Original title: Crypto's First Family Is Deepening the Swamp
By Lionel Laurent, Bloomberg Opinion Columnist
Compiled by: J1N, Techub News
Eric Trump, the second son of US President Trump, believes that now is a good time to buy Ethereum. He believes that his support for Ethereum has driven the short-term rise in the price of the currency. But at the same time, it is also a good time for politicians and regulators to take action to establish stricter regulatory measures against the cryptocurrency business that the Trump family and its related personnel are actively promoting. The family business is expanding rapidly and has serious conflicts of interest with regulators.
It’s now clear that the Trump family doesn’t just want to put the U.S. on a path to support cryptocurrencies through friendlier regulation, they want a piece of the action. World Liberty Financial, a decentralized finance platform backed by the Trump family, has built up a cryptocurrency reserve that includes about $340 million worth of Ethereum. According to Reuters, Trump has issued billions of Memecoins out of thin air and generated nearly $100 million in transaction fee revenue for presidential-related agencies. In addition, Trump’s Truth Social platform is also expanding its business and plans to enter the financial services sector.
This is not the kind of investment that the average family would make. Based on my calculations using the current spot price, the current book value of Memecoin held by institutions associated with Trump is approximately $14.9 billion. If these numbers are staggering, the risks are equally staggering. As investors and industry insiders rush to curry favor with the Trump team by purchasing its tokens, it will eventually lead to more and more power transfer and corruption. At the same time, this also brings moral hazard, because when the most powerful people in the world and their relatives promote Memecoin and can bear its risks, it will cause more people to invest in Memecoin without knowing their own risk tolerance. When someone told Trump how much his Memecoin holdings were worth, he responded almost nonchalantly, "A few billion dollars, that's just chump change."
So when Eric Trump friendly-tweeted that “Ethereum is worth buying,” he was more than just saying it, as he seemed to realize when he deleted the line “You can thank me later” on X. Whether by coincidence or design, World Liberty put his ideas into practice, and the project address accumulated about $55 million worth of Ethereum after Trump’s tariff threats triggered a sell-off over the weekend. This was after the platform transferred most of its reserves to Coinbase, although they denied any plans to sell. At this stage, the conspiracy theory that Trump’s team is harvesting the market through crypto is not true. After all, Trump’s tariff policy is not conducive 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 “banana republic” is already very strong.
Democracies have existed long enough to build institutional safeguards against political conflicts of interest. The question is whether the authorities are determined enough to actually enforce them. The United States has pushed for reforms in official ethics and transparency after Watergate, and has introduced the 2012 Stock Act to combat insider trading, as well as the Foreign Interest Clause, which has existed since the beginning of the Constitution. Cryptocurrency is no excuse for evading regulation: the EU's latest digital asset rules explicitly include provisions for insider trading and market abuse. Moreover, former Democratic congresswoman Tulsi Gabbard, nominated by Trump, has agreed to sell her stock and cryptocurrency holdings to comply with relevant regulations.
Without effective enforcement and enforcement by authorities, regulation of behavior is futile. Trump seems unfazed. Trump’s nominee for Commerce Secretary, Howard Lutnick, has not said whether he will recuse himself from the cryptocurrency working group because his firm, Cantor Fitzgerald, holds convertible bonds related to the stablecoin Tether. There are problems of insider theft within institutions that could cause financial losses in the future; for example, when German fintech company Wirecard AG collapsed, staff at its regulator, BaFin, were suspected of insider trading in Wirecard’s stock rather than fulfilling their supervisory responsibilities. Let’s hope that Trump’s cryptocurrency czar, David Sacks, will deliver on his promises to strengthen consumer protection.
At the very least, a basic requirement for all politicians is that they must deposit all their investments into "blind trusts" on the day they take office, and that their relatives' investments must also be restricted. "Blind trusts" here refers to a form of asset management in which politicians hand over their property to a third party to manage it, thereby avoiding any influence on investment operations and preventing officials from using their power for personal gain. This is the view put forward by Garen Markarian, a corporate governance expert at the University of Lausanne. What is worrying is that the current attitude of the elite is to advocate less supervision rather than more scrutiny of politicians and their related investments.
Trump is joining forces with the crypto community to lash out at the so-called “de-banking” phenomenon, while Musk, who has been allowed to set his own rules, is using DOGE as a weapon against the government. This is classic overconfidence, especially considering that the president has been convicted of fraud. It also sends a signal of arrogance to ordinary people, showing that the law will be more lenient towards those who have inside information. The regulatory chaos in the cryptocurrency field is obvious, but there is little sign of action to clean it up.