American Hustle

When cryptocurrencies and meme coins exploded into the public consciousness half a decade ago many dismissed them as speculative fads, digital confections with no tangible backing and few, if any, safeguards. To the cautious observer, they seemed little more than online Ponzi schemes and an unregulated frontier to get ‘rich quick’ built on nothing more than ‘hype’ and social media gloss.

Yet today it is an established, albeit fringe, multibillion-dollar ecosystem from which even the President of the United States couldn’t resist the temptation of making a pretty penny. 

Launched in January of this year, the $TRUMP coin entered the market with all the flash and fanfare that you would expect. Within hours of launching the coin was trading at $69 per coin, but that plummeted to just $9 by the 22nd of April, with its total market capitalisation being around $684 million.

On Wednesday morning this week President Trump posted on social media that the top 220 holders of the coin would be invited to a private dinner at the White House with the top 25 in this group being promised an “ultra-exclusive VIP reception” with the President and a personal tour.

Within minutes, the market responded. The value of the $TRUMP coin surged to $14, with the total market capitalisation climbing to $1.99 billion, an increase of 300% from just the day before. 

This move raises profound ethical and legal questions.

Offering access to the President of the United States (private dinners, VIP receptions, and tours of the White House) linked to ownership of a coin that bears his name and is mostly owned by him/his team is not just a novelty. It is paying for political access if you personally enrich the President. Trump may have forgone the presidential salary but he certainly has not given up  cashing in on the position.

This also seems to fly in the face of what US regulators like the US’s Securities and Exchange Commission (SEC) has been saying about crypto. The SEC recently released a statement that this form of crypto, “meme coins”, did not merit the same scrutiny as traditional financial markets because they “typically have… no use or functionality [and that they are for] entertainment or other non-functional purposes”. Instead they likened it to a speculative hobby, like collectibles. 

But surely $TRUMP is offering something very real, and has moved past a speculative hobby? If purchasing $TRUMP now provides one with the red carpet treatment at the White House, as well as access and exclusive time with the President, then surely the asset has become something very real indeed. 

Similarly, it must be questioned whether this constitutes insider trading. Insider trading is defined as the “illegal practice of trading… to one’s own advantage through having access to confidential information”. Trump and Trump’s team own the majority of $TRUMP. Him posting about this unique offering was obviously going to make the value of the crypto coin jump and would benefit those who knew the social media post was coming and who owned vast quantities of the “asset”. This bears remarkable similarities to old school (and very illegal) ponzi schemes: get in early, inflate the assets value, sell for profit at the expense of the unlucky majority that believed your schmooze. 

The only difference here is that it is the most powerful man in the world scamming his loyal fan base. I think it would be fair to say that the presidents of old, once they had been filled in on what the internet is and what crypto meme coins are, would be turning in their graves to see their office desecrated for the sake of a quick buck.