The president’s decision to release the $TRUMP memecoin on inauguration weekend shocked even some of his top supporters in the crypto-currency industry.
Such memecoins are often called “shitcoins,” for good reason: any given token has no more inherent value or utility than another—which is to say, no value at all. They’re only distinguished by the name on the label and how much money their issuers manage to fleece from individual speculators before the coin’s value inevitably plummets toward zero. Often, a memecoin’s lifespan can be counted in minutes or even seconds.
In the 2024 election cycle, Trump, who once called Bitcoin a “scam” that threatened to undermine the U.S. dollar, performed an about-face and embraced every crypto-industry policy priority, culminating in his triumphant speech at the Bitcoin Conference in Nashville, where the crowd chanted Trump’s name after he promised to fire S.E.C. chair and prominent crypto critic Gary Gensler.
Hundreds of millions of dollars in donations for his and other Republican political campaigns helped change Trump’s mind. So, reportedly, did the intervention of his sons, who helped start a crypto company called World Liberty Financial last September, through which the Trump family would start selling a crypto token called $WLFI. There was money to be made, and Trump has never hesitated to put his name on a product. The biggest purchaser of $WLFI tokens so far, having spent $75 million, is Justin Sun, a tax-shelter-favoring crypto entrepreneur being sued by the S.E.C. for fraud.
Allying with Sun, who has been advising Trump’s sons on crypto-token purchases on X, was itself a dubious choice. Releasing a memecoin was something else entirely, and the crypto industry knew it. These tokens, which can be spun up in minutes, are pretty much good for one thing: running illicit pump-and-dump schemes. Having fully embraced crypto and its scammy, get-rich-quick possibilities, Trump was launching a worthless token to soak his fan base.
Crypto-industry veterans had seen this kind of play countless times, performed, for example, by podcaster Jake Paul and, allegedly, Haliey Welch, the “Hawk Tuah Girl.” They knew how it worked—and how it ended. It was the kind of brazen, potentially illegal act that, in any other time, might have provoked an S.E.C. investigation. But Gensler was already gone. And this was the new president, blessed with presumptive immunity by the United States Supreme Court.
It was so easy—so apparently free of legal risk—that he repeated the gesture the next day, with the launch of a $MELANIA token. This week, Trump Media, which operates Truth Social, announced the launch of Truth.Fi, yet another crypto venture whose profits, if any, will flow to the sitting president.
Having fully embraced crypto and its scammy, get-rich-quick possibilities, Trump was launching a worthless token to soak his fan base.
Having vanquished its enemies in the administrative state, the crypto industry is about to receive a bespoke regulatory regime designed to give it unfettered access to banking services and capital markets. Dozens of regulatory and criminal investigations will probably disappear. Last week, a federal court ordered the Treasury Department to lift sanctions on Tornado Cash, a “crypto mixer” that exchanges one batch of crypto for another, muddying its digital trail—otherwise known as money-laundering. The North Korean government was a heavy user.
Legalizing Tornado Cash was a crypto-industry priority. So was the release from prison of Ross Ulbricht, who created the Silk Road, a dark-web drug market—which, not incidentally, was instrumental in popularizing Bitcoin. The crypto industry cheered his release and created crypto wallets to collect donations on his behalf.
Back in 2008, Bitcoin was heralded by some as a more decentralized, trustworthy, and transparent alternative to Wall Street and the government that bailed out the big banks. Created by a pseudonymous person or group named Satoshi Nakamoto in the wake of the financial crisis, Bitcoin was here to disrupt the monetary system at its very core, its Utopian possibility represented by a mantra popular with some coiners: Fix the money, fix the world.
Crypto-currency advocates have told many different stories about what crypto might be used for and the revolution in finance that it might one day provoke—if only the government would get out of the way. But none of these Utopian promises have materialized. It’s clear, more than 14 years later, that crypto has no legitimate purpose. It is only good for facilitating crime, including political corruption at the highest levels.
As crypto has become increasingly defined by lawlessness, wild volatility, and rapid boom-and-bust cycles, consumer interest has flatlined. Some of its most prominent advocates have gone to prison, such as Sam Bankman-Fried and former Binance C.E.O. Changpeng Zhao. Today, crypto’s biggest boosters are the financial insiders that personally stand to profit from it—a group that now includes the president of the United States.
They are now lobbying the White House to get the Treasury Department to buy a “strategic reserve” of crypto-currency. How this highly volatile asset is supposed to help the taxpayer is unclear. The benefit to crypto insiders, on the other hand, is all too obvious. Printing U.S. dollars, a supposed anathema to coiners, is now welcomed, if it will inflate the value of their tokens.
Crypto has no legitimate purpose. It is only good for facilitating crime, including political corruption at the highest levels.
What they have built is a poorly regulated parallel financial system, where capital controls and banking and money-laundering laws can often be evaded. This system, populated by scammers, cyber-criminals, and jurisdiction-hopping crypto start-ups, is a minefield of balky security, frequent hacks, confusing protocols, and unreliable markets. But there’s profit to be made for those who know how to navigate it.
With its right-wing, libertarian underpinnings and its attempt to make issuing currency the province of private corporations, crypto-currency has always been about challenging the power and legitimacy of the nation-state. The attendant irony, though, is that crypto craves legitimacy and recognition from the powerful on Wall Street and in Silicon Valley and D.C.
The industry needs constant infusions of cash—what they call “fiat currency,” otherwise known as real money—because that is how the world still functions, and crypto is not viable on its own. Crypto has made deep inroads into the highest levels of institutional power, but, thankfully, the world doesn’t yet run on shitcoins.
Jacob Silverman is a co-author of Easy Money: Cryptocurrency, Casino Capitalism, and the Golden Age of Fraud
