NYT Reporter on Trump’s Crypto Empire: “No Precedent in Modern U.S. History”

HARI SREENIVASAN: Christiane, thanks. David Yaffe-Bellany, thanks so much for joining us. You cover cryptocurrency for the New York Times and most Americans – let’s just kind of set the table a little bit here, if we can – are maybe a little familiar with crypto, maybe they saw a Super Bowl ad. But before we have kind of a more in-depth conversation about the possible conflicts of interest and how important this is in the next few years, just explain kind of what cryptocurrency is for people?

 

DAVID YAFFE-BELLANY: At the most basic level, cryptocurrency is a form of digital money that can be transferred from person to person without any sort of intermediary in between like a bank. So obviously people have been able to transfer money electronically for a very long time. We do it every day with our credit cards and our bank accounts. But the idea of crypto is you can eliminate the middleman and it’s just person to person.

 

SREENIVASAN: Okay. One of the first executive orders that the president signed when he came back into office was that, “The digital asset industry plays a crucial role in innovation and economic development in the United States, as well as our nation’s international leadership.” Right, I mean, he is as pro-crypto as any president has been in the past. Why is that important?

 

YAFFE-BELLANY: So, under the Biden administration, there was a kind of government-wide crackdown on the crypto industry. The SEC sued huge numbers of crypto companies, other regulators in Washington, you know, adopted fairly punitive policies toward crypto in all sorts of ways. And so the industry was really on the rocks, and it was facing what would’ve been kind of a years long courts battle to effectively determine whether the industry could continue to exist in the United States. And with one election that was all wiped away. With Trump in power, crypto is ascendant again and in the process of achieving legislation that would pretty much cement that status for the industry.

 

SREENIVASAN: You know, we don’t have to go that far back into President Trump’s history to find that he was not a fan of cryptocurrencies, at least during his first administration. What changed?

 

YAFFE-BELLANY: Yeah, I mean, Trump’s, Trump’s a real estate guy, obviously. And so in many ways he’s not like an obvious fit for the world of crypto. He’s come out numerous times to say that he doesn’t trust the technology that he thinks it’s, you know, used by scammers and drug dealers. Things started to change over the last year and a half, and there were a serious kind of important phenomena that all kind of happened in parallel. One was that the crypto industry started donating a huge amount of money to the 2024 kind of election campaign. You know, some of that money went to Trump, or Trump aligned super pacs, but most of it actually went to kind of congressional candidates. And so it was a real demonstration of the financial power of the industry. That was one thing. At the same time that was hap, that that was happening. Trump’s sons, his older sons, Eric and Don Jr, became increasingly disillusioned with the traditional financial system. That was largely because post January 6th, they felt like they had been kind of locked out by traditional banks. And so suddenly they had this sort of philosophical alignment with the crypto world and became interested in pursuing crypto ventures himself. So those sort of two things kind of happening in parallel kind of shaped Trump’s adoption of crypto.

 

SREENIVASAN: Okay. So there are kind of multiple storylines that you’ve been reporting on in the past a few months. One, just to try to clarify for our audience, there’s the idea of a meme coin. You might wanna explain what that is. And there’s the idea of a, a sort of stable coin. And then there’s the World Liberty Financial. Kind of pick, break these apart for me.

 

YAFFE-BELLANY: Sure. So it’s complicated and there are a lot of moving pieces here, but I’ll try to break it down as best I can. So the first and arguably most important Trump crypto venture is a company called World Liberty Financial. And this is run by Trump’s sons, by some other kind of family friends in his circle, and like a couple of crypto entrepreneurs who the family recruited to work on it. And World Liberty Financial sort of marketed itself as a kind of newfangled bank for cryptocurrencies. A place where people can go to borrow and lend money using crypto. That’s the sort of overarching idea of the company. But what the company has actually done so far is really just issue two new digital currencies that can be sold to the public.

One is a type, is a cryptocurrency called WLFI. And it’s a cryptocurrency that’s kind of just associated with this platform, and they’ve spent months selling it to the public. They’ve raised $550 million selling that coin to the public. So that’s the first Trump cryptocurrency, WLFI.

The second Trump cryptocurrency, which is also issued by World Liberty Financial, is called a stable coin. And that’s a type of crypto that, unlike Bitcoin, which is constantly going up and down, maintains a constant value of $1. And it’s useful ’cause if you work in the crypto world and you want to kind of conduct a normal business transaction, you know, it’s helpful to have a form of currency that isn’t constantly fluctuating. So World Liberty has also issued this, this Trump stable coin, which is called USD1. So you’ve got WLFI, USD1, and then the third kind of Trump cryptocurrency, and probably the one that’s gotten the most attention, is the so-called meme coin, which is totally separate from World Liberty. Different people working on that project. And that’s basically a kind of cryptocurrency based on a joke or an online mascot. It doesn’t have any value or any function beyond speculation. Trump started marketing it to the public a couple days before his inauguration, shot up in price, which made his family and its business partners huge amounts of money in transaction fees, and then immediately crashed, which is what tends to happen with meme coins. So you’ve got the Trump meme coin, the WLFI cryptocurrency and the USD1 stable coin. Those are the three Trump cryptocurrencies.

 

SREENIVASAN: So how do these different currencies connect to the president himself? Because there is usually at least one sort of arm’s length distance. Past presidents have taken great steps to try to say, you know, I’m putting everything into a blind trust. I can’t really make any investments. None of this, what’s happening in the stock market, or any market affects me or my decisions. Are these crypto coins and currencies any different? Do they have an impact on the president?

 

YAFFE-BELLANY: They do. They directly financially benefit the president and his family. And you know, you can see that in the way that kind of underlying corporations, you know, backing these different cryptocurrencies are structured. And, you know, one, one point that I think is really important to understand is that this is, you know, buying these currencies and enriching the president and his family is like fundamentally different from making a campaign donation. Because when you make a campaign donation, you’re supporting a political effort and that money is restricted. It has to be spent on the political effort. The money that Trump and his family are generating through these crypto ventures is money that they simply have to do whatever they want with. And that sort of aggressive kind of personal fundraising, you know, business activity while president is, has no precedent in modern US history.

 

SREENIVASAN: Now we should note that the spokesman for World Liberty has said “It would be false, absurd and dangerous to suggest that investments or partnerships with World Liberty Financial were conducted as some sort of political quid pro quo. Never has an investor or partner requested any political favoritism, nor would we ever entertain such a possibility.” Do we know who invests in these coins?

 

YAFFE-BELLANY: So this is something that’s complicated about crypto. All digital currency transactions are recorded on something called the blockchain, which is basically a giant spreadsheet showing every time crypto is bought or sold. So you can look and see, you know, who’s buying the WLFI coin, for instance. But those people are identified by long strings of letters and numbers. And so you don’t actually have a name attached to any of those accounts. So my colleagues and I at the New York Times have worked with basically companies that specialize in a kind of crypto forensics who try to assign, you know, names and identities to these, you know, anonymous wallet addresses. And so we’ve had some success in doing that. And we found that, you know, a lot of the people who have bought the WLFI coin in particular are, you know, people based in foreign countries who would be barred under US law from donating to a political campaign or an inaugural fund for a president. Others are people with crypto businesses who might have some interest in potentially curing favor with the US government because they’re trying to expand their business in the US or they’re seeking some sort of regulatory approval. And so the conflicts of interest really mount up the more and more you look at the type of people who are buying these coins.

 

SREENIVASAN: When it comes to foreign policy, are there other implications? There was recently a situation where the UAE with their sovereign fund was deciding to back one of these ventures with $2 billion. What does that mean? 

 

YAFFE-BELLANY: At a conference in Dubai a few days ago, one of the people who runs World Liberty Financial, Zach Witkoff, who’s the son of Steve Witkoff, the White House Middle East Envoy, got onto a stage with Eric Trump and announced that a venture capital fund, which is backed by the government of Abu Dhabi, so backed by the, you know, the government of this area, is going to use that USD1 stable coin to complete a $2 billion transaction. So effectively they are handing this Trump business $2 billion. In return, the Trump business is giving them these $2 billion in stablecoins, ’cause remember, the stablecoin maintains that one-to-one value. And it’s sort of a huge boost for this Trump business, and it’s being provided more or less directly by a foreign government.

 

SREENIVASAN: So what are the kind of policy implications there? Because the individual, you mentioned Zach was also in Pakistan recently. I mean, what are the, what was that like?

 

YAFFE-BELLANY: Yeah, I mean Zach Witkoff’s trip to Pakistan was pretty incredible. I mean, you can see the videos online, but it kind of had all the trappings of a state visit. I mean, he’s got an American flag pin on his lapel. You know, he and his business partners are, you know, photographed sitting across from the Prime minister, they’re meeting with other government officials. There’s a police escort through the streets, a dance performance, fireworks. You know, it’s the sort of kind of pageantry that is usually reserved for a visiting head of state. But here has been kind of bestowed upon, you know, these guys who are just in business with the head of state.

 

SREENIVASAN: So is this, this sort of proximity to power and basically somebody saying, well, I’m gonna go ahead and support your venture because you know the president or your dad works for the president.

 

YAFFE-BELLANY: None of that is, you know, made explicit. I mean, certainly none of these officials in Pakistan came out and said, we’re only hanging out with these guys because they’re connected to the president. But sort of an obvious conclusion to draw. I mean, none of the people involved in the day-to-day operations of World Liberty have any sort of strong track record in the crypto world. And the company also hasn’t really released any meaningful products so far. It’s just released these two coins. And so the value of the company and the clear reason it has so much kind of networking power is its association with the US president.

 

SREENIVASAN: And you’ve reported that the crypto executive with perhaps the most to gain from his affiliation with World Liberty is Justin Sun, a Chinese billionaire who founded the crypto platform, Tron. Who’s Justin Sun?

 

YAFFE-BELLANY: Justin Sun is a really important and very colorful figure in the crypto world. He’s been around for a long time. He’s enormously wealthy, and he’s the kind of key figure behind Tron, which is this crucial crypto platform. You know, people who aren’t even that aware of crypto might remember him from last year when he bought a $6.2 million piece of experimental artwork, which was a banana duct tape to a wall. So he sort of gained a lot of you know celebrity from that stunt. But Sun has also been in the crosshairs of US regulators for a long time. He was sued by the SEC in 2020, in 2023 for fraudulently manipulating the price of the Tron cryptocurrency. After Trump won the election, he spent $75 million on that World Liberty Financial crypto WLFI and became one of the top investors in it. And not long after Trump was inaugurated, that SEC case against him was essentially put on ice. And so, you know, critics of that whole transaction have pointed to the sort of obvious incentive that Sun would have to curry favor with the administration. Now, Sun says, you know, his purchase of those coins didn’t have anything to do with the SEC case. But the sort of alignment of interests you know, creates a certainly bad optics for the administration.

 

SREENIVASAN: We should note that Mr. Sun denies the SEC charges and in a text message to the Times last year, he said his World Liberty investment was simply a vote of confidence in the Trump family’s “excellent project.” I’ve also read people saying, look, this is just sour grapes from the people who are out of power right now. Because corruption pedaling and influence pedaling and corruption have been part of politics ever since politics existed. Right. I mean, there’s historical precedent where members of the family have been perhaps able to take advantage of their proximity to the president. Is there something different about what’s happening now?

 

YAFFE-BELLANY: I think there’s just a much clearer role for the president himself in these ventures. I mean, Trump even now, you know, even in the last few days, is actively promoting the meme coin on his social media channels, for instance. He, you know, is a, is expected to have dinner with the top 220 holders of this meme coin. I mean, basically he started a competition. If you buy more of the meme coin, you can get onto this list to have dinner with him. And it’s sort of in kind, it makes kind of explicit the clear kind of premise of all of this, which is that, you know, you buy the coin and that you get, you get access to the president. And so that’s what’s really unusual about this.

 

SREENIVASAN: You know, the president and the vice president, aren’t they kind of the two sort of exceptions on people in the executive branch who can have conflicts of interest? The president has gone out and said, the law is totally on my side. I can’t have a conflict of interest.

 

YAFFE-BELLANY: Yes. I mean, there’s, the legal, I mean, you know, the president is not subject to those conflicts of interest rules. And so yeah, and on some level what he’s doing is kosher. But it’s also out of step with what presidents have done historically, and it creates all these sorts of ethical concerns. And of course, if there were actually, you know, an incident of a true explicit quid pro quo that could be proven, then that would not be covered by this exception.

 

SREENIVASAN: The White House has said that “the president’s assets are in a trust managed by his children,” and therefore “there are no conflicts of interest.” What do you make of that?

 

YAFFE-BELLANY: I mean, it’s a little bit misleading because that trust still ultimately benefits Trump himself. And so, you know, any, any kind of financial gain will like ultimately flow to him and to his family as well. And so, you know, there’s a clear kind of personal incentive for him to, you know, boost the holdings of his family and its business operations.

 

SREENIVASAN: When you look out at the kind of crypto landscape overall,  do people feel like this administration and these, the rollback of these regulations is really kind of the new dawning that they needed? The, the, the, the, you know, that the field is now wide open for them? Or is this just another sort of cycle?

 

YAFFE-BELLANY: There’s certainly a lot of optimism in the industry. I think the concern is that Trump is famously fickle and what if he just tweeted tomorrow I don’t like crypto anymore. I mean, who knows? Stranger things have happened in the career of Donald Trump. And then there are sort of broader economic policies pur he’s pursuing, you know, tariffs most obviously that that kind of hurt crypto interests. At the same time, the price of Bitcoin is doing pretty well. It’s up close to a hundred thousand. You know, it’s a very kind of healthy price for it to be at. And what the industry is trying to do is capitalize on this moment, which is a unique moment in crypto’s history where the industry has so much political support from the ruling party to get legislation passed that sort of cements those gains so that if Trump is out of office in a few years and a Democrat who hates crypto takes over, there’s a limit to what that person can accomplish. Because legislation has been passed that sort of enshrines crypto’s role in the financial system and creates a regulatory framework for it that the industry, you know, considers helpful

 

SREENIVASAN: Technology reporter, the New York Times. David Yaffe-Bellany, thanks so much for joining us.

 

YAFFE-BELLANY: Thanks for having me.