that will be offered through this new Truth Media financial platform. And literally three days after that announcement, crypto.com got the news that the SEC was dropping an investigation into the company. So I mean those are just two examples.
- [07:15]
Tim Miller
Like what, what, so what kind of products are they going to put on the platform? Like the, this is the, and this is the, the Truth Social company. Because obviously there are multiple companies there. Yeah, right.
- [07:26]
Molly White
Yeah. So this, yeah. Truth Media is the company, the parent company of the Truth Social platform. They've recently I think in January announced that they were going to be launching this fintech brand called Truth Fi. And the details have been a little bit scant, but they've mostly talked about launching what they call America first investment products which will be exchange traded products containing both traditional and crypto assets that they consider to be America first in some way, which is a little ironic given that their partner Crypto.com is a Singapore based company. But that's maybe neither here nor there.
- [08:00]
Tim Miller
Yeah, well it's crypto.com is Singapore based company and obviously that direct grift. Again, just going back to the intro, totally unprecedented in American history that the US sitting president would be doing a financial deal with a company that was dealing with an oversight enforcement from the government and then they would get relieved of that oversight enforcement. There's nothing like that in our history. But at least they're a Singapore based company. They're also doing deals with Chinese and Russia based, you know, crypto like efforts. And we've mentioned, I mentioned Justin sun who put money into. Which one was it? Was that the, was that the World.
- [08:42]
Molly White
Liberty Financial, World Liberty Financial product? He purchased $75 million worth of the tokens issued by that company in exchange for an advisory position. And shortly afterwards the SEC enforcement case against him was stayed pending resolution.
- [08:58]
Tim Miller
And then there is this DWF Labs, which I guess is a Russian company that is opening offices in New York to work on the new stablecoin with Trump and Wyckoff. So are there other examples of that that you've seen? Chinese and Russian, you know, crypto, either.
- [09:18]
Molly White
Individuals or companies, those are the primary ones. You know, the Chinese and Russian involvement with crypto is a little bit fraught given that those countries both have somewhat nebulous relationships with cryptocurrency and crypto mining in those companies or in those.
- [09:34]
Tim Miller
In what way? Explain for the people.
- [09:36]
Molly White
Well, crypto mining is prohibited in China. And you know, Justin sun is essentially a fugitive from China almost in that he launched a ICO in the country shortly after initial coin offering in the country, shortly after the country outlawed it. And so, you know, he sort of left to avoid any sort of, or seemingly to avoid any sort of action there. And I mean, there are certainly, you know, Russia has been warming to cryptocurrencies as they have faced more sanctions from the United States. They've, you know, there have been reports about them using cryptocurrencies in their own trading and so on and so forth. So the relationships with, you know, between those countries and crypto is sort of fluid and ever evolving. But there aren't that many Chinese or Russian crypto companies that do direct business with the United States.
- [10:28]
Tim Miller
One of the other things from your article that I hadn't seen, maybe it's been out there, but is that there's a lot of attention around the Trump and Melania coins that were offered the Trump coin right before the inauguration. The Melania coin was right after. I forget exactly. Right around the inauguration time.
- [10:46]
Molly White
Yeah, it was only a couple days after the inauguration. The early Trump coin. Yeah.
- [10:50]
Tim Miller
Yeah. But it seems like the Trump controlled wallet has cashed out a couple of million both of the Trump coin and the Melania coin. And we're coming up on another opportunity for them to take out hard cash from those offerings. Talk about that a little bit.
- [11:08]
Molly White
Yeah. So it's really challenging to sort of put a hard number on valuations around meme coins. I wrote about this a little bit around the time because people were reporting that Trump had made billions of dollars off of these mem coins, which was not accurate. But there was a good, there was some good reporting from the Financial Times recently that estimated Trump has cashed out around $350 million from the Trump meme coin alone. Following that reporting, we're seeing more movements of funds from Trump controlled crypto wallets that are being traced on chain. And then the Melania token has not been as lucrative as the Trump token, but we're still seeing money, money moving in wallets that are controlled by the team that launched those tokens. So $30 million of funds that were supposed to be allocated to a, what they were calling a community wallet were recently moved in association with the Melania token. So, I mean, there's real money moving around as a result of these tokens, which Trump has been able to sell to his base.
- [12:13]
Tim Miller
Is there any, um, at this point, like rumors or other evidence of like, who is putting money into these, into the Trump owned coins? I mean, that's another part of this. It's like very, very opaque at this point. Right?
- [12:26]
Molly White
Yeah. I mean, that's the challenging thing about blockchains. You know, despite the fact that everything is public and traceable on chain, you still have to try to connect these wallets, which are, you know, pseudonyms essentially, with actual individuals or trading firms or whoever might be behind it. And that's challenging to do. So there's not been a ton of insight, I would say, into who is buying these Trump tokens. Certainly some of it is the usual crypto traders who are, you know, experienced traders that are essentially trying to time these launches. We saw a lot of automated trading happening with the Trump tokens, which is pretty normal for meme coins, where, you know, people try to buy it earlier than you could humanly do it and then sell it at a profit. But as far as, you know, major buyers, it's really not been super clear.
- [13:18]
Tim Miller
What do you. Any thoughts on the ramifications of all this deregulation at this point or like, what else we can expect?
- [13:28]
Molly White
Yeah, I mean, I think the ramifications are going to be very serious for people who are involved with the cryptocurrency world, you know, who are trading crypto or who are hoping to invest in maybe crypto businesses. I think it's a very, very risky time to be doing that. I mean, it always has been. But, you know, there really are no Apparent rules right now. And the rules that are, you know, discussed to be, to be coming into, you know, that are being written in Congress right now are being written by the cryptocurrency companies. And so, you know, I don't think it's reasonable to expect that these rules will be anything other than benefiting those companies, likely at the expense of everyday people who might use their services. More broadly speaking, I think there's real risk to people who have no involvement with cryptocurrency. That's something I've really been trying to underscore because I think there's this knee jerk reaction by some people when they see reporting about Trump's Meme Coin and his crypto involvement that's like, well, you know, if you're dumb enough to buy the Meme coin, you deserve to lose it all. And why should I care? You know, there's more important things to worry about. But I think that this regulatory shift is actually very dangerous to everybody, regardless of whether you hold crypto or have any involvement in that sector, because they are working to pare back regulations around banks getting involved with crypto, pension funds and other retirement programs investing into cryptocurrencies. So, you know, there are ways in which they are really working to integrate the crypto crypto sector, which is notoriously volatile. It blows up practically on a regular basis with the traditional economy, with traditional finance. And so, you know, we could really see contagion from a crypto blow up, you know, hitting the traditional financial system in a very serious way, especially as the sector grows and its integration with the economy grows and, you know, its integration with the government, which is talking about a bitcoin strategic reserve, for example, and, you know, getting direct exposure to crypto assets.
- [15:45]
Tim Miller
Is there any more generous assessment of all this? And I have friends at some of these companies who get mad at me when I talk about this and call and say, look, you know, we, you know, the, the Democratic administration, the Biden administration and Gensler didn't understand crypto and we need to get people in there that do understand it so we can have smart regulations that, you know, allow people that are serious investors and Bitcoin and other products that are more legitimate, you know, so that there can be an environment for them to grow and we can, you know, foster innovation and blah, blah, blah. Like, do you, are you sympathetic to that argument at all?
- [16:21]
Molly White
Yeah, I mean, that is a very good summary of the sort of story that comes out of the crypto world. I'm really not very sympathetic to that. Argument. I mean, we all lived through the FTX collapse, which happened under Biden and the regulatory regime that they claim was too strict. You know, we saw the collapse of many crypto companies, including American ones. You know, people will claim that ftx, oh, is an offshore company. The regulators maybe couldn't have done anything. But you know, American companies, Celsius, for example, was a big, an American based crypto company that collapsed and there were, you know, under, there was serious fraud happening there. That was what was happening with these so called overzealous regulators who were supposedly stamping down innovation in the industry by, by being too aggressive. And so I don't put much stock in that claim because I think if anything the regulators were not doing enough. There was not enough oversight of the industry. I also really question whether the crypto industry realizes that this deregulatory push, you know, creating this total wild west for the crypto industry is actually good for the crypto industry. You know, I think that a lot of them have not really thought this out very much and they haven't realized that when there is no trust at all in the markets or in, you know, a business, not just up and scamming you and running off with your money, people don't want anything to do with that. You know, people understood that crypto is risky, it's volatile. You know, they're generally speaking willing to, you know, operate under those conditions. But when there is the, when there's no trust that someone might not just take your bitcoins and run away with them, people don't want anything to do with it. And so I think that by, you know, people are dreaming of this sort of, you know, innovation explosion as all the guardrails are removed. But I think we're going to really just see an explosion in the same type of scamming, predatory behavior, you know, malfeasance in the crypto world that has already given it under the previous administration, which was supposedly overly aggressive in terms of regulation, this reputation that it is scam central and that it's nothing but a grift.
- [18:47]
Tim Miller
Yeah, I'm with you on that. But I push back always on these folks when they say that is like, look, if there was, if Walmart, you know, had a section that had legitimate businesses like Bitcoin or whatever, where you couldn't, where you could buy products and feel good about it, and then there were like three other sections of the store where if you went over there, they would steal your wallet. It's like nobody would go into Walmart right? That's not how you create a business that works. All right, well, appreciate it very much, Molly. We'll be having you back. The article again is Trump's newest grift, building a cryptocurrency empire while destroying its regulators. Her newsletter is citation needed. It's really important stuff, and I appreciate you coming on the Bulwark YouTube page.
- [19:25]
Molly White
Thank you for having me.