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Hey, it’s Michael. Before we start today’s show, I have a request. For an upcoming episode, we want to hear from you about this very uncertain moment in the economy. Specifically, we want your questions about it.
So send us those questions about President Trump’s tariffs, the global trade war, the wobbly stock market, and what all of it means for you. No question is too big or too small. Record a voice memo with the question, include your name, age, and where you’re from, and email it to [email protected]. And make sure in the subject line to put the word “economy.” OK, here’s today’s show.
From “The New York Times,” I’m Rachel Abrams. This is “The Daily.”
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President Trump was once a loud skeptic of cryptocurrency, who called it a haven for drug dealers and scammers. But over the past few months, he’s emerged as the industry’s biggest cheerleader. A new “Times” investigation shows just how much the president and his family have profited from that transformation. Today, my colleague Eric Lipton, on what happens when the country’s top crypto policymaker is, himself, a crypto entrepreneur.
It’s Thursday, May 1.
So, Eric, you have been extremely busy covering the business interests of the Trump family since the first Trump presidency. And back then, the focus really seemed like it was on Trump’s real estate deals, like running a hotel in Washington, DC, where people might try to stay to curry favor or trading on the Trump name in various ways while Trump was in office. But more recently, you have been looking at conflicts in the second term. And so I want to start by talking about what you have found, but also how what you have found compares to the conflicts of the first term.
In the first term, it’s almost quaint in comparison. The scale of the conflicts and the amount of money in play is so much greater. And the complexity of the conflicts are greater. It’s no longer an appearance of a conflict of interest. It is clearly a conflict of interest.
It is no longer theoretical, basically.
Yeah, I mean, the Trump family in the second term is effectively unleashed. They’re no longer hesitant about pursuing profits without restraint. And by far the biggest and most problematic conflict that my colleagues David Yaffe-Bellany, Ben Protess, and I have found as we’ve looked at this, it relates to the president’s interest in cryptocurrency.
So we have talked on the show before about how Trump has really changed direction on crypto. Originally, he actually seemed like kind of a skeptic about the industry. And obviously now not only is he a booster, but he’s actually in the business himself. So can you just talk a little bit, how did we go from Trump being skeptical and then coming around to crypto, and then to actually getting involved?
It’s a pretty radical turnaround. I mean, this is the same guy who, in 2019, was tweeting that he’s not a fan of cryptocurrency because it’s involved in drug trade and other illegal activity. And then by 2024, he’s at a cryptocurrency conference and calling how he’s going to make the United States the crypto capital of the world and is embracing crypto. And a few things happened in between that changed his tune.
And that includes millions of dollars in campaign contributions coming in from the cryptocurrency industry, which was quite frustrated with the Biden administration and its very intense regulatory posture, relative to crypto. And also just a sense that this crypto community, both of crypto enthusiasts who are buyers of crypto and the corporate world that is backing it, that was a constituency that he could pick up because it represents a slice of America, both donors and voters, that felt disaffected. And you might as well go grab them and bring them onto your side, and he did that quite effectively.
And another thing that was happening in the background was Don, Jr, his oldest son, and Eric, who are the key players in the family business operations, went to the dad Trump and said, you know what? This is a business that we actually want to embrace for political reasons and also for potentially profit-making reasons.
So they came up with two ideas. One was to launch something called the meme coin, which it’s a collectible. And the second was to launch a whole new business that they call World Liberty Financial, which is effectively a cryptocurrency bank. And those were the two business venture ideas they came up with and they began to pursue even before the election.
OK, so we’re going to get into what both of these things are. Let’s start with the meme coin because that’s the one, I think, I’m a little bit more familiar with. I’m thinking of the dogecoin, the picture of a dog on this coin that I think was launched as a joke. But can you just explain to me and everybody else, what exactly is a meme coin?
A meme coin is effectively sort of like a Beanie Baby or a baseball card. It’s something that is limited in numbers and that people want as a collectible. And they can become quite valuable really quickly.
They can go up in value because there’s a certain amount of them and they’re a commodity. And if people want them and they’re going willing to pay a lot, then they’ll suddenly surge in value. But the people who issue these meme coins, they say that while they’re not an investment vehicle, they’re are collectible, so you’re welcome to buy them if you’d like.
And so it’s 9:44 PM on January 17, and hundreds of people are gathering for a crypto ball in advance of Trump’s inauguration. And on that evening, Trump posts on Truth Social that my new official mean coin is here. And it’s time to celebrate and everyone should go buy it.
And it has a picture of him on this card that you get if you buy the meme coin with his fist in the air. And it says, “Fight, fight, fight.” And so when the president-elect of the United States announces on Truth Social that you should go buy my collectible, in fact, hundreds of thousands of people around the world did. And it suddenly, overnight, became one of the most popular and most valuable meme coins in the world.
Do we know exactly how they made money from these meme coins and how much money they made from them?
The Trump family controls percent of the meme coins that eventually will be issued by this platform, but they haven’t sold any of them yet. So that’s just paper money.
We know that for sure?
Yes. It’s theoretical money. We can see in the marketplace that they haven’t sold it. But they also make money every time there’s a purchase and a sale, and there’s a transaction, there’s a small cut that’s taken by the issuer of the meme coin. And so we were able to determine, with the help of some crypto analytical companies, that there was more than a hundred million dollars, just as of March, in transaction fees that were generated as a result of these transactions.
So it was already generating tens of millions or a hundred million dollars for President Trump, members of his family, and their business partners that launched this meme coin. But there were some real losers, because what happened with the Trump meme coin is that the price spiked almost instantaneously, from $0.17 to $75. And everyone looked at that and think, wow, I better get in on this and buy it because it’s going to go even higher.
But just as it hits $75, the crash began. And it went down just as quickly as it went up. And there were hundreds of thousands of people who’d bet their own money on this Trump meme coin who then quickly became losers and were left with large losses on this speculative bet that they had made, following the advice of President-Elect Trump.
And is any of that illegal?
It’s not illegal if you follow the fine print, which says, buyer beware, this is a collectible. This is not an investment. But that said, traditionally, if there had been a launch like this, an overnight one of the most valuable meme coins in the world, what I’ve been told is that this likely would have resulted in a review by staff at the Securities and Exchange Commission to see whether or not there was any potential violations of federal law. And that did not occur. And, in fact, what happened was soon after Trump became president and he appointed an acting head at the SEC, there was a new policy that was issued that formally announced, for the first time, that meme coins will not be the subject of investigations or regulatory actions to punish issuers of meme coins.
So Trump personally benefits from this thing that is in a legal gray area, this meme coin. Then he becomes president. And then under him, the agency that might have investigated him in an earlier administration, perhaps a more aggressive administration, puts out a statement that says, nothing to see here.
That’s right. And now, more recently, as the meme coin was bottoming out in value, President Trump and his financial backers announced that they’re going to have a contest that says, for the top 220 holders of this his cryptocurrency, that they’re going to get an invite to have a private, special dinner at the Trump Golf Club in suburban Washington with the president of the United States.
Wow.
And they create a leaderboard with an online game where you can bid yourself up on the rankings to see where you are. The more you buy, the higher your rankings. And they say that you have to have a certain ranking for between now and the middle of May in order to be eligible for this dinner.
I mean, again, it’s like they’re directly selling access to the president of the United States if you buy his meme coin, that’s going to bring him and his family profits. And not only that, but they say for the top people at the top of the 220, we will give you a tour of the White House.
But wait, can I just say, Eric, that I think people might be thinking, OK, well, big donors get access to political candidates who then become presidents all the time. But just to put a point on this, those donors are, number one, donating for a specific issue or to get a specific candidate elected. It’s not like they’re writing checks to somebody’s personal bank account. And here, people are paying what sounds like a ton of money to get what sounds like explicit access to the president of the United States.
That’s right. I mean, this is not a campaign contribution. This is a payment that benefits, financially, the president and his family. And that’s what makes it so unprecedented, is yeah, we live in a democracy where campaign contributions are legal. And if you make a lot of them, you get more access.
But we don’t live in a country where, traditionally, if you pay the elected president of the United States money personally, then you can have dinner with him. And if you enrich his family personally. And so that’s the distinction here, is that the president and his family are personally profiting from this.
But as we continue to look at this and learned more about the meme coin, what we realized is that this was just a small piece of the cryptocurrency efforts that the Trump family was undertaking. And in fact, the scale of the self-enrichment was even greater with their second venture that they call World Liberty Financial.
Which is what? Tell us about that company.
World Liberty is effectively a cryptocurrency bank. This is the Trump family saying we’re going to become the JPMorganChase of the cryptocurrency world. And we’re going to make a lot of money doing it.
So at first, this new business venture is kicked off shortly before the election. It’s not taken very seriously. It’s being promoted by three of Trump’s sons — Eric Trump, Don, Jr, and Barron, who’s now becoming a part of the family business ventures. And then they’ve got other outside partners that, for the most part, we’ve never heard of. I mean, a guy named Zak Folkman, Chase Hero, who were the serial entrepreneurs that have had a series of business failures. They sold a colon cleanser. One of them was selling “how to pick up hot girls” advice.
It wasn’t actually called that, was it?
No, it really was called that. It was a website called datehottergirls.com.
Wow.
And then Zach Witkoff, who’s the son of Trump’s new Middle East envoy, Steve Witkoff, who’s a real estate lawyer and a friend of Trump’s for years. And so it’s the Trump sons and these other players that we’ve not heard of before.
What exactly does World Liberty Financial do?
They lay out some of these ambitions and something they call the Gold Paper, which on the title page has this large portrait of Donald Trump with gold paint splashed across it. Trump’s face is on every single page of this document that details their ambitions. And they start off by just introducing this token that certain types of investors can buy in October of 2024.
And just to be clear, Eric, that token, that’s separate from the Trump meme coin we’ve been talking about, right?
That’s right. It’s very different from the meme coin. This is a token that gives buyers a say in the governance of this new financial institution. And it can’t be bought and sold very rapidly. It has all kinds of rules around it. But the Trump family, from the start, was going to own billions of these tokens, more than anyone else.
Got it. So what happens when they release this token into the market?
It’s actually quite a flop. And they way underperform their target of having $300 million in sales. They only attract a fraction of that total.
But Trump then wins the election. And from the night of the election, the money starts to pour in, where suddenly, there are people that want to try to influence Trump, there are people who see him as a winner and someone that’s likely going to have a successful cryptocurrency venture. And it goes from having a hard time raising money to raising $550 million in token sales.
Wow.
So that’s a startling number. And as reporters at “The New York Times,” it opens up a bunch of questions for us. Who are these people? Why are they buying the token? And what types of conflicts of interest is this going to create when President Trump is back in office and appointing the regulators who are going to oversee his own business?
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We’ll be right back.
So, Eric, before the break, you told us that you had some questions about who some of the investors were in World Liberty Financial and this new token that it had issued. What did you find when you started looking into that question?
So one thing about cryptocurrency is that these transactions occur on something called the blockchain, which is essentially a public ledger of all transactions. And so anytime someone was buying the World Liberty token, their wallet, which is a long number, was publicly available to see. So we could see 85,000 different wallets, ultimately, that bought $550 million worth of this token.
But all you see is a really long number and you don’t know who’s behind that wallet. And so as a team of reporters at “The Times,” we were like, we need to figure out who some of these buyers are. So the first thing we did was we went to a company called Nansen, which is a cryptocurrency analytics company. And we said to the folks at Nansen, can you do an analysis of all of these 85,000 wallets? And can you tell us who some of them are?
And they came back to us with a spreadsheet of a bunch of possible buyers of World Liberty financial tokens. And they were from all over the world. They were from Gibraltar, or from Israel, from Asia, Europe, and the United States. But they were more foreign than domestic.
And a lot of them operating out of countries that you pick if you want to not have a lot of financial transparency, in fact. And so we decided we had to actually reach every single one of those companies and individuals to confirm that they actually were a buyer, because maybe there was a mistake in the data analysis. It was a very laborious process, because a lot of them did not want to be found.
And when you found some of these people, did they tell you why they had bought this token?
Yeah. In fact, I mean, one of the things I also did was I went to some cryptocurrency conferences, including one that happened to be in Washington, DC. And I had the list with me, and I’m walking around. And there’s this guy right in front of me from Tensor Capital that was on the list. And it’s like, wow, that’s convenient.
And so I asked him, here, I’ve got you on my list. I was wondering, why did you decide to buy the Trump token? And what he said was that he was confident that Trump was going to make a lot of money on this. And if Trump was going to make a lot of money that he wanted to make money, too. So that’s one group of investors.
But there’s another that we found. And these are people who are enthusiastic about Trump’s plans for crypto. Because Trump, by this point, has announced that he’s going to significantly curtail the regulatory reach of the government, as it comes to crypto. And these investors wanted to send a signal to President Trump that we support this effort. And then we found that there’s people who bought the token who had previously been investigated themselves. So these are people who had been charged with breaking federal laws that are buying the Trump token and celebrating the fact that he’s going to basically restrict the powers of the federal regulators that had gone after them previously.
Can you give me an example of one of these people that they’d run afoul of regulators before and were sort of excited?
I mean, the best example is Justin Sun, who has a company called Tron.
His name sounds sort of familiar.
Yeah. Justin Sun became a phenomenon when he’s the guy that bought, at an art auction, a banana that had been taped to the wall for millions of dollars and then proceeded to eat the banana as a stunt.
I remember this guy. Yep, the $6-million banana.
Yes. He likes being in the limelight. In 2023, he was accused of violating United States’ securities law, and he was in the midst of a very intense battle to avoid being sanctioned by the United States government. Then Trump is re-elected to a second term. And that’s when Justin Sun decides to commit tens of millions of dollars to World Liberty Financial.
He’s purchased $75 million of the token. And ultimately, after Trump is elected and appoints new leadership at the Securities and Exchange Commission, the United States government and Justin Sun’s lawyers agree to put the case on hold. It hasn’t yet been dropped, but essentially the investigation has been frozen.
It sounds like Justin Sun, effectively, bought himself leniency from the SEC.
I mean, if you look at the sequence of events, that’s how it unfolds. Justin Sun is accused of wrongdoing. Justin Sun puts up tens of millions of dollars into a Trump family business venture. And then the investigation stops.
Now, World Liberty Financial says that there have been no quid pro quos. No deals made here that if you buy in, we’ll get you actions from the federal government. But sequentially, that’s what happened.
So this company is creating new appearances of conflicts of interest. But I’m trying to understand, what does World Liberty Financial actually do with the money that they raised from the tokens that you’re describing?
One of the first things that World Liberty Financial does is with this $550 million that have come into their coffers through people buying their token, is they take some of that money and they start buying other cryptocurrencies, tens of millions of dollars. They buy some bitcoin. They buy another cryptocurrency called ether. They’re creating their own mini reserve of foreign currency reserves.
Like JPMorgan buying up a lot of euros?
That’s right. But here’s the problem. Shortly after they begin to build this inventory of all these other cryptocurrencies, President Trump announces that he wants to create a federal crypto reserve and that one of the cryptocurrencies that it’s going to include is ether. And the family company has already bought tens of millions of dollars of ether. And the moment that President Trump announces that ether is going to be in that reserve, suddenly the price of ether surges. And effectively, he’s writing himself a check because he has a personal financial interest in it.
Right. Basically, the president sent a message about his administration’s policies, in this case ether, that led pretty directly to his family’s company making a bunch of money, at least on paper.
That’s right. And the Trump family has said that it did not sell any of its ether. But it has moved some of it to a different platform where we can’t see whether or not it’s buying and selling. So we don’t really know for sure.
And this is just the beginning of the conflicts of interest that have emerged as a result of the continuing operations of World Liberty Financial now that President Trump is in office. There’s something else that’s called a stablecoin that they are just now issuing that’s created a whole new field of conflicts.
Oh, good. Another coin to understand. What is a stablecoin?
Yes, I’m sorry. A stablecoin is a type of a crypto token that does not fluctuate in value. So what they want people to do is to come to them with any kind of a crypto, and you deposit it at World Liberty Financial, bring your bitcoin and you can transfer that bitcoin into a certain number of stablecoins that will have dollar value every day, no matter what is happening in the cryptocurrency markets.
A dollar value that is always the same. So if I have 50 stablecoins today, they will be worth $50 today, tomorrow, presumably six months from now.
That’s what the promise is, yes.
I mean, it sounds like cash. That’s what this sounds like.
Yeah, it’s an alternative form of cash, which is sort of like you might wonder, well, why are they doing this if we already have cash? But this is a way that the cryptocurrency industry says, we’re going to create a less volatile token that you can use to transact with, because if all these kinds of cryptos are constantly changing in price, you can’t really use it to buy and sell things. So this is the crypto industry’s answer as to how they can create a relatively stable currency. It’s called the stablecoin. And World Liberty Financial is now in the stablecoin industry.
OK, so I understand what a stablecoin is based on that explanation. But why does World Liberty Financial want to be in the stablecoin business?
It turns out that stablecoins are one of the most profitable chunks of the whole world of cryptocurrency, because they could take that digital money that you brought them, and they can earn a really big return on it. And they could potentially make hundreds of millions of dollars a year by effectively earning money off of your money.
And so now World Liberty Financial, as of this week, is issuing stablecoins and selling them. And it’s actually already asserts that it has a billion dollars worth of stablecoin deposits. And so it’s suddenly, overnight, become one of the largest stablecoin issuers in the world.
And does any of that intersect with any policymaking that Trump is working on right now?
Yes, in fact, this is, in fact, one of the most startling conflicts of interest that we have seen so far. Congress is considering legislation that would regulate stablecoins. And Trump is trying to press Congress to enact the legislation that would be beneficial to World Liberty Financial.
And just explain quickly, Eric, why would passing legislation help this part of the industry?
That legislation will be a federal endorsement of stablecoins.
It will basically legitimize it.
It will be a federal recognition and endorsement of the stablecoin industry. And suddenly, what you’re going to see is that stablecoins are going to become part of the whole financial marketplace. And they’re going to start to become even rivals to banks.
It’s going to significantly increase the scale of this industry. And the Trump family is positioned to profit enormously from that. And the president is prepared to sign that legislation that will then bring himself and his family enormous profits.
OK, so just to recap, because there’s a lot here to get your arms around. We have a president who is using his office to boost coins that his family owns. His administration is halting lawsuits against people who have invested in his crypto venture.
He’s announced policies that have raised the prices of crypto that his company owns. And the president is pushing for legislation that would seem to benefit his company. Do I have all that right?
That’s right.
What did the Trump say about these concerns about their conflicts of interest?
The White House says to us that President Trump has no conflicts of interest, because he turned over his financial assets to his sons and that his sons are running the business. That’s not entirely true. What President Trump did in 2017, when he was first elected, was that he transferred all of his assets to the control of his sons, but President Trump himself is still the financial beneficiary. So he still has a direct financial interest in all of this, including in World Liberty Financial and the meme coin. But President Trump says there is no conflict of interest because he no longer runs the companies.
Eric, I’m just imagining somebody who could be listening to the show today and thinking, OK, I don’t like that he’s using his position to make money in the ways that you’ve explained, but I’m not a crypto investor. I don’t care about crypto. This doesn’t affect me. So why should I care about this side of the president’s business?
Yeah, I mean, it’s a good question. Most people aren’t invested in crypto. But really, there’s a lot of reasons here that this is a cause of concern. I mean, first of all, we’re just used to having a nation where the commander in chief is pursuing the interests of the public and does not have personal financial interests that are potentially affecting the choices that he’s making and that may be influencing federal policy in ways that are more self-interested than in the public’s interest.
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Beyond that, while crypto is still a pretty isolated part of the US and global economy, the goal of World Liberty is to merge the crypto sector and the traditional banking sector. And the Federal Reserve and the Treasury have both expressed concern about the volatility of cryptocurrency and how, if there were to suddenly be a huge downturn in crypto, if these two sectors are intertwined, it could cause a systemic risk to the US economy and even the global economy. That’s a concern that we’ll see how that plays out in the next several years.
Well, Eric, thank you so much.
Thank you, Rachel.
We’ll be right back.
Here’s what else you need to know today. On Wednesday, the US and Ukraine announced a deal that would give the US proceeds from Ukraine’s rare earth minerals, in exchange for a security commitment from the United States. The announcement follows months of tense negotiations and comes as the United States is trying to broker a peace deal between Ukraine and Russia.
And the US economy has stopped growing and has actually shrunk, according to GDP data released this week. Other data suggests that the economy is still growing, albeit slowly. But the new numbers, economists say, reflect the impact of President Trump’s tariff policies, which have roiled markets and created uncertainty for businesses and consumers.
The president acknowledged the economic turmoil in a social media post, but said tariffs are not to blame and that they would help the economy in the long run. “Be patient,” he wrote with three exclamation points.
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Today’s episode was produced by Will Reid, Claire Toeniskoetter, and Nina Feldman. It was edited by Patricia Willens, and contains original music by Dan Powell and Rowan Niemisto, and was engineered by Alyssa Moxley. Our theme music is by Jim Brunberg and Ben Landsverk of Wonderly.
That’s it for “The Daily.” I’m Rachel Abrams. See you tomorrow.
