Financial Insights That Matter
DOJ scales back efforts to fight cryptocurrency fraud
The Department of Justice is planning to scale back its legal fight against cryptocurrency fraud, according to an April 7 memo.
Straight Arrow News
WASHINGTON – Congressional Democrats are increasingly concerned about President Donald Trump’s personal connections to the cryptocurrency industry, and that’s throwing a wrench in bipartisan efforts to regulate the digital currency.
Two of the cryptocurrency investments owned by Trump-affiliated entities have made at least $300 million in trading fees alone on sales of his meme coin and other digital currency since January.
In late April, a company affiliated with Trump promoted the $TRUMP meme coin by offering an “intimate private dinner” with the president at his northern Virginia golf club, after which the coin’s value grew as much as 80%.
And another Trump family crypto firm, World Liberty Financial, announced on May 1 that one of its digital coins is being used by an Abu Dhabi government-backed investment firm for a $2 billion investment in cryptocurrency exchange Binance − a major outlay from a foreign government to the benefit of Trump’s family.
At the same time, the administration is moving to support the crypto industry’s growth in the United States, including creating a “strategic bitcoin reserve” and digital asset stockpile, and pulling back from a Biden-era crackdown on the industry.
Lawmakers on Capitol Hill, too, had planned to advance legislation this week to create a regulatory framework for stablecoin, a type of crypto linked to the value of another asset like the dollar, in order to remain stable. The bill has been aggressively supported by crypto lobbyists and is expected to accelerate the currency’s growth.
But nine Democrats who had previously supported the bill abruptly announced on May 3 that they would no longer support the stablecoin bill, dubbed the GENIUS Act, citing concerns that the legislation doesn’t do enough to prevent money laundering and protect national security.
At least seven Democrats would be needed to pass the legislation in the Senate, where lawmakers need at least 60 votes to overcome the filibuster. Senate Democratic Leader Chuck Schumer, D-N.Y., repeatedly told reporters only that “Democrats and Republicans are talking to each other about the bill,” while Senate Majority Leader John Thune, R-S.D., said the Senate will proceed with a vote regardless.
Rep. Maxine Waters, D-Calif., walked out of a House committee hearing on cryptocurrency on May 6 “because of the corruption of the president of the United States and his ownership of crypto and his oversight of all the agencies.”
Sen. Adam Schiff, D-Calif., called for an Office of Government Ethics investigation into the president’s crypto connections, and Sen. Richard Blumenthal, the top Democrat on the Senate Permanent Subcommittee on Investigations, launched his own investigation into Trump’s profits.
Blumenthal demanded information about the business structures and potential conflicts of interest of World Liberty Financial and Fight Fight Fight (the Trump-linked business that owns the $TRUMP memecoin) in letters on May 6, which were viewed by USA TODAY.
“Donald Trump is selling cryptocurrency like snake oil in the Wild West, and he’s put a for sale sign on the White House for his meme coin,” Blumenthal said. “People in America deserve to know how he is potentially under the influence of foreign governments and investors who are buying his crypto assets.”
Sens. Jeff Merkley, D-Ore., and Elizabeth Warren, D-Mass., plan to introduce a bill Wednesday that would ban the president, vice president, members of Congress and their families from creating crypto assets. It is co-sponsored by Schumer and Sen. Kirsten Gillibrand, D-N.Y., who is also a co-sponsor of the GENIUS Act.
“This is not a situation where somebody is passing a few thousand dollars under the table as a bribe. This is a situation where – on the table, in full view of the public – the president is selling access to his office,” Merkley told USA TODAY. “If we’re going to have any credibility in working for the people, we have to end this vastly corrupt enterprise the president’s engaged in.”
While Democrats remain the minority in both the House and Senate, the filibuster gives Democrats some leverage over legislation’s fate in the upper chamber.
White House spokeswoman Anna Kelly said in a statement that Trump is “dedicated to making America the crypto capital of the world.”
“His assets are in a trust managed by his children, and there are no conflicts of interest,” she said.
It’s not just Democrats who have raised concerns about the crypto legislation in the Senate. Sens. Josh Hawley, R-Mo., John Kennedy, R-La., and Rand Paul, R-Ky., said this week that they’re not sure if they can support the GENIUS Act.
Sen. Bill Hagerty, R-Tenn., the primary sponsor of the legislation, said he is negotiating with Democrats to get their support for the bill. After months of work, he said, “we’re very close to having everything concluded and I expect it to be concluded by the end of the week.”
Josh Meyer contributed.
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