As he got closer to regaining the White House, however, Trump changed his mind about this “scam,” probably as a result of the millions of dollars that flowed into his campaign coffers from industry donors. To the delight of these donors, Trump promised to make the United States the cryptocurrency capital of the world. He also talked about creating a strategic reserve of Bitcoin.
After he won the election, Trump received over $11 million in contributions to his inaugural committee from the crypto industry. It’s a hallmark of pyramid scams that only the people at the top reap the benefits, and Trump has put himself at the very apex of the ziggurat in order to rake in millions for his posse and for himself.
Consider the saga of $TRUMP.
Three days before his inauguration, the $TRUMP meme coin debuted. Meme coins are usually based on an Internet meme and are “typically characterized by their volatile nature.” Well, that sounds like a good fit for Trump! Indeed, after he promoted the coin on his social media accounts, its value surged astronomically.
Some of the biggest winners in this naked money grab were the firms that launched the coin and profited from the transaction fees, which netted them as much as $100 million in the first two weeks. One of those firms was CIC Digital, which is owned by…Trump himself.
Like all financial operations characterized by irrational exuberance, the value of $TRUMP soon plummeted. Indeed, over 800,000 investor accounts lost a total of $2 billion. Of course, they’re not the only Trump supporters who are suffering from buyer’s remorse. Even the stock market, which initially cheered Trump’s election, is having a serious hangover, a swing in mood not very different from $TRUMP’s trajectory.
$TRUMP’s deep dive notwithstanding—or perhaps because of the success of this scam—crypto remains an essential part of Trump’s economic plans. And Trump is not the only far-right leader who has dabbled in scamming the population with crypto. Argentina’s Javier Milei is now dealing with the aftermath of a corruption scandal associated with $LIBRA, a meme coin he initially supported and which left 10,000 investors over $250 million poorer. El Salvador is still reeling from Nayib Bukele’s crypto obsession, which cost his country $60 million when Bitcoin tanked a couple years ago—not to mention all the Salvadoran energy and natural resources that Bitcoin mining has absorbed.
Two years ago, I explained how cryptocurrencies function like pyramid scams. Last year, I discussed the environmental consequences of crypto.
Now I want to dig a little deeper into the politics of crypto: how Trump and his far-right allies are using these digital currencies as a strategy to rig the rules of the game in their favor.
The Mechanisms of Theft
To understand how crypto scams work, you need to know about “sniping” and “rug-pulling.”
When a new crypto product is launched, whether it’s a meme coin or a non-fungible token, a select group of speculators place a big buy to push the value higher. If enough of these “snipers” exit at the same time, the value drops, providing the snipers with short-term profits and leaving a lot of other investors holding the (empty) bag.
Of course, it helps to know in advance about a new product launch so that you can line up your bots and your AI to execute high-volume and high-speed trades—and your coordinated exit from the stage. In another context, you might call this “insider trading.”
The orchestrated sale of the crypto product is known as the “rug pull.” It can be sudden, as was the case with $TRUMP. Or it can take place over a longer period of time in what used to be known as the “long con.”
The rug pull sometimes relies on the services of a celebrity. Let’s take a brief look at the case of Javier Milei in Argentina to understand how this works.
Enter Milei
Argentine President Javier Milei is, to say the least, a heterodox economist. He pledged to cut government spending as a way of reining in inflation. He fired 30,000 government workers, eliminated government subsidies, and halted many public works projects. No surprise that Milei and his infamous chainsaw served as the inspiration for Musk and DOGE.
Inflation in Argentina has indeed fallen, from nearly 300 percent to around 85 percent in January. But the costs have been immense to the poor. More than half of Argentines now live below the poverty line, and they are dealing with increased costs for food and basic services. The economy has contracted as a not-very-surprising result of Milei’s chainsaw approach to government.
Among his many economic enthusiasms, Milei has relentlessly attacked the country’s central bank and advocated for the adoption of the U.S. dollar as the national currency. During his first year in office, he didn’t put crypto at the heart of his economic platform. But his efforts to displace the central bank has been accompanied by a push to lift restrictions on currency exchange, which would give cryptocurrencies a big boost. Argentinians are already leading adopters of crypto, largely as a hedge against the volatility of the Argentine peso (frankly, they might as well buy lottery tickets or play slots at the casino).
But that’s changing as a result of the $LIBRA scandal.
At the instigation of several fast-talking meme coin boosters, Milei endorsed $LIBRA when it was released on Valentine’s Day this year. But the value of the meme coin tanked within mere hours as top investors pulled the rug out from under it. As “Cryptogate” spread, Milei scrambled to deny any connection to the fiasco.
But that was hard to do given the evidence of several tweets showing Milei, with his trademark glower and two thumbs up, posing with those boosters, including an American named Hayden Davis.
Davis runs Kelsier Ventures, which was part of the sniping and rug-pulling around $MELANIA, the spousal counterpart to $TRUMP, which followed a similar trajectory of jumping high off the diving board and then plunging into the empty pool below. Davis did the same thing with $LIBRA, making off with around $100 million. He has promised to refund some of that money to the people who lost big. Don’t hold your breath.
“This is an insider’s game,” Davis has said about these meme coins. “This is like an unregulated casino.”
As for Milei, the real purpose of his economic program has been starkly revealed by this scandal: a transfer of money from the poor to the rich. His popularity was already on a downward trajectory in early February before the scandal, with 53 percent of the population disapproving of his policies (compared to 43 percent in favor). Cryptogate could be an anchor that pulls Milei down to the bottom of the sea.
Trump Also Goes Big
It’s no accident that the administration’s government-cutting initiative, DOGE, shares a name with a leading cryptocurrency. Cutting government oversight, eliminating regulations, and empowering the already-powerful private sector all benefit the crypto industry. But Trump is not just cutting government—he is putting his own people into positions of power.
That includes right-wing financier David Sacks, who’s in charge of both crypto and AI in the Trump administration. Sacks comes out of the same political milieu as Elon Musk and Peter Thiel (with whom he led PayPal). As with so many of Trump’s appointees, the opportunities for corruption abound. As MSNBC reported at the end of last year, “Sacks launched an artificial intelligence company called Glue this year and is known to be a major investor in cryptocurrencies, which would seem likely to create some conflicts of interest if he’s steering the administration’s AI and crypto policies.”
Trump is also staffing the Securities and Exchange Commission with crypto loyalists who have already begun to deconstruct the oversight of the crypto sector. As The New York Times notes:
Federal officials declared that so-called memecoins would not be subject to strict oversight. A series of investigations into major cryptocurrency firms were halted. And the Securities and Exchange Commission agreed to pause a fraud case against a top crypto entrepreneur. Just over a month since President Trump’s inauguration, U.S. regulators have almost entirely dismantled a yearslong government crackdown on the crypto industry, a volatile sector rife with fraud, scams and theft.
Meme coins, of course, are the $TRUMP and $MELANIA scams that have already bilked thousands of investors. The reduction of oversight on crypto, meanwhile, is likely to increase the pool of victims. Burwick Law is the firm trying to claw back money for those who were scammed by $HAWK (promoted by influencer Haliey Welch) and also 200 clients from various countries who lost money in the $LIBRA scandal. Dubbed the “ambulance chaser of crypto,” Max Burwick is going to face a deregulatory headwind coming from the Trump administration.
But the biggest crypto project of the Trump administration is its crypto strategic reserve, an idea promoted hard by the crypto industry. It’s the culmination of the right-wing’s push for U.S. businesses to invest in crypto and also state governments buy up the currency. A strategic reserve of crypto makes no sense. Such reserves are meant for valuable assets like oil and gold. Why doesn’t Trump consider a strategic reserve of Amway products or Tupperware?
For the time being, the two reserves (one for Bitcoin, the second for other digital assets) will contain only crypto seized in criminal or civil forfeitures. The crypto industry was disappointed that Trump didn’t mandate federal purchases of the currencies. But that will probably happen in the future. The new initiative calls on federal agencies to come up with strategies to buy more Bitcoin. And there’s now a bill in Congress calling on the government to buy a million Bitcoin.
So, basically, such a reserve is just a gift to all the crypto loyalists who have supported Trump. Let’s call it what it is: a first step toward state capture by crypto oligarchs.
Why Does the Far Right Love Crypto?
Crypto appeals to the far right for several reasons. It promises to undermine the state’s central authority. It offers a degree of anonymity, which can facilitate tax evasion, asset parking overseas, and plain old money-laundering. And its volatility allows for the profiteering that sometimes goes by the name of entrepreneurialism.
Meanwhile, for extremist organizations that need to stay under the radar to evade surveillance, crypto is the monetary equivalent of an encrypted messaging service. According to the Anti-Defamation League, “15 white supremacist and antisemitic groups and individuals, as well as their donors, that collectively moved $142,546 worth of cryptocurrency to and/or from 22 different cryptocurrency service providers.” The European far right is also beginning to trade in these currencies.
In countries with conventional governance—that is, not lunatics like Trump and locos like Milei—crypto functions as a right-wing weapon against the state. But when the inmates take over the asylum, the currency becomes a way of consolidating power in the hands of oligarchs.
Meme coins like $TRUMP and $LIBRA are just the side hustles by opportunists who want some of the crumbs that fall off the oligarchs’ tables. The real money is in the “legitimate” trade in crypto, the speculation in Bitcoin and Dogecoin. This is where far-right politicians create “positive synergies” between government deregulation on one side and campaign contributions on the other.
This institutional corruption is at the center of the Trump/Milei enterprise: the wholesale looting of the public sector and the grotesque enrichment of the already rich.