\n<\/p>\n
Day Three of\u00a0Donald Trump\u2019s presidency\u00a0brought no crypto bombshells, although Democrats are badgering Republican colleagues to call out the president\u2019s memecoin grifting.<\/p>\n
Putting the \u2018er\u2019 in \u2018strategic reserve\u2019<\/strong><\/p>\n Day Three of Trump 2.0 drew to a close with no sign of the president fulfilling his\u00a0campaign pledge\u00a0to establish a \u2018strategic (BTC) stockpile\u2019 aka the\u00a0\u2018strategic BTC reserve\u2019\u00a0(SBR). While crypto bros continue to give Donald the benefit of the doubt, there are clearly some fraying nerves among those who really need Trump to deliver the goods.<\/p>\n Take Fred Thiel, CEO of BTC\u00a0block reward mining\u00a0outfit MARA (NASDAQ: MARA), who last year led his company down a dead-end road marked \u2018BTC treasury strategy.\u2019 Basically, MARA has been borrowing billions of dollars to buy BTC on the open market and sits on it, believing that each token will someday be capable of purchasing Greenland by itself.<\/p>\n On January 17, Thiel\u00a0announced\u00a0that MARA had imprinted an AI portrait of Trump\u2019s face on the BTC blockchain visible via the network\u2019s mempool explorer. Thiel called this\u00a0the \u2018Trump 47\u2019 block,\u00a0but if Trump noticed this fawning tribute he hasn\u2019t commented on it publicly.<\/p>\n On January 21, Thiel\u00a0announced\u00a0he was \u201c(f)ocusing now on bringing the (SBR) to all 50 states and the Federal government.\u201d MARA is a co-founder of the Bitcoin Voter Project, which, since the conclusion of last year\u2019s U.S. election, has kept itself busy\u00a0tracking proposed SBR legislation\u00a0in individual U.S. states (none of which has passed).<\/p>\n Brian Armstrong, CEO of the\u00a0Coinbase\u00a0(NASDAQ: COIN) exchange, posted his guide to increasing\u00a0\u2018economic freedom\u2019\u00a0last week, which argued for establishing an SBR because BTC \u201cwill become central to national security in a world where holdings of (BTC) can shift the balance of power among nation states.\u201d<\/p>\n Given that\u00a0MicroStrategy\u00a0(NASDAQ: MSTR) founder\u00a0Michael Saylor\u00a0now controls\u00a02% of all the BTC that will ever exist\u2014more when you consider how much BTC has been lost over the years\u2014we urge Trump to invade Saylor as soon as possible. (He should be easier to take than Greenland or Panama, and the payoff will be HUGE.)<\/p>\n At the time this was written, the\u00a0Polymarket\u00a0prediction\/betting site has a 34% chance of Trump\u00a0establishing an SBR within his first 100 days in office. That figure stood at 48% on January 20. Rival prediction site Kalshi\u2019s odds on Trump\u00a0establishing an SBR this year\u00a0are currently at 63%, down from around 70% a week ago.<\/p>\n Geoff Kendrick, head of digital assets research at Standard Chartered (NASDAQ: SCBFF),\u00a0said\u00a0this week that Trump needed to act soon or nervous BTC bros would start smashing the \u2018sell\u2019 button. \u201cHope is not a strategy \u2026 When hope dies, digital asset prices will fall 10-20%.\u201d<\/p>\n TRUMP memecoin controversy not going away<\/strong><\/p>\n After\u00a0feigning ignorance\u00a0Tuesday of the billions of dollars he\u2019d earned (on paper) from last Friday\u2019s launch of his\u00a0$TRUMP memecoin, Trump\u2019s personal social media accounts\u00a0reposted several posts promoting his token. Despite this shilling, TRUMP\u2019s token fiat value continues to slide, sitting at just above $37\u00a0as of Thursday morning.<\/p>\n A crypto tax software firm\u00a0CoinLedger survey\u00a0found that nearly 7.5% of crypto users had traded the $TRUMP token in the first two days it was available. Nearly 2% of users had traded $MELANIA, the token issued by Trump\u2019s wife on January 19, during its first day of availability.<\/p>\n As a vivid illustration of the portal to hell that the Trump tokens have opened, entities have already\u00a0filed applications\u00a0for\u00a0exchange-traded funds\u00a0(ETFs) based on $TRUMP and some other memecoins, including\u00a0DOGE\u00a0and\u00a0$BONK. Not so long ago, such a plan would be widely mocked. But up is down, black is white, and you\u2019re either on this gravy train, or you get left at the station.<\/p>\n Consider Crypto Quant CEO Ki Young Ju, who was\u00a0challenging\u00a0the crypto community only last October to \u201cname one meme coin that genuinely creates social value.\u201d Fast forward to this week, and Ki was\u00a0celebrating\u00a0memecoins as \u201cthe spiritual energy of internet society\u201d and\u00a0praising Trump\u00a0for \u201cacting like a black hole pulling in speculative liquidity from retail crypto investors across the globe.\u201d<\/p>\n Ki described the Trump administration\u2019s new approach thusly: \u201cIf it\u2019s inevitable, use them.\u201d This view is shared by investor Mark Cuban, who likened crypto\u2019s post-TRUMP mantra to a shoulder-shrugging\u00a0\u201cMint it, print it, sell it F*ck it.\u201d<\/p>\n Cuban followed that diss with\u00a0a memecoin challenge, saying he\u2019d issue his own token with the same terms as $TRUMP, but \u201cAll the revenue from the sale of the coins go to the US Treasury. The wallet address will be published so everyone can track it. If you want to gamble, gamble. But at least use it to make a dent in the US Debt(.) You in?\u201d Cuban\u00a0added: \u201cIf it\u2019s a grift. Make it a grift to benefit all Americans.\u201d<\/p>\n Even the Wall Street Journal\u2019s editorial board cast a critical eye on Trump\u2019s crypto boondoggle,\u00a0saying the president \u201cis inviting trouble with what looks like remarkably poor judgment.\u201d Memecoins are a zero-sum game, so what will happen when many of his token buyers\u2014including many of his political supporters\u2014get burned?<\/p>\n The WSJ warned that \u201ca business or foreign official with interests before the federal government might seek to curry favor with Mr. Trump by announcing plans to buy millions of his tokens to pump up the price \u2026 If Mr. Trump\u2019s regulators then act in a way that aids crypto or the person seeking the favor, he\u2019ll be accused of aiding the buyer in service of presidential self-dealing \u2026 Where are Mr. Trump\u2019s lawyers?\u201d<\/p>\n A recent survey showed a disturbing percentage of $TRUMP\/$MELANIA buyers were first-time crypto buyers. This newbie feeding frenzy isn\u2019t likely to end soon, as app store charts show crypto apps dominating the \u2018finance\u2019 categories (be they\u00a0Android\u00a0or\u00a0Apple). God help us all.<\/p>\n But don\u2019t worry. For instance, did you know the TRUMP token could\u00a0solve America\u2019s national debt crisis? God be praised!<\/p>\n Democrats demand committees take action<\/strong><\/p>\n The controversy surrounding a sitting president actively promoting products intended to boost his bottom line isn\u2019t going away. At a January 22 House of Representatives\u2019 Financial Services Committee meeting, newly installed chairman Rep. French Hill (R-AR) outlined the administration\u2019s goals for the current session.<\/p>\n Hill\u00a0said\u00a0Republicans would \u201cbring legal clarity to digital assets, providing innovators with new tools to build decentralized financial products and services that can empower people to help one another and ensure that America will remain a leader in this financial technology.\u201d<\/p>\n In\u00a0a statement\u00a0laying out the Committee\u2019s agenda,\u00a0Operation Choke Point 2.0\u00a0was mentioned, as the Committee pledged to \u201cinvestigate the misuse of regulatory authority to prevent digital asset firms from accessing and maintaining banking services.\u201d The Committee will also \u201cmonitor and evaluate\u00a0the Federal Reserve\u2019s previous efforts\u00a0to research and develop a (central bank digital currency).\u201d<\/p>\n However, the Committee\u2019s ranking member, Rep. Maxine Waters (D-CA), used her\u00a0opening statement\u00a0to note Hill\u2019s failure to mention Trump\u2019s memecoin opening up \u201cpotential conflicts of interest that may put our national security at risk.\u201d Waters warned that Trump\u2019s token was \u201cincreasing his personal wealth and possibly providing a backdoor for sanctioned persons, hostile governments, and other bad actors to give money to Trump directly.\u201d<\/p>\n Over at the House Oversight Committee, ranking member Rep. Gerard Connolly (D-VA) sent new chairman Rep. James Comer (R-KY)\u00a0a letter\u00a0on January 21 demanding \u201cimmediate action to investigate (Trump\u2019s) grave conflicts of interest.\u201d<\/p>\n Besides the $TRUMP token, Connolly cited the Trump family\u2019s\u00a0decentralized finance\u00a0(DeFi) product,\u00a0World Liberty Financial\u00a0(WLF), as a \u201cparticularly troubling example\u201d of Trump\u2019s conflicts. Connolly noted that\u00a0WLF\u2019s largest investor\u00a0is \u201ca foreign entrepreneur under investigation by the Securities and Exchange Commission for\u00a0alleged securities fraud.\u201d<\/p>\n The said alleged fraudster is none other than\u00a0Justin Sun, founder of the\u00a0Tron\u00a0blockchain, who has purchased at least $75 million of WLF\u2019s \u2018governance\u2019 token WLFI. Sun\u2019s purchases helped push total WLFI sales over the threshold that allows a Trump-linked entity to receive 75% of token sales.<\/p>\n WLF has acknowledged Sun\u2019s generosity by using some of the funds it\u2019s raised to purchase Tron\u2019s TRX token, including\u00a0another $2.65 million worth\u00a0on January 21, raising\u00a0WLF\u2019s total TRX holdings\u00a0to over $7.7 million. The day before, Donald\u2019s son Eric began\u00a0following Tron\u2019s official X account.<\/p>\n WLF has also acquired $47.6 million worth of \u2018wrapped\u2019 BTC (wBTC), another token\u00a0with ties to Sun. This makes you wonder how soon Sun might announce a \u2018wrapped TRUMP\u2019 token on Tron.\u00a0Suspicions are already being raised\u00a0as to the extent of Sun\u2019s involvement in the Trump family\u2019s crypto operations and what payoff Sun might be hoping to extract.<\/p>\n Pardon me, Justin?<\/strong><\/p>\n A clue as to Sun\u2019s motivations may have been raised in Connolly\u2019s letter and its references to the SEC investigation into Sun\u2019s alleged pump-and-dump tactics. Reports that the Department of Justice (DoJ) is\u00a0conducting a criminal probe\u00a0into Sun\u2019s activities have circulated for years, which may be why Sun hasn\u2019t appeared to have set foot on U.S. soil since the pandemic.<\/p>\n On January 21, Trump fulfilled a campaign pledge by pardoning\u00a0Ross Ulbricht, founder of the\u00a0BTC-powered\u00a0Silk Road\u00a0dark web marketplace that sold everything from illegal narcotics to illegal weapons. Following the pardon, the controversial X user Rothmus\u00a0suggested\u00a0that\u00a0Roger Ver\u2014currently in\u00a0Spain awaiting trial on\u00a0charges of mail fraud and tax evasion\u2014should also receive a pardon.<\/p>\n Trump\u2019s \u2018first buddy\u2019 Elon Musk\u00a0replied\u00a0to this appeal by saying: \u201cWill inquire\u201d. Musk, who claims to have been\u00a0\u201cin the Oval Office\u201d\u00a0when Trump signed Ulbricht\u2019s pardon, later\u00a0clarified\u00a0that pardon decisions were \u201cup to the President, but I have asked whether (pardoning Ver) was possible.\u201d<\/p>\n Musk\u2019s ability to influence Trump on clemency matters has sparked speculation about who might be next. Ver\u2019s odds of receiving a pardon in Trump\u2019s first 100 days in office are\u00a0currently standing at 32% on Polymarket. So far, the only other pure crypto figure in the hunt is disgraced\u00a0FTX\u00a0founder\u00a0Sam Bankman-Fried\u00a0(4%), although we suppose Julian Assange \u00a0(24%) might qualify due to his embrace of the BTC token.<\/p>\n Justin Sun has yet to make the Polymarket list but that\u2019s likely due to his relative anonymity next to the other candidates. Should a pardon be issued, we\u2019ll have established a financial benchmark for the right to lie, cheat and steal with impunity. Fun times.<\/p>\n Free Kim Jong-un!<\/strong><\/p>\n Another crypto voice angling for Trump to pardon his pals is\u00a0Ethereum\u00a0co-founder\u00a0Vitalik Buterin, who responded to news of Ulbricht\u2019s pardon by\u00a0tweeting\u00a0\u201cNo man left behind.\u201d Buterin tagged Roman Storm and Alexei Pertsev, developers of the Ethereum-based\u00a0Tornado Cash, a\u00a0coin-mixing\u00a0service that allows users to obfuscate\u00a0ETH\u00a0tokens\u2019 blockchain history.<\/p>\n Roman Storm was charged with\u00a0money laundering and sanctions evasion\u00a0in August 2023 in connection with\u00a0North Korean hacking groups\u00a0using Tornado Cash to launder their ill-gotten gains. Storm is currently in U.S. custody, while Pertsev is in a Dutch prison after being\u00a0sentenced to 64 months\u00a0last May.<\/p>\n Buterin noted a\u00a0January 21 ruling\u00a0related to Tornado Cash in the U.S. Court of Appeals for the Fifth Circuit. Last November, the same court\u00a0found fault\u00a0with the Treasury Department\u2019s Office of Foreign Assets Control (OFAC) for applying sanctions to the smart contracts powering the mixer (and the developers who wrote them). The court now ruled that the smart contracts aren\u2019t \u2018property\u2019 and are thus beyond OFAC\u2019s authority to sanction. The court lifted the sanctions and sent the case back to the lower court for further arguing.<\/p>\n Buterin later\u00a0tweeted\u00a0\u201cFree Virgil\u201d, a reference to\u00a0Virgil Griffith, the Ethereum developer who was\u00a0sentenced to 63 months in prison\u00a0in April 2022. Griffith traveled to North Korea in 2019 to give the regime pointers on how blockchain tech could help them evade sanctions. This trip defied advance warnings by U.S. authorities that they wouldn\u2019t look kindly on such shenanigans, but Griffith chose to go anyway.<\/p>\n Trump framed his Ulbricht pardon as a payoff to \u201cthe Libertarian Movement, which supported me so strongly,\u201d while Sun is putting tens of millions of dollars in Trump\u2019s pocket. What does Buterin have to offer in return for not one but three crypto pardons?<\/p>\n Plenty, if you ask Ethereum co-founder\u00a0Joe Lubin, who noted the over 56,000 ETH (worth ~$182 million) that WLF has acquired, while WLF also registered some .eth domain names associated with Trump family members, including Donald\u2019s sons Eric and Barron. This led Lubin to\u00a0claim\u00a0that WLF \u201cis 100% Ethereum aligned.\u201d<\/p>\n Lubin justified this declaration by\u00a0claiming\u00a0that \u201cthe Trump family will build one or more giant businesses on Ethereum \u2026 The Trump administration will do what is good for the USA, and that will involve ETH, considerations of how the USA can support Ethereum \u2026 and perhaps eventually use Ethereum technology in government activities just as they currently use the internet and web protocols.\u201d<\/p>\n That\u2019s some pretty bold future-surfing given that Ethereum is currently undergoing a \u2018civil war\u2019 that has seen\u00a0senior developers leaving the project, the apparent\u00a0launch of a rival\u00a0to the\u00a0Ethereum Foundation in charge of network developments, and Buterin\u00a0telling the community that he\u2019s in charge\u00a0so sit down and shut up. Bullish.<\/p>\n But don\u2019t worry, Ethereum fans. Justin Sun is\u00a0here to solve all your problems.<\/p>\n USDC for the win<\/strong><\/p>\n Lubin\u2019s self-interested optimism also belies the fact that Donald and Melania chose to issue their tokens on the\u00a0Solana\u00a0network, not Ethereum. Solana\u2019s transaction volume spiked following the token launches, leading to serious network congestion and transaction delays. Nonetheless, somehow, Solana managed to avoid another\u00a0outage requiring a full restart.<\/p>\n But the real winner, not named Trump, appears to be USDC, the dollar-denominated\u00a0stablecoin\u00a0issued by\u00a0Circle\u00a0in\u00a0a partnership\u00a0with Coinbase (which drew customers\u2019 ire when its wonky infrastructure led to\u00a0a days-long backlog\u00a0of Solana transactions).<\/p>\n When Trump issued his memecoin, USDC\u2019s market cap was sitting around $46.5 billion. Five days later, that cap has hit $51.5 billion, only ~10% off its all-time high in mid-2022. Much of that growth has come via\u00a0USDC issued on Solana, fueling the most active trading pairs. By contrast, USDT, the market-leading stable issued by\u00a0Tether, has gained only around $1 billion over the same period, raising its cap to $138.5 billion.<\/p>\n Coinbase\u2019s Armstrong recently suggested his exchange could prevent U.S. users from accessing USDT,\u00a0as it recently did in Europe, to comply with\u00a0stablecoin legislation\u00a0expected to be approved by Congress in the current session. The gist is that Tether would be unable to abide by the legislation\u2019s requirements, including subjecting its\u00a0reserve assets\u00a0to independent audits, something Tether has steadfastly refused to do.<\/p>\n In response to Armstrong\u2019s musings, Tether CEO Paolo Ardoino\u00a0tweeted\u00a0(in Italian) \u201cMore and more I feel like the black knight.\u201d We\u00a0really<\/em>\u00a0hope Ardoino was referencing\u00a0the black knight\u00a0of Monty Python & The Holy Grail fame, who suffers the loss of all four limbs in a duel with King Arthur and yet refuses to concede that he\u2019s beaten.<\/p>\n In the end, Arthur just went around the crippled knight, much as USDC appears to be preparing to assume the dominant role in regulated markets, relegating Tether to its\u00a0crime coin status. That is unless Tether\u2019s friend in D.C.,\u00a0Howard Lutnick\u2014Trump\u2019s nominee for Commerce secretary\u2014can somehow lobby Trump to ensure a USDT carveout before Congress can vote on any stablecoin bill. <\/p>\n Watch:\u00a0Teranode is the digital backbone of Bitcoin<\/p>\n