Yves here. I’m not wild about framing the rampant con-artistry in the world of crypto as if it were a right-wing speciality. Has everyone forgotten the crypto-scammer uber alles, Sam Bankman-Fried, a huge donor to Team Dem and allied causes? The fact that the two biggest crypto exchanges, FTX and Binance, failed and their founders were criminally charged and went to prison, should be proof enough of how rancid this ecosystem is.
Nevertheless, it is also true that strong-form libertarians heart crypto and seem remarkably indifferent as to how it facilitates crime, such as ransomware, sex trafficking, and drug-running, when in other context, they love muscular policing. Is this meant to be a self-licking ice cream cone?
By John Feffer, the author of the dystopian novel “Splinterlands” (2016) and the director of Foreign Policy In Focus at the Institute for Policy Studies. His novel, “Frostlands” (2018) is book two of his Splinterlands trilogy. Splinterlands book three “Songlands” was published in 2021. Originally published at Common Dreams
Back in 2021, Donald Trump called cryptocurrency “a disaster waiting to happen” and a “scam.” Takes one to know one, right?
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 tankeda 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% to around 85% 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 restrictionson 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% of the population disapproving of his policies (compared to 43% 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 MSNBCreported 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 Timesnotes:
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.
Jeez, “crypto” really should just be synonymous with “Ponzi scheme” now. It’s, if anything, even more fraudulent than anything Ponzi did.
Except for the “extremist funding” sentence, the article is almost entirely about so-called “meme” coins, which, I agree, are a sort of scam/ponzi scheme. But meme coins has about as much relevancy to bitcoin as collecting Mr. Potato Heads has to do with the US dollar, as far as I can tell. Some of the meme coin scams scale larger than Mr. Potato Head but they fall far short of the capitalization of bitcoin and its acceptance around the world. And the same goes for the use of bitcoin in criminal activities — US $100 bills have a much larger use for that than does bitcoin, for example.
https://youtu.be/lRvqBI6I2z4?feature=shared
She stole $10 Billion of bitcoin.
Where does she fit in there? Above or below Mr. Potato Head?
Not familiar with the young lady.
Is she a collectible?
Please tell that to all the newbies who were taken.
The entire history of finance is full of frauds (and a meme coin is effectively a fraud),which is why over time regulations developed, to make financial instruments safe or at least not insanely reckless and stoopid for the unsophisticated. You are on the side of fraud. Glad we have that clear.
As I said in my post, “…meme coins, which, I agree, are a sort of scam/ponzi scheme.” I don’t know enough about the technicalities as to what exactly constitutes “fraud”, but I agree it’s a bad idea to buy into any ponzi: you might get lucky and sell higher than you bought, but chances are you’ll get rug pulled and lose most of your “investment”. So I think we basically agree on that. Lots of scammers and crooks. So I think I’m clear about that.
The essence of a “Ponzi” is the scammer: (i) promises investors a return; (ii) deceives investors to believe that the venture generating the profits to pay the return; (iii) in reality, the scammer is relying on new investors, rather than profits, as the source of funds.
You might characterize crypto as a scam, but the vast majority is not a Ponzi because there is no promised return. Terra/Luna was an exception because it promised a 20% return. FTX was a fraud, but not a Ponzi, because it promised no return; rather, SBF used customer assets to gamble. Trump’s meme coin, like all meme coins, is a speculative gambling token, but not a Ponzi scheme, because there is no promised return.
I think a big reason why crypto is popular with the far-right is the the Libertarian movement within the far-right. You can see how this new administration embodies a lot of the Libertarian-Right ideology with the push for less regulation and government, and free-market and free-speech absolutism.
It’s unfortunate because there is a significant amount of people worldwide who use crypto as an alternative to their country’s poor financial system, like mentioned in Argentina, but the Libertarian side of it truly favors capital and power.
A lot of people have been truly indoctrinated that a completely “free” market, lacking market controls, is the best system and this is seen to American society with their concept of freedom. It’s materializing in debates against things like DEI, state funding, etc, because the belief is that market dynamics will always lead to the correct balance. Crypto really embodies this ideology combined with the push of financialization of all goods in the form of “asset tokenization”.
You can also see this overlap in the “Freedom Cities” movement that was recently introduced in the US, pushed by those who created Prospera. The powerful Libertarian-Right want to see this same freedom to create city-states in the US, have their own (crypto)currencies, etc.
I get a kick out of self-styled “libertarians” and “free speech absolutists” who openly push for extreme authoritarian policies, and smashing free speech. “Freedom for me, slavery for thee, we love hypocrisy”
Just invert the terms, and we have much more accurate description.
Libertarian and Free Speech are NewSpeak terms apparently
I agree with Yevs that, while it’s true some crypto world people have been partisan to the Republican Party, i see the alliance as primarily opportunistic for both the crypto people and maga/ republicans. Biden’s regulation of crypto was pitiful, and the authors framing that right wing= eroding the state i think is an oversimplification. In any sane world, crypto would be banned and most of the people at the top would be charged with fraud.
Agreed. When I was a kid I recall the old saying that “politics makes for strange bedfellows”. I mean the counter picture is so obvious in how the mainstream Dem party has become the party of war. I mean the Dem’s lost a presidential election in 1988 in part because they laughably placed Dukakis on a tank for a photo op. Fast forward to our current period and the Dems are more than happy to remind everyone of the Opps Room call by Obama to take Bin Laden.
The fact that now serious discussions are held everywhere about crypto shows how much fraud and the corruption that enables it have become societally normalized.
This parallels a similar normalization of genocide.
That is some carny talk right there.
From the ADL article linked: “Regulatory and government agencies should take action and encourage private sector partners to counter the financing of hate and extremism by engaging in partnerships and providing guidance on the current threat landscape.”
The reason the “extremist and hate” organizations are using bitcoin to transfer money is because organizations like the ADL have pressured non-bitcoin transfers from banks, PayPal, etc., to not allow organizations deemed “extremist” by the ADL and others to have accounts.
A question for me is, who gets to decide who is an “extremist”? The ADL, the government, Elon Musk? Another, should banks, etc., yield to such pressure?
Tucker Carlson has a new interview of Sam Bankman-Fried.
The most interesting point is he hasn’t heard a word from the hundreds of people who used to be his friend. I read in only a couple of obscure places that the depositors got all of their money back although they did miss the full run of bitcoin X 6 and Anthropic stock X 10. It turned out it was only a brief liquidity problem and his business was fundamentally sound. **
** If a cryptocurrency business can be described as fundamentally sound. I am definitely not buying into one any time soon.
Until Trump came back in vogue, crypto seemed to me to be a young male adult thing to do-don’t be old fashioned like your parents and their 401k, ok?
I never got the feeling that evangs were really into it to some extent, just another odd thing pitched on Fox news TV commercials.
But that was then…
As much as i’d like to have a near full strategic petroleum reserve, i’m relieved that my Tacoma was converted to take Bitcoin in lieu of gas, now that the strategic Bitcoin reserve nears being a reality.
Its going from something you once openly joked about, to really nervous laughter that something so silly could be the catalyst of the end of Capitalism, as we knew it.
Dont worry little people, Bitcoin, Meme coins, NFT’s are all backed up by some of the most solid thin air….
The solid gold in the gold reserves is likely most solid thin air too. I guess that’s why they had to introduce the term physical gold.
But you can rest easy, because the US dollar isn’t backed by gold but instead by “the full faith and credit” of the US government.
There is probably still gold in Fort Knox. But for every bar there, 5 or 6 people may think they own the title to it.
Anyone with half a functioning brain knows that Crypto is a scam.
I thought Johnny James nicely summed up the Libertarian credo with: “Freedom for me, slavery for thee, we love hypocrisy”. I could never understand how Libertarians could complain about “unbacked fiat government currency” while embracing empty air (Crypto) in the next breath.
So are we looking at the quantum revolution where money is no longer a token but now a digital commodity? No mining necessary. It sounds like the logical end point for financialism. The one where we break through the reality barrier into a state of being where there is endless and infinite credit? Just waiting to be hooked up with a good cause? Some bright idea that is not held hostage to the demand for extraction and profit? And etc. So why do we all feel so sick and insecure? If we only knew how to make all the things we need just materialize… no problem.
We were set up by people who have been victims. Our aim is to look out for you as well and ensure you get back your loss.