The David Frum Show (The Atlantic)

Episode: How Crypto Is Turning America Into a Kleptocracy

Date: December 17, 2025
Host: David Frum
Guest: Will Thomas, Professor of Business Law, Michigan Ross School of Business

Overview of the Episode

This episode delves into the alarming convergence of cryptocurrency technology and weakening American public integrity law, examining how crypto is facilitating a new era of political corruption—or "kleptocracy"—in the United States. Host David Frum speaks with legal scholar Will Thomas about how regulatory gaps and Supreme Court rulings have created fertile ground for corrupt politicians to legally amass vast fortunes using crypto tools, with particular attention to recent high-profile examples from the Trump administration. The episode also explores potential legal reforms and the broader democratic implications of unchecked crypto-influenced corruption.

Key Discussion Points and Insights

The Evolving Landscape of Public Integrity Law

• Supreme Court's Narrowing of Corruption Laws

  • Recent Supreme Court decisions, most notably McDonnell v. United States (2016), have made it extremely difficult to convict politicians of bribery unless an explicit quid pro quo ("this for that") is proven.
  • [15:00] Frum: "The things that are easy to prove is that the meeting happened and the favorable result ensued, but... the Supreme Court has made it very difficult to prove."

• Three Legal "Pathways" for Corruption

  • Will Thomas outlines how donors can now safely give money to politicians:
    1. Before election/victory: As “support.”
    2. After the favor is done: No legal risk unless pre-arranged.
    3. Blurred connection: General favors and gifts not formally linked.
  • [17:42] Frum: "I hear from you, I hear three opportunities, three fantastic opportunities to advance my case with my governor."
  • [18:33] Thomas: "I think that's right. I think you've got three pretty solid pathways these days to avoid getting in trouble."

Cryptocurrency as a Tool for Corruption

• Why Crypto Is Attractive to Corrupt Actors

  • Crypto offers pseudo-anonymity, operates amid regulatory ambiguity, and enables near-untraceable transfers of value to politicians or officials.
  • Meme coins and stablecoins facilitate both active and passive enrichment.
  • [19:09] Thomas: "Crypto is this cheap sort of anonymous piece of financial technology... there's not a lot of oversight."

• How Crypto Transactions Enable Bribery

  • Bribe givers can:
    • Buy meme coins linked to the politician (proceeds go directly to them).
    • Use anonymous wallets, so only the recipient knows the real source.
    • Use stablecoins for more reliable cash-out value, reducing risk from price volatility.
  • [23:14] Frum: "So cryptocurrency is a bunch of computer code that has a unique location and that you persuade people that this computer code has some value... but it's essentially computer code that exists on computer systems and is traded back and forth."

Real-World Consequences: The Trump Example

• Trump’s Use of Meme Coins and Stablecoins for Self-Enrichment
  • Since returning to the presidency, Trump has reportedly made hundreds of millions—possibly over a billion dollars—by issuing meme coins (Dollar Symbol TRUMP) and stablecoins.
  • [30:35] Frum: "In fact, we have not just a governor, but a president of the United States and his family engaging in these operations. Do you have any doubt that what President Trump has been doing this year is legal?"
  • [31:29] Thomas: "Yes, I believe that all of this is legal unless we were able to find out the exact, narrow, exacting kind of quid pro quo facts."
• Legal Loopholes
  • Actions are legal due to both narrowed definitions of official acts/corruption and deliberate deregulatory actions under the Trump administration.
  • [33:18] Frum: "...the Biden administration figured out these things are poison. They have no legitimate use... The Trump administration, second Trump administration figured out I personally can make a billion dollars if I say let them rip."
• Precedent for Future Politicians
  • Worry that Trump is showing a "playbook" for future self-enrichment by officeholders.
  • [36:05] Thomas: "Our worry is... Trump playing the role of entrepreneur, where he is showing future politicians exactly the playbook to run if they want to sort of follow in his footsteps."

Crypto’s Broader Dangers and Regulatory Issues

• Crypto as a Vehicle for Crime

  • Used for terrorism, drug trafficking, and money laundering (e.g., Binance convicted for facilitating such crimes).
  • [26:03] Thomas: "...Binance founder and Binance were convicted of federal crimes, including money laundering... this is deeply harmful to national security."

• Structural Problems with Stablecoins

  • Stablecoins mimic banks without proper regulation, audits, or insurance, recreating risks of classic bank runs (It's a Wonderful Life analogy).
  • [38:29] Frum: "Stable coins are like Bailey Savings and Loan, without the federal deposit insurance and without the proper system of auditing."

Fixes and Policy Solutions

• Policy Recommendations

  • Regulate all cryptocurrencies as securities—subject to full SEC oversight and anti-fraud provisions.
    • [42:17] Frum: "We can take is pass a law that says cryptocurrency shall henceforth be known as crypto securities."
  • Enact a “crypto fraud statute” directly tailored to crypto’s unique challenges.
  • Clarify and expand corruption statutes to include after-the-fact gifts, ambiguous favors, and tighten the link between real-world context and legal liability.
    • [44:57] Thomas: "We can knock out some low hanging fruit here by looking at things like dollar amounts, by looking at connections, behavior... we can just be like context sensitive human beings."
  • Treat stablecoins as deposit-taking institutions, requiring auditing, insurance, and US domiciling.
    • [47:50] Frum: "I think we need to see a stablecoin is a deposit taking institution..."

• Broader Financial Reforms

  • Improve cross-border money transfer systems to remove excuses for stablecoins’ necessity.
    • [50:48] Thomas: "Thinking of crypto in that way is it's a trillion dollar solution to a million dollar problem."

Notable Quotes & Memorable Moments

• On Supreme Court’s Role in Corruption:

  "The Supreme Court has made it very difficult to prove [corruption]."
  — David Frum [15:00]

• On How Easy Corruption Has Become:

  "It's gotten a lot easier both for decisions like McDonnell... the advice I'd be giving a client is... be as transactional as you want to be. And chances are the law is going to protect you."
  — Will Thomas [16:06]

• Crypto’s Irony:

  "...the sort of deep irony of crypto is it's built atop the system that's supposed to be giving us, like, radical transparency... and yet the sector is notorious for being secretive and providing anonymity."
  — Will Thomas [20:15]

• On the U.S. Legal Double Standard:

  "Maybe in Japan, if you take the money after doing the favor, they still say, sorry, we're not such idiots that taking the money after the favor means that we don't see what happened here. That's only in America that’s going to be a defense."
  — David Frum [36:20]

• Closing Reflection on the Technology:

  "A technology invented by science fiction fans and used by fans of The Godfather."
  — David Frum [51:39]

Timestamps for Key Segments

• Defining the Problem: Supreme Court and Corruption — [12:05–17:42]
• How Crypto Facilitates Legal Corruption — [17:43–23:58]
• Explaining Meme Coins and Stablecoins — [21:06–28:28]
• Stablecoins, Banking Analogies, and Policy Solutions — [37:05–47:50]
• Policy Recommendations and SEC Role — [42:03–48:50]
• Broader Dangers and Other Solutions — [47:51–51:55]

Episode Tone & Takeaways

The tone is both expository and alarmed, mixing Frum’s acerbic, skeptical questioning with Thomas’s measured, clear legal explanations. Both speakers employ vivid analogies (bank runs, science fiction, mafia movies) to make complex points. There’s an undercurrent of frustration and warning: the legal system’s design flaws and de-regulation have enabled a powerful, hidden new frontier of corruption with real-world consequences for democracy.

Brief Book Interlude

• Frum briefly discusses "Lord Jim" by Joseph Conrad, reflecting on courage and responsibility, inspired by recent tragedies (starts at [51:57]).

This episode offers a thorough warning: As crypto outpaces regulation and public integrity law erodes, American democracy faces a growing threat from legalized, almost invisible self-enrichment. Without significant legal reforms, the playbook is set for future leaders—and the public may remain none the wiser.