Original Title: Crypto’s First Family Is Deepening the Swamp
Written by: Lionel Laurent, Bloomberg Opinion Columnist
Translated by: J1N, Techub News
Eric Trump, the second son of U.S. President Donald Trump, believes now is a good time to buy Ethereum, claiming that his support for Ethereum has driven a brief increase in its price. However, it is also a good time for politicians and regulators to take action to establish stricter regulations targeting the cryptocurrency business actively promoted by the Trump family and its affiliates, which is rapidly expanding and has serious conflicts of interest with regulators.
It is now clear that the Trump family not only wants to pave the way for the U.S. to support cryptocurrencies through more favorable regulations, but they also want a piece of the pie. The decentralized finance platform World Liberty Financial, supported by the Trump family, has established a cryptocurrency reserve that includes approximately $340 million worth of Ethereum. According to Reuters, Trump has issued billions of Memecoins out of thin air, generating nearly $100 million in transaction fees for presidential-related entities. Additionally, Trump's Truth Social platform is also expanding its business and plans to enter the financial services sector.
This is not the kind of small-time investment typical of an ordinary family; based on current spot prices, the Memecoins held by entities connected to Trump have a book value of about $14.9 billion. If these numbers are staggering, the associated risks are equally alarming. As investors and industry insiders seek to curry favor with the Trump team by purchasing its tokens, it ultimately leads to an escalation of power transfer and corruption. At the same time, it brings about moral hazards, as the world's most powerful individuals and their relatives promote Memecoins while being able to bear the risks, leading more people to invest in Memecoins without understanding their risk tolerance. When someone tells Trump how much his Memecoins are worth, he responds almost indifferently, "Billions of dollars? That's just pocket change."
Therefore, when Eric Trump hints on Twitter that "Ethereum is worth buying," he is not just speaking casually, as he seems to have realized when he deleted the phrase "You can thank me later" from X. Whether by coincidence or design, World Liberty has put his thoughts into practice, increasing its holdings of Ethereum worth about $55 million after Trump's tariff threats triggered a sell-off over the weekend. This was done after the platform transferred most of its reserves to Coinbase, although they deny having any plans to sell. At this stage, the conspiracy theory that the Trump team is harvesting the cryptocurrency market is unfounded; after all, Trump's tariff policies are not favorable to cryptocurrencies, and his son's tweets have a very limited overall impact on the market. However, given that this is the third week of the new administration, the atmosphere of a "banana republic" is already quite thick.
Democratic nations have existed long enough to establish institutional safeguards against political conflicts of interest. The question is whether the authorities have the determination to truly enforce these measures. The U.S. pushed for reforms in official ethics and transparency after the Watergate scandal, enacted the 2012 STOCK Act to combat insider trading, and has had the Foreign Emoluments Clause since the Constitution. Cryptocurrencies cannot be an excuse to evade regulation: the EU's latest digital asset rules explicitly include provisions against insider trading and market abuse. Moreover, former Democratic Congresswoman Tulsi Gabbard, nominated by Trump, has agreed to sell her stocks and cryptocurrencies to comply with relevant regulations.
If the authorities do not effectively enforce and strengthen measures, then regulation of behavior will be meaningless. Trump seems unconcerned about this. Howard Lutnick, Trump's nominee for Secretary of Commerce, did not clarify whether he would avoid participating in cryptocurrency working groups due to his company Cantor Fitzgerald holding convertible bonds related to the stablecoin Tether. There are issues of self-dealing within institutions that could lead to economic losses in the future; for example, when the German fintech company Wirecard AG collapsed, its regulator BaFin's staff were suspected of insider trading in Wirecard's stock instead of fulfilling their supervisory responsibilities. We hope that David Sacks, the cryptocurrency chief appointed by Trump, will truly deliver on his promise to strengthen consumer protection.
At the very least, a basic requirement for all politicians should be that they must place all their investments into "blind trusts" on the day they take office, while also imposing restrictions on their relatives' investments. "Blind trusts" refer to a form of asset management where politicians hand over their assets to a third party for management, thereby avoiding any influence on investment operations to prevent officials from profiting from their power. This is a viewpoint proposed by Garen Markarian, a corporate governance expert at the University of Lausanne. What is concerning is that the prevailing attitude among the elite seems to advocate for reducing oversight rather than strengthening scrutiny of politicians and their related investments.
Trump is teaming up with the cryptocurrency circle to vehemently criticize the so-called "de-banking" phenomenon; meanwhile, Musk is allowed to set his own rules, using DOGE as a weapon against the government. This is a classic case of overconfidence, especially considering that this president was once convicted of fraud. It also sends a signal of arrogance to the general public, showing that the privileged class with insider information is treated more leniently by the law. The regulatory chaos in the cryptocurrency sector is glaringly obvious, yet there are few signs of action to clean it up.
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