For more than a year, the firm was investigated by part of President Joe Biden’s Democratic administration An aggressive push to regulate The largely unregulated cryptocurrency industry. Financial regulators have told the company that enforcement action is a possibility.
Donald Trump again won the 2024 electionsAnd the company’s legal troubles went away.
Crypto.com increased spending for a lobbyist close to Trump and donated $11 million to political committees tied to the Republican president, records show. Within months, the investigation was closed. As of August, Crypto.com announced it was investing nearly $1 billion in assets A venture with a new partner -Trump’s social media company.
Legal and ethics experts say Crypto.com’s journey from investigative target to Trump business partner provides a case study conflict of interest that has arisen Trump’s second presidency. Unlike any of his predecessors in the modern era, Trump has allowed his family businesses to enter into lucrative arrangements with companies regulated by the federal government, some of which have benefited from actions taken by his administration.
In this example, the deal with Crypto.com was favorable to the president’s social media company, which is millions of dollars lost Since its 2021 launch. Trump Media & Technology Group put up very little cash, yet received a substantial ownership stake in the new treasury for Crypto.com’s Kronos token.
Kedric Payne, formerly a top lawyer at the Congressional Ethics Office, said presidents historically have “made great efforts to avoid even the appearance that they are using the office for personal gain.”
“This looks like another example of pay-to-play administration,” said Payne, who leads the ethics program at the nonpartisan Campaign Legal Center in Washington. “There is clearly a perception that in order to receive favorable policies and actions from the administration, a company needs to provide financial benefits to the President.”
In a statement, Crypto.com spokeswoman Victoria Davis did not address the concerns raised by legal and ethics experts.
“Crypto.com wants to partner with companies that are pro-crypto and share our vision for its future,” said Davis, who calls Trump Media “a leader in digital media.”
Trump did not respond to specific media questions about the arrangement. In a brief statement, company spokeswoman Shannon Devine called the story “clearly spoon-fed to The Associated Press by political operatives.”
The White House has repeatedly said that Trump has Appropriate steps to avoid conflict of interestPointing to his decision to place his business stakes in a trust controlled by his sons shortly after his presidential election.
“Neither the President nor his family have ever engaged in, or will ever engage in, a conflict of interest,” White House press secretary Carolyn Leavitt said in a statement.
Trump media gets involved in crypto
Trump Media & Technology Group, which is majority-owned by Trump, was not founded with cryptocurrencies in mind. Its flagship truth social platform was launched in early 2022, giving the then-former president a megaphone after he was banned by Twitter and Facebook for his role in instigating the January 6, 2021 attack. crowd of his supporters At the US Capitol. Trump has been reinstated on both platforms.
Truth Social faced obstacles getting started. A shell company – a SPAC in financial jargon – that raised money for the venture was investigated by the Securities and Exchange Commission for misleading investors, culminating in a multimillion-dollar fine. A SPAC board member was sentenced to prison for insider trading.
when it goes public in 2024Trump Media was forced to fend off litigation from two co-founders who accused the company of fraudulent dealings in shares.
Trump Media hasn’t made a profit yet. Last year alone it suffered a loss of more than $400 million. Its share price closed at about $10.50 a share on Monday, down from a high of about $62 when it began trading in March last year. Over the past year, company executives have branched out into new directions of business, including streaming platforms, financial services — and crypto.
The move into crypto reflects a complete evolution in Trump’s thinking about digital currencies. Shortly after leaving office in 2021, he said that Bitcoin, a major cryptocurrency, “feels like a scam.” Three years later, during his presidential campaign, he took a very different approach. His family launched their own crypto company, World Freedom Financialstarted token sale and pledged to roll back regulation of the industry.
Among those who have been involved in trading entanglements: Changpeng Zhao, the billionaire founder of Binance, who was Trump pardoned This comes several months after participating in a complex deal with a sovereign wealth fund for the United Arab Emirates. As part of the arrangement, $2 billion was invested in World Liberty Financial to purchase its new crypto stablecoin.
In a statement, Binance said it was “inaccurate and extremely misleading” to describe the company’s business activities with World Liberty Financial as a “conflict of interest.” The company said the decision to use World Liberty’s stablecoin to complete the deal was made by the UAE’s sovereign wealth fund.
SEC also Justin Sun’s investigation stopped The crypto tycoon said he bought about $200 million in Trump crypto offerings.
Sun did not respond to requests for comment made through its company.
SEC investigation
Crypto.com spent much of 2023 and 2024 battling potential regulatory action by the Biden administration. After Trump defeated Biden, the crypto firm started donating to political committees affiliated with the president-elect.
Crypto.com gave $1 million to Trump’s inauguration last December, followed by a $10 million contribution to the president’s super PAC, MAGA Inc., in February. In late 2024, Crypto.com began increasing lobbying spending for Trump World powerbroker and GOP fundraiser Jeff Miller, who served as finance chairman of the incoming president’s inauguration festivities.
Miller, who did not respond to a request for comment, lobbied the White House and the SEC on regulatory matters, according to the disclosure report. The investigation was formally dismissed on 27 March.
A spokesperson for Crypto.com said that Miller “had no involvement” in the SEC investigation. The company declined to comment on the nature or seriousness of the charges being filed against it by the SEC.
Agency commissioners authorized charges against Crypto.com during Biden’s presidency. But company lawyers negotiated with the SEC to delay filing any enforcement actions until Trump became president. In return, Crypto.com withdrew a counter-lawsuit filed against the SEC. Such negotiations are common before the SEC brings an enforcement case.
“Ultimately, the investigation was closed because there was no legitimate case to pursue,” spokesman Davis said. “There is no connection between that decision and Crypto.com’s” political activities.
“Any claims to the contrary are completely false,” he said.
Just days after Crypto.com revealed that the SEC investigation had been dropped, the Trump media was making up its own news.
Search for new partners
When he launched a series of investment funds with a “Made in America focus” in March, Trump Media announced that Crypto.com had been selected to become the digital host of the funds.
However, the Trump media is eyeing even more deals, and an early effort between the two companies offered a glimpse of what the future holds.
In April, executives of the social media company indicated that they were looking for a telecommunications, media or technology company to acquire. They teamed up with a financial services firm and launched a SPAC to raise money for the venture.
Four months later, Trump Media and Crypto.com announced the formation of Trump Media Group CRO Strategy. He said the new company would serve as the treasury for Crypto.com’s Chronos token, though company officials did not disclose many specifics.
Under the terms of the deal, which has not yet been finalized, Crypto.com is obligated to contribute the bulk of the capital it will sink into the venture worth $1 billion of its Kronos token. Yorkville Advisors, a financial services firm that has worked closely with Trump Media, is offering a range of credits. Trump Media’s contribution is more limited and includes “a license to use certain intellectual property,” according to the SEC filing.
According to a company press release, all three companies will have “majority ownership” in the new venture. But how much stake Trump media will have has not been disclosed yet.
“When you consider that the investigation into (Crypto.com) has been dropped, the economics of it look more like a plea deal than a business deal,” said cryptocurrency policy expert Corey Fryer, who was a senior official at the SEC during Biden’s presidency.
Hillary Allen, a law professor at American University who specializes in banking and cryptocurrencies, said the deal was troubling from an ethical perspective.
“With Crypto.com, we removed an investigation and made an investment (in Trump Company) after the fact,” Allen said. “People can draw their own conclusions.”
Trump Media Chairman and CEO Devin Nunes told a conservative commentator in August that the new company offered consumers “two names” — Trump Media and Crypto.com — “you can trust.”
“This is really going to be the future of finance,” said Nunes, a former congressional Republican and close Trump ally.
Crypto.com appears to be eager to strengthen other deals with Trump Media. The crypto exchange announced in October that it was creating an online marketplace that would allow Truth Social users to bet on a range of world events.
Among those on which users will be able to bet: Election results.
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