Democrats push back against Trump's growing crypto empire
Jonathan Raa | Nurphoto | Getty Images
Democrats turned up the pressure on President Donald Trump's cryptocurrency ventures this week and the fortune that he and his family are making off the efforts as a vote rolls forward on a key crypto bill.
Thursday's vote on the GENIUS ACT, a bill to establish federal rules for stablecoins, will be a test of how far the crypto lobby's influence goes after it heavily backed Trump's 2024 presidential campaign.
Even with limited power, Democrats are calling for probes into Trump-connected coins and backers, seeking financial records and blocking legislation.
On Capitol Hill Tuesday morning, California Rep. Maxine Waters, the top Democrat on the House Financial Services Committee, walked out of a hearing on digital asset allocation flanked by fellow Democrats, effectively shutting it down.
That same morning, Sen. Richard Blumenthal, D-Conn., sent letters announcing an initial inquiry into the Trump family's expanding crypto empire, calling the Trump meme coin dinner contest a 'pay-for-play scheme.'
Blumenthal, the ranking member of the Senate's Permanent Subcommittee on Investigations, demanded records from Fight Fight Fight LLC. — the company behind the $TRUMP meme coin — and World Liberty Financial, a family-run crypto venture that recently announced plans to launch a stablecoin.
He called for documentation on ownership, revenue flows, and all communications with the White House, citing what he described as 'unprecedented conflicts of interest and national security risks.'
Last month, the project ran a promotion offering top $TRUMP holders a dinner with the president and a 'VIP White House tour,' a promise that sent the token's price soaring after weeks of decline.
'President Trump's financial entanglements to the $TRUMP coin, as well as the attempted use of the White House to host competitions to prop up the value of $TRUMP, represents an unprecedented, pay-to-play scheme to provide access to the Presidency to the highest bidder,' Blumenthal wrote.
Roughly 80% of the $TRUMP token supply is controlled by the Trump Organization and affiliates, according to the project's website.
One of Blumenthal's letters was addressed to Bill Zanker, the entrepreneur behind Fight Fight Fight, which controls a large portion of the $TRUMP token supply.
With the White House and both chambers of Congress controlled by Republicans, Democrats have little ability to push a legislative agenda or to lead investigations into potential malfeasance. But they're betting that a coordinated effort to call out what they view as corruption in a formerly niche corner of the financial markets will resonate with a voter base that's already souring on the president's economic policies.
The White House responded to Blumenthal's inquiry with a short statement from Deputy Press Secretary Anna Kelly to CNBC's 'Crypto World.'
'President Trump's assets are in a trust managed by his children. There are no conflicts of interest,' she wrote.
Waters on Tuesday convened a Democrat-only session focused squarely on Trump's meme coin and World Liberty Financial. Her decision to derail the primary hearing came after Rep. French Hill, R-Ark., chair of the House Financial Services Committee, rejected her request to include provisions in the Digital Asset Market Structure Bill aimed at blocking Trump from further profiting off digital assets while in office.
'I object to this joint hearing because of the corruption of the president of the United States — and his ownership of crypto and his oversight of all the agencies,' Waters said.
Kelly responded to Waters, saying that Trump was working to make America the 'crypto capital of the world.' 'Cultivate influence'
Waters introduced a discussion draft that would ban the president and members of Congress from owning crypto assets or financially benefiting from them.
In the Senate, Democrats on Tuesday unveiled the 'End Crypto Corruption Act,' spearheaded by Sens. Jeff Merkley of Oregon and Chuck Schumer of New York, meant to prohibit elected officials and senior executive branch personnel and their families from issuing or endorsing digital assets.
'Currently, people who wish to cultivate influence with the president can enrich him personally by buying cryptocurrency he owns or controls,' Merkley said. 'This is a profoundly corrupt scheme. It endangers our national security and erodes public trust in government.'
'Our democracy shouldn't be for sale,' said Schumer, the Senate minority leader.
The bill has already garnered backing from key Senate Democrats and endorsements from watchdog groups including Public Citizen and Democracy Defenders Action.
Merkley and Sen. Elizabeth Warren of Massachusetts sent a letter this week to the Office of Government Ethics, demanding an urgent review of a reported deal between World Liberty Financial, crypto exchange Binance and a UAE state-backed fund called MGX. The senators warned that the deal could represent a 'staggering conflict of interest,' violate federal bribery laws and raise national security concerns.
Abu Dhabi-based MGX is using the Trump stablecoin for a $2 billion investment in Binance, Reuters reported.
Warren also sent a letter to the OGE questioning a White House waiver granted to David Sacks, the White House AI and crypto czar.
Sacks, a venture capitalist who co-hosted a $1.5 million-a-head fundraiser this week for a Trump-aligned super PAC, reportedly splits his time between advising the president on crypto policy and running a firm with active investments in the digital asset space.
Under federal ethics law, such financial entanglements would typically bar him from shaping policy in the same sector.
But the Trump administration issued an ethics waiver asserting that Sacks' holdings were 'not so substantial' as to compromise his judgment — a claim Warren called unverifiable. In her letter, Warren demanded clarity from the OGE on whether it reviewed the waiver and whether Sacks still holds crypto-related financial interests that pose a conflict of interest.
Sacks said he sold over $200 million worth of digital asset-related investments personally and through his firm, Craft Ventures, before starting the job, according to a memo from the White House in March. Read More A 'critical year' for the UK's carbon capture ambitions Legislation is becoming harder
The GENIUS Act was moving toward a Senate floor vote with bipartisan support until the weekend, when nine Senate Democrats pulled back, citing weakened anti-money laundering safeguards and new fears that Trump's inner circle could financially benefit from the policy shift.
Democratic Sens. Ruben Gallego of Arizona, Mark Warner of Virginia, Andy Kim of New Jersey, and Lisa Blunt Rochester of Delaware, among others, said in a statement that they remained open to negotiation but wouldn't support the bill in its current form.
'We are eager to continue working with our colleagues,' they wrote, but noted 'we would be unable to vote for cloture should the current version of the bill come to the floor.'
Chris Dixon, General Partner at Andreessen Horowitz, discusses cryptocurrency during the TechCrunch Disrupt forum in San Francisco, October 2, 2019.
Kate Munsch | Reuters
The crypto industry is lobbying to push it forward.
'The GENIUS Act will protect consumers and increase transparency — a significant improvement on the status quo,' said Chris Dixon, managing partner in Andreessen Horowitz's crypto practice, in a post on X. 'Moving quickly on this and a market structure bill would provide long-overdue clarity for consumers and the industry so that we entrench dollar dominance and the U.S. remains the leader in blockchain technology.'
Stripe, which recently acquired stablecoin infrastructure startup Bridge Network for $1.1 billion, has also backed the bill. The company said as part of a press release on Tuesday that it 'supports the development of a clear, consistent regulatory framework for stablecoins and welcomes the growing bipartisan interest in this issue.'
WATCH: Jack Mallers looks to rival Strategy with new bitcoin company backed by Tether and SoftBank
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