Trump, Crypto, Conflicts and Corruption

November 8, 2024

Trump, Crypto, Conflicts and Corruption

WASHINGTON, D.C. - In light of Donald Trump's election victory, Robert Weissman, co-president of Public Citizen, released the following statement on unprecedented election spending by crypto companies, Trump's personal conflicts of interest related to crypto, and the corruption that will likely ensue under his administration.

"Crypto corruption ran amok in the 2024 election and things are poised only to get worse going forward.

The tiny industry spent record amounts in the 2024 election.

A conflicted, crypto-promoting investment banker is running the Trump transition team.

Donald Trump and the Trump family are connected to a crypto project that make them hundreds of millions of dollars if it succeeds.

The leverage of political spending, insider connections, and a sweetheart deal for Donald Trump are likely to generate political momentum for deregulation that will, ultimately, swindle average crypto investors.

The cryptocurrency industry shattered precedent with its massive amounts of direct corporate spending to influence 2024 election outcomes - something that would have been impossible before the Citizens United decision. Direct spending from crypto companies amounted to almost half of all direct corporate spending in the election.

Crypto Super PACs spent at least $130 million on extensive ads targeting candidates who wanted to apply sensible investor protections to cryptocurrencies - or sometimes targeting candidates simply because they had not fully embraced crypto. The huge money dump certainly had an impact, likely including in Ohio, where crypto Super PACs spent $40 million and helped defeat Senate Banking Committee Chair Sherrod Brown.

The industry has suggested that the election results show public support for crypto deregulation. That's preposterous; the industry's ads focused entirely on non-crypto-related themes.

What the election showed was that the industry is willing to make massive spends to bend politicians in favor of an insecure product that has demonstrated no meaningful economic purpose.

And, politicians did get the message. Crypto deregulatory legislation suddenly gained much greater traction in Congress this summer, after the industry started spending big in primary races.

Making matters far worse are the severe conflicts of interest in the Trump administration.

Trump transition co-chair Howard Lutnick is chief executive of the investment bank Cantor Fitzgerald, which manages assets for the cryptocurrency Tether. Tether is currently under investigation by SDNY, and that case will now likely be dropped. Lutnick laughably says there's no conflict of interest for him, because he maintains a "firewall" between his transition and banking work.

And, the biggest conflict of all, unsurprisingly, concerns Donald Trump himself: The Trump family is connected to a crypto project, World Liberty Financial, that is built entirely around the Trump brand, promises the family enormous payouts if the project succeeds.

Cryptocurrency values soared after Trump's win and crypto investors have every reason to anticipate deregulation under Trump.

But buyer beware: Investors should not view deregulation as a good thing. There may well be a short-term bump in crypto values because of the vibes of the election. But over the medium and long term, investor protections help investors. Deregulation is sure to fuel bubbles that will eventually burst and cause huge losses for small crypto investors.

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