If, like me, you have avoided paying attention to Donald Trump’s plan for a “strategic crypto reserve” because you don’t understand crypto, fear not. You only need to understand that it’s a(nother) huge rip off designed to secretly benefit Trump.
Like so much of Trump’s blather, a “strategic crypto reserve” sounds like something good, like the Strategic Petroleum Reserve. But as Paul Krugman explained, the crypto reserve consists of nothing other than “a hackable string of ones and zeroes on servers,” i.e. a speculative, virtual currency that is “almost always” involved in criminal activity such as money laundering or paying ransom. The sad thing is that Trump’s scam seems perfectly legal.
Forget the confusing details of how crypto works. Pay attention to what Trump is doing with it. Sen. Chris Murphy calls the crypto reserve the “clear winner when it comes to the contest for the worst of the [Trump] corruption. … It’s all just a shameless scheme for Trump to legalize large scale bribery, and shockingly, very few people seem to have taken notice.”
Noah Berlatsky pointed out that in his first term, Trump acknowledged that cryptocurrencies are based on “thin air.” You can probably guess that Trump changed his tune after he got millions of dollars in bribes donations from the crypto industry and then figured out how to cash in with his own crypto businesses. “Boosting crypto as president, then, allows Trump and his family to profit directly from his public office,” Berlatsky said.
Murphy noted that the Trump administration has halted investigations into cryptocurrency firms and dropped lawsuits over crypto fraud. But that all pales before Trump’s latest corruption, i.e. his plan to make the U.S. “the Crypto Capital of the World,” via the “strategic crypto reserve.”
More from Murphy:
Right before the inauguration, Trump launched his own ‘meme coin’ called $TRUMP. It’s a digital asset with a value tied to, well, nothing, other than the popularity of Trump himself. It has no independent value. Its price is just a function of demand. If a lot of people want it, its price goes up. If nobody wants it, its price plummets.
Trump knew his MAGA supporters, wild with enthusiasm during the inauguration, would buy up a ton of the worthless coin. It worked. When prices jumped from 18 cents to $75 apiece, his net worth, on paper, swelled to more than $56 billion. And when it fell back down to $17, where it sits today, many of his supporters who bought at the top lost actual real money. He duped his followers into buying the coin (with its real value of $0) at its highest price, knowing it was going to crash.
Trump doesn’t need to care about the fluctuation of the cost because he gets a transaction fee every time coin trades are made. The Trump family made $100 million just in trading fees, while many of his supporters have lost thousands of dollars.
But the real scam is not the transaction fees. No, it’s the way that the coin can be inflated in value, at key moments, to allow Trump to swell his fortune. Trump held back 80% of the coin, and he will put more up for sale when the price once again spikes. And how does the price spike, allowing Trump to cash in with an additional release of the coin? Well, all it takes is a few Russian oligarchs or billionaire CEOs to buy a large quantity of coin (therefore increasing net demand) for the price to rise.
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The biggest scam is that we will never know who is buying the Trump coin to inflate the price and put cash into Trump’s pocket, because the buyers of the coin are secret! So it’s essentially a private conduit for bribery. Billionaires with business before the U.S. government can buy coin in order to make Trump rich, and then whisper to Trump that they need a favor. And the American people would never know.
So, you can ignore the details of how crypto or a crypto reserve works. All you really need to know is that this bogus “strategic reserve” is a scheme to put big bucks into Trump’s pockets without us knowing who’s paying him off.
