Title: What to Know About Trump's Embrace of Crypto

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Brian Lehrer: It's the Brian Lehrer Show on WNYC. Good morning again, everyone. Now rising in Washington as a controversy and possible corruption scandal involving President Trump, the way he's personally profiting off the crypto industry. Once a crypto skeptic, Trump changed his tune and said things like this on the campaign trail last year.

President Trump: I'm laying out my plan to ensure that the United States will be the crypto capital of the planet and the Bitcoin superpower of the world.

Brian: Now, by some estimates, he has increased his personal wealth by billions of dollars by helping launch a crypto exchange called World Liberty Financial last October, issuing Trump and Melania meme coins since and also from a $2 billion investment deal he recently announced with an Emirate investment fund backed by the government of Abu Dhabi, as reported in The New York Times. Is this okay, or is this corruption? Trump says no, it's not corruption because his sons, not he himself, control the company. Others, like Senator Elizabeth Warren, say yes, it is. She refers here to the big crypto exchange called Binance.

Senator Elizabeth Warren: Binance and the foreign investment firm are going to use Donald Trump's stablecoin to finance their transaction, essentially giving Trump a cut of that $2 billion deal. Boy, looks like corruption, smells like corruption.

Brian: Senator Elizabeth Warren will explain stablecoin, and it's relevant because, sure enough, a crypto-related bill regarding stablecoin that had bipartisan support got stuck without enough votes in the Senate yesterday, now that all this has emerged. With us now, David Yaffe-Bellany, technology reporter for The New York Times, covering the crypto industry from San Francisco, and he's been very much on this story. David, thanks for joining us. Welcome to WNYC.

David: Thanks so much for having me.

Brian: I think we should do some 101 for people here. Why was Donald Trump once a critic of cryptocurrency?

David: Donald Trump's an old-fashioned businessman. Obviously, he made all his money in real estate, and like a lot of traditional business people, I think he was just instinctively skeptical of this new type of money. He said that it seemed like a scam, that it would undermine traditional currencies like the US dollar, and that it would be used by criminals to conduct drug deals and that sort of thing. That was the source of his skepticism, at least. That's how he articulated it over the past few years.

Brian: When and why did he change?

David: He started to change really on the campaign trail last year, and it was a confluence of factors that drove that. First of all, the crypto industry was spending a huge amount of money on congressional races across the country and also funding super PACs that were supporting Trump's candidacy. There was a clear financial incentive for him to change his tune on crypto. At the same time, his two older sons, Eric and Don Jr., were becoming more and more interested in the crypto world.

The way that they explain it is basically, after January 6th, they felt like they were getting locked out of the traditional financial system. Banks didn't want to work with them, and so they needed some type of alternative form of finance. That's how they turned to crypto. Trump has his sons in his ear about crypto, and he's got all of this crypto money pouring into the campaign, and that adds up to a total 180 on crypto policy.

Brian: What's this company, World Liberty Financial, and what is the president's relationship to it?

David: This company was unveiled last year by the president and his sons. Basically, it was pitched as a kind of crypto bank, a place where people can go and use digital currencies to borrow and lend money. Now, that actual financial platform hasn't been released yet. So far, it's just a cryptocurrency that's related to the platform that's been sold to the public, but this bank-like business doesn't exist yet. That's the pitch for the company. Trump is listed on the marketing materials as the chief crypto advocate for the company, but really, his role is promotional, and also a business entity tied to him and his family gets an enormous cut of the revenue from sales of that World Liberty cryptocurrency.

Brian: What are these meme coins, as they're called, named Trump and Melania, and when were they issued?

David: This is a separate branch of Trump's crypto efforts. You've got World Liberty Financial on one side, and then on the other, you've got this meme coin venture, which is run by a long-time Trump business partner named Bill Zanker. The meme coin debuted a couple of days before the inauguration. It was really astonishing. I remember sitting at home and seeing President Trump post on Truth Social that he was launching a meme coin.

Meme coins in the crypto world are really controversial. They're basically speculative assets that are tied to an online joke or a celebrity mascot. They don't have any ostensible function besides gambling, essentially. To see the president create his own meme coin and urge the public to buy it was really pretty astounding, and the fact that he did it just a couple of days before the inauguration, too.

He launches that meme coin, it skyrockets in value as people buy it, and then his wife, Melania, launches her own meme coin a day or so later. Once the Melania coin was in the market, crypto investors started to get skeptical. They thought that this was maybe a cash grab. They worried about the market for Trumpy meme coins becoming oversaturated, and soon, the price of both the Trump coin and the Melania coin started to crash.

Brian: How much money has Trump personally made from any of this since the launch of World Liberty Financial just before the election, as far as you can tell?

David: It's hard to tell exact figures, but as best we can see on the World Liberty Financial side, they sold $550 million worth of these tokens. Under the terms that the World Liberty Financial website lays out, the Trump family business entity gets a 75% cut of that token revenue. That's already would be in the hundreds of millions of dollars. Then on the meme coin end, the Trump family sits on this large stash of meme coins, which has a value on paper.

I think right now the meme coin is trading at about $12, so you can multiply the millions and millions of meme coins that the Trump family has by 12, and you would get a dollar value. It's really theoretical, because if you tried to sell it, the market would collapse. Trump family also collects transaction fees every time the meme coins are traded, and that transaction fee total is in the territory of $300 million. You put it all together, and you've got gains that may not total a billion yet, but are approaching it.

Brian: Listeners, any questions or comments about Donald Trump and the crypto industry on whether this counts as corruption? We'll get into what people are saying on either side of that. Anybody listening right now who invested in anything Trump-related in crypto markets or anyone else? 212-433-WNYC, 212-433-9692. We will also get into this bill for sure that did get stuck in the Senate yesterday, having to do with crypto, that looked like it was going to pass easily with bipartisan support until some of these stories, including I think David's own in The New York Times, emerged pretty recently. 212-433-WNYC, 433-9692. David, why do some people see this as corrupt?

David: Trump is benefiting personally, and his family is benefiting personally from crypto ventures at the same time that his government sets crypto policy. He has the ability as president to shape the fortunes of the crypto world, and he's benefiting from it at the same time. That's a clear conflict of interest.

Brian: How is he shaping it?

David: He's done all sorts of things since he took over as president. The first was really a rhetorical shift. The Biden administration was very aggressive in policing crypto. Trump, starting on the campaign and continuing to his first weeks in office, was much, much nicer about the crypto world. He talked about how he wanted to make it a center of the US economy and turn America into the crypto capital of the planet, and soon, he started taking substantive steps to act on that.

He appointed a chair of the Securities and Exchange Commission who is sympathetic to the crypto industry, has worked with crypto companies before. The SEC proceeded to drop a series of lawsuits that it had filed against crypto companies. Trump took other actions as well. He announced that the US was creating its own federal stockpile of Bitcoin and other cryptocurrencies. You can think of this as a digital Fort Knox consisting of Bitcoin and other types of crypto. All those steps have boosted the crypto market. You see these coins trading at higher prices, and so the impact has been really stark.

Brian: Does somebody get hurt by that? Because someone could argue, "Okay. He thinks that's good for the country, and he's investing in it. That's not necessarily corruption."

David: The argument that critics of the crypto world make is that what's happening now is that crypto is being woven into the mainstream economy in ways that are really dangerous. I started covering this stuff in early 2022. Pretty soon after, the crypto world had its own version of the 2008 financial crisis. A lot of companies collapsed. People were arrested, went to prison. I guess we didn't see too much of that in 2008, but that's what happened in the crypto world. This disaster for crypto was pretty contained. It hurt people, but those were mostly people who had chosen to invest their money in crypto assets.

There weren't really ripple effects that spread to people in the mainstream economy who'd stayed out of crypto. What's happening now, through Trump's actions and other policy mechanisms that are at play, is that crypto is becoming more and more interwoven with our mainstream financial system. The long term risk is that next time there's a crypto crash because you've got a fraudulent company doing something shady or simply because these assets are inherently very volatile, that the effects of that crash will hurt a lot more people and could even hurt people who didn't know that they had anything to do with crypto.

Brian: One of the things raising eyebrows is this $2 billion investment from a venture fund backed by the government of Abu Dhabi. Tell us about that.

David: I was in Dubai last week for a big crypto conference called TOKEN2049. Part of the reason that I went was because two of the leaders of World Liberty Financial, Eric Trump, the president's middle son, and Zach Witkoff, who's the son of Steve Witkoff, the White House Middle East Envoy, were going to appear on stage to talk about World Liberty. In front of this crowded auditorium of conference attendees, they announced that a venture firm called MGX, which is backed by the Abu Dhabi government, essentially it's an arm of the state and the UAE, was spending $2 billion to use one of the Trump cryptocurrencies, one I actually haven't mentioned yet, it's called a stablecoin.

They were going to use that stablecoin to conduct a major industry business transaction. This, in some ways, is really the most astonishing development so far in the Trump crypto project, because you basically have a foreign government using a Trump cryptocurrency in a way that directly benefits the Trump family's bottom line. It's exactly the potential foreign influence over a president through business transactions that critics of this administration have been really worried about, and it was announced totally out in the open. I was left wondering what would Republicans have said if Obama was doing something like this. It would have been a massive scandal.

Brian: Is Abu Dhabi seeking some kind of favors from US policy?

David: It's not totally clear that there's an explicit quid pro quo here, and I should stipulate that in all my conversations with World Liberty, they have maintained that there's no quid pro quo anywhere, nobody who's invested in the company is asked for any sorts of political favors, and I'm sure they would say the same of this UAE connection. The Emirates are in all sorts of high-stakes discussions with the United States about many different things, you know, in relation to AI policy and chip manufacturing.

Sheikh Tahnoon, who is a important political figure in the UAE, and who helps run this venture fund MGX, was actually in the US a few weeks ago, meeting with Trump meeting with cabinet members. It's clear that there's significant policy discussions going on between the two nations. Then there's this investment happening in parallel.

Brian: If you're just joining us, we're talking to David Yaffe-Bellamy, technology reporter for The New York Times covering the crypto industry from San Francisco. He's been very much on the story of the rising controversy surrounding how President Trump is benefiting from crypto and accusations that that's a form of corruption. Gabe in Queens, you're on WNYC. Hi, Gabe.

Gabe: Hi, Brian. Thanks for having me. My comment was I am involved in the cryptocurrency world, so I was following and investing with the whole Trump coin launch. It was a super interesting turning point for crypto because some people made a ton of money, a lot of them were insiders who got the information early. When I say a lot of money, I mean a lot of money. Most other people lost. They bought high and sold low. It's very obviously a grift. A lot of meme coins, the way that works is they're explicitly grifts. It's all insider-based.

Something interesting I've noticed is a lot of people in the crypto world were very pro-Trump because they thought he was going to deregulate the crypto sphere, and they thought it'd be good for their money. I have seen a lot of people in that world turn against him because of the market uncertainties caused, the tariffs, everything has made the economy shaky, and it's been bad for their money. I think it's portentous for what's to come if you see people who elected him because it'd be good for their money, slowly starting to turn on him.

Brian: Interesting, Gabe. Thank you. David, can you confirm some of that? Is it possible that the president himself is making a lot of money on crypto, while other people in it, secondary to him in some ways, are losing?

David: Yes, this is definitely true. By and large, the crypto industry enthusiastically embraced Trump, but a lot of industry executives that I talked to were really disgusted by the meme coin launch. A lot of these people consider themselves serious crypto types who disapprove of meme coins in general. Then to see the president embark on what looked to them like a cynical cash grab on the eve of his inauguration was really appalling. That criticism has been bubbling up since then.

A lot of these people, of course, are unwilling to speak up publicly about this because Trump's a highly transactional president, and they don't want to be on his bad side. This is definitely a line of concern that I've heard a lot in the crypto world. It's grown louder and louder as some of these other business ventures have gained steam in recent weeks.

Brian: By the way, does this fit into a pattern of profiting personally in multiple ways from his presidency, or is it just crypto?

David: Look, I'm not an expert on Trump's other business dealings, but obviously, in the first term, this was a persistent line of criticism from Democrats and other people who questioned the administration. The Trump Hotel in Washington was a place where lobbyists or foreigners visiting the US could gather on trips to the Capitol and spend money in ways that would directly or indirectly benefit the Trump family. That was obviously a source of concern in the first term.

This is like putting the Trump Hotel on steroids. The amount of money is just orders of magnitude greater, and the reach is also so much more expansive. Anybody around the world can buy these Trump cryptocurrencies. In fact, we've identified foreign investors in all sorts of locations who've bought cryptocurrency in a way that benefits Trump. These are people who are barred under US law from donating to a campaign or to a president's inaugural fund. It's essentially creating a new avenue for overseas nationals to contribute to the president's bottom line.

Brian: Somebody's texting saying, "This isn't just Trump. Remember, President Biden introduced Hunter Biden to somebody he wound up doing business with." I think it was before Joe Biden was president, but nevertheless, he was, or at least had been, vice president. Tom in Brooklyn is calling with another take on that. Tom, you're on WNYC. Hello.

Tom: I'd want to know who turned off the hypocrisy meter on the Republicans who were spending months and years actually gnashing their teeth about the $5 million that Hunter Biden allegedly gained through his father's role as president. Why aren't there any Republicans loudly objecting to the Trump juniors and even the president himself profiting from all of these kinds of machinations? What happens to ethics, and what happens to just equality between bad doings on both sides?

Brian: Tom, thank you very much. What about everybody does it as a defense, David? The Republican Congress did investigate whether Biden himself, Joe Biden, was having ill-gotten gains from anything that Hunter was doing, and they couldn't find anything. Is this really unique in terms of what presidents have done?

David: It really is unique. For a recent story, we consulted a whole bunch of presidential historians and laid out for them what Trump and what his family is doing in terms of crypto. We asked, is there any precedent for this? The answer that we got back was essentially not since slavery. Obviously, there are presidents who own slaves, and also we're running administrations that supervise the slave trade. Since then, there hasn't been a conflict of interest this stark. That was the answer that we got from [crosstalk]

Brian: The Trump defense, which you quote in your article, is that his kids control the crypto exchange firm, not him. How much does that insulate him?

David: It insulates him to some degree. As president also, he's not subject to these conflict of interest laws. There's a layer of legal protection there, but he's still benefiting from this. Gains from this go into the trust that his assets are kept in, and so there is a direct benefit to him. The other thing I'll say is that he's much more directly involved in these sorts of ventures than President Biden ever was in anything that Hunter was doing. Just look at Trump's Truth Social feed. He's been vocally promoting an upcoming dinner for the top investors in his meme coin. He announced that the top 220 investors in the Trump meme coin would get to have dinner with him. He's been promoting a contest on his social media feed.

Brian: How different is that from regular campaign finance, where people can donate a boatload of money to somebody who's running for office and have dinner with them as a result?

David: This is a really crucial point, I think. It's really fundamentally different because when you donate to a political campaign, that money has to be spent on political activities. It's not just $1 million that goes into a candidate's pocket to spend on whatever. The money that these Trump business ventures generate for him and for the family, that's money that could be spent on anything. It's much more of a direct contribution personally than a political donation. I think you're also right to point out that some of this kind of pay-to-play aspect of politics is just baked into our system at this point, post Citizens United. There are plenty of people who think that on its own is scandalous.

Brian: Pat in Uniondale, you're on WNYC. Hi, Pat.

Pat: Hi. Thank you. I'm not a fan of crypto because of the fact that it doesn't invest in anything, it's just a gamble, and because of the stress it puts on our electric grid. Isn't it a conflict of interest that Trump's tariffs are making the market go up and down and that people will turn to crypto and that enriches him?

Brian: Do you see a connection there, David?

David: It's interesting. Actually, a lot of people in the crypto world are upset about the tariffs because the price of crypto moves up and down in parallel to traditional stocks, despite the kind of aspirations of the crypto world to be its own separate thing. The tariffs actually really push down the price of Bitcoin and other assets. We had the other caller ask about crypto folks getting annoyed with Trump using the meme coin to benefit personally. There are also plenty of crypto people who got annoyed with him over the tariffs.

Brian: That caller also asked, "Is there anybody investigating the conflict of interest?" Did you say a couple of minutes ago that the president is exempt from conflict of interest laws?

David: Yes, he is legally protected. At the same time, though, if he were found to be acting fraudulently in some sort of way, he could potentially be subject to some sort of investigation, or at least his family could. Here's the thing, and this is why it's a conflict of interest. Trump appoints the head of the SEC. The SEC has issued guidance recently that says that meme coins are not securities under federal law, and that the SEC doesn't govern them essentially. It's highly unlikely that you would see a federal investigation into any of these crypto ventures while Trump is president.

Brian: The president is uniquely exempt? That is, members of Congress and other elected officials are not exempt from conflict of interest laws, but the president is?

David: I believe so, though I can't say that with 100% confidence. I would have to check up with some of our legal sources.

Brian: All right. Now let's get to this bill that had bipartisan support and got stuck in the Senate yesterday. Here's Trump in March promoting a policy towards something called a stablecoin.

President Trump: I've also called on Congress to pass landmark legislation creating simple, common-sense rules for stablecoins.

Brian: What's a stablecoin, and how does it relate to everything else we've been talking about?

David: Traditional currencies like Bitcoin or Ethereum constantly go up and down in value. They're like stocks. One day they'll be worth $10, the next day, $20. They go up and down. In the crypto world, that makes them inconvenient to use for large transactions. If you want to pay someone $1 million in crypto, you give them that in Bitcoin, the value could be less than a million the next day.

As an alternative, people in the crypto world have used something called a stablecoin, which is a type of cryptocurrency, meaning that it's not supervised by a bank. You can send it directly peer to peer, but it maintains a constant price of $1. That's why it's stable. That's what a stablecoin is. The way that they work is essentially, you an investor, have $100, you want 100 stablecoins, so you give that $100 to a stablecoin issuer. They hold it in reserve the way a bank would, and in return, they give you those stablecoins. Then when you want to redeem your stablecoins for dollars, you go back and you do that exchange. That's basically how it works.

Brian: The bill was?

David: The bill introduced in the Senate is called the GENIUS Act, and it's a piece of legislation the crypto industry has been pushing for for a long time. What it basically does is create rules for how stablecoin issuers operate, how their reserves should be maintained, that sort of thing. Crucially, what the bill would do is essentially give a mark of federal legitimacy to the stablecoin world. I think you would see a lot more big companies, even companies that aren't dedicated to crypto, start adopting stablecoins if legislation like this was passed. It would be a huge boon for the crypto industry.

Brian: A lot of Democrats were for that bill before they were against it. One listener writes, "Crypto is also flooding the Democratic coffers. That's why there's such a split among Democrats over the bill. So many Democrats are corruptly compromised by donations from crypto money." Jenny in Brooklyn wants to go further with that, I think. Jenny, you're on WNYC. Hello.

Jenny: Hi, there. Thanks for having me on. I've been on before. I listen regularly. I'm calling because I organize with Indivisible Brooklyn, and we were part of the pushback yesterday on the GENIUS Act and feeding calls to both Schumer and Gillibrand, who was an actual sponsor of the bill. It's just incredibly embarrassing to have-- I knew that Gillibrand was a supporter of crypto. It's been coming out in the news recently, and it's really outrageous because we know that crypto mining is so horrendous for the climate. Also, it's just so clear that it's corrupt. She's doing it, like the last commenter said, because she's getting money from that industry.

Brian: Just to say, a lot of politicians of any party would say, "Yes, they get campaign donations." That doesn't mean that's corruption, and they're not basing their policies-- I'm sure Gillibrand would argue on the basis of getting donations from crypto. I'm just saying that's what she would say.

Jenny: Right. The other part of it is that it opens up this possibility for Trump to make billions of dollars. We are already very, very disappointed with her because she supported the reconciliation bill. She is basically both on a governmental level and a personal level, opening up the bank for Trump and for his fascist regime.

Brian: Jenny, I'm going to leave it there. Technically not the reconciliation bill, but the stopgap budget bill that Schumer decided he wasn't going to try to filibuster, and Gillibrand was on board with that. What's the connection here as we start to run out of time, David, between, let's say, your articles and other things that have emerged recently questioning Trump's relationship to the crypto industry and whether it's corrupt and the fact that Democrats who were supporting the stablecoin bill suddenly turned against it and sunk it, at least for the moment, yesterday.

David: The stablecoin bill looked like it was gliding toward passage. When it progressed out of the Senate Banking Committee, it had votes from some Democratic senators, including some who had been backed by the crypto industry during the campaign. Of course, as you note, they would argue that that spending has nothing to do with how they vote. The bill really looked like it had a high chance of passage. Then these Trump business ventures started to pick up more steam. The stablecoin part of the venture became public.

Then we at The New York Times published two stories in quick succession. The first was a big investigative piece that I worked on with two colleagues, just about trying to capture the scale of the conflicts of interest the Trump crypto project has created. Then the other was reporting that I did from Dubai about this massive investment from the government of Abu Dhabi that would boost the Trump stablecoin. Those two stories circulated widely in the Capitol. They've been cited and in a lot of the public statements that some of these senators have made, and also in private discussions that they've had about the bill.

I think that reporting, combined with other factors, prompted a break among Democrats who were maybe initially inclined to support the bill, and that resulted in a failed vote on the bill earlier this week. With all that said, I think we're likely to see another vote on this bill in the coming weeks, and I don't think it's entirely dead by any means.

Brian: David Yaffe-Bellany, technology reporter for The New York Times, covering the crypto industry, thank you for such an illuminating conversation for a lot of people who are not directly involved about crypto generally and the president's maybe corrupt relationship to it. Thank you very much.

David: Thanks. It's my pleasure.

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