Save this storySave this storySave this storySave this story
Imagine that someone in a position of great political power created a hundred billion raffle tickets and made them available for public purchase. If you buy the tickets, eventually you will receive a reward: a proportional quantity of magic beans—and eventually each magic bean will be exchangeable for one United States dollar. What’s more, if you buy the raffle tickets early, you can get them for less than a dollar, perhaps for as little as five cents apiece. Not only will the raffle tickets eventually gain you more traditional currency; you can also vote on company matters with your raffle tickets and help manage the magic-bean supply, and the more tickets you purchase, the more say you have. Oh, and the creator of the raffle will keep a bunch of the tickets for himself, and much of the revenue generated by the magic-bean economy will also go back to him.
This effectively describes the workings of a new cryptocurrency created by World Liberty Financial, a company affiliated with the Trump family, with President Donald Trump serving as its “Chief Crypto Advocate.” The cryptocurrency, a so-called governance token called WLFI, is the raffle ticket, and another cryptocurrency, a “stablecoin” called USD1, is the magic bean. World Liberty deals in the nascent industry of “decentralized finance,” in which cryptocurrency instruments allow users to circumvent the traditional, regulated banking ecosystem for moving, storing, and lending money. Stablecoins are cryptocurrencies that are pegged to a single currency value, such as one U.S. dollar, though they are not always so stable: Terra, a once successful stablecoin, lost its peg and suffered a collapse in 2022. Stablecoins fall nebulously within the bounds of the law, so long as they don’t appear to function as securities (as, for instance, stock in a publicly traded company does). A banner on the World Liberty website serves as a legal disclaimer: “World Liberty Financial does not consider the tokens to be securities.” Donald Trump et fils quietly assumed a controlling stake of World Liberty, in January, through a company called DT Marks Defi. Though fine print specifies that no member of the Trump family is an “officer, director or employee” of World Liberty, DT Marks Defi receives seventy-five per cent of its subsidiary company’s net revenue. (The remaining twenty-five per cent goes to Axiom Management Group, which is connected with two of World Liberty’s official leaders, Chase Herro and Zachary Folkman, a pair of self-described “crypto-punks,” whose other ventures include, in Folkman’s case, a company called Date Hotter Girls.)
Trump is a onetime crypto skeptic who announced, in a tweet in 2019, “I am not a fan of Bitcoin.” Yet in recent years, he has touted several varieties of magic beans, bringing a P.R. boost to an industry in which new ventures are often dead on arrival. In 2022, he released Trump Digital Trading Cards, a series of non-fungible tokens that has continued to produce new batches, including a January, 2024, “Mugshot” edition, featuring his glaring police photo. (Bulk buyers of the mug-shot N.F.T. received invitations to Mar-a-Lago.) Three days before his Inauguration, he launched a so-called meme coin, cryptocurrencies based on online notoriety that become de-facto pyramid schemes as early buyers sell off to later ones at higher prices. $TRUMP consists of a billion coins, eighty per cent of which were kept by Trump-related companies, and the remainder sold to the public. It reportedly made around three hundred and fifty million dollars in revenue in its sale and has a market capitalization of nearly three billion dollars; Trump’s business earns a fee for every $TRUMP transaction.
The price of the meme coin is now down to less than a fifth of its all-time high, and the majority of its buyers have seen their purchases lose value. An official Melania Trump meme coin released soon after Trump’s has fared even worse. But $TRUMP was given a recent bump when Fight Fight Fight, a business associated with the Trump Organization and its crypto projects, ran a contest in which the two hundred and twenty largest holders of the meme coin won invitations to a gala dinner with Donald Trump, to be hosted at the Trump National Golf Club near Washington, D.C. (Black tie is optional.) The top twenty-five will get access to a more private reception with the President. The contest offers an explicit way to buy Trump’s attention, lending magic beans a new appeal as a lobbying tool. Many of the meme-coin investors are based abroad, and some have been unequivocal about their goal of influencing Trump’s agenda. (One Australian entrepreneur told the Times that he hopes to talk to the President about crypto policy; a Mexican buyer said that he would like Trump’s ear on tariffs.) On Tuesday, a small Chinese company that operates an e-commerce business on TikTok announced plans for a three-hundred-million-dollar purchase of $TRUMP and Bitcoin—at a time when the Trump Administration is considering whether to follow through on a TikTok ban.
The World Liberty operation has far vaster implications than the meme coin, however, because its stablecoin, which can be easily and reliably exchanged for U.S. dollars, creates something like an entire Trump-sponsored underground economy. It’s as if a new bank had opened under the sitting President’s name, and it was being sent large quantities of funds by various foreign businesses and political élites. Major buyers of WLFI have included Justin Sun, a Chinese crypto entrepreneur, who bought seventy-five million dollars’ worth, and DWF Labs, an Abu Dhabi-based cryptocurrency trading firm, which bought twenty-five million dollars’ worth. In March, World Liberty announced that it had sold more than half a billion dollars’ worth of its token. Earlier this month, another Abu Dhabi-based investment firm announced that it would use USD1, the stablecoin controlled by World Liberty, for a two-billion-dollar investment in Binance, the largest cryptocurrency exchange in the world.
Buying the Trumpian magic beans provides a way of purchasing influence, not unlike how foreign dignitaries could rent rooms at the Trump International Hotel in D.C. during Trump’s first Administration. But World Liberty makes renting hotel rooms look quaint by comparison. The more money that flows into WLFI and USD1, the more legitimate and valuable these currencies appear, and the higher their market capitalizations creep. Tether, the world’s largest stablecoin, has a market capitalization nearing a hundred and fifty billion dollars, with more than thirty billion dollars in daily trading volume. World Liberty aspires to create something similar.
The American public has been inundated with news of the Trump family’s self-enrichment for so long that many of their dealings now barely create a stir. Just this week, it was revealed that the Administration is preparing to accept the gift of a luxury Boeing 747-8 jet offered by the royal family of Qatar, to be used as a new Air Force One, at least until a new Air Force One is completed by Boeing. The Department of Defense will receive the jet, but when Trump leaves office it will reportedly be donated to his Presidential library, effectively turning the plane, worth four hundred million dollars, into a private possession—never mind that this arrangement would seem to blatantly contradict the foreign-emoluments clause, which prevents U.S. officials from accepting gifts from foreign leaders and governments. (Trump has dismissed ethical concerns by saying that declining a gift would be “stupid.”) In the realm of crypto, though, a backlash against Trump’s ventures may be mounting in Congress. Last week, some Senate Democrats balked at passing a popular crypto-friendly bill in light of the President’s naked profiteering. In a bit of almost farcical understatement, Senator Cynthia Lummis, Republican of Wyoming, recently told the Times, “The optics are challenging.” But the Trump family has so far wagered correctly that no one will stop them. ♦
Sourse: newyorker.com
