Senate Probes Trump's Crypto Ventures for Ethics Violations

The US Senate’s Permanent Subcommittee on Investigations, led by Democrat Richard Blumenthal, has initiated a formal inquiry into President Donald Trump’s crypto ventures. The probe focuses on potential conflicts of interest and violations of federal ethics laws, particularly involving the Official Trump (TRUMP) token and the World Liberty Financial (WLFI) project.

The investigation, detailed in two letters sent on May 6, targets Bill Zanker of Fight Fight Fight LLC, the entity behind the TRUMP meme coin, and Zach Witkoff, co-founder of Trump-backed WLFI. The letters emphasize the Subcommittee’s concern over potential violations of government ethics rules and the involvement of foreign governments and individuals under federal investigation in these ventures.

The TRUMP meme coin saw a significant increase in value following President Trump’s endorsement, but it soon plummeted. This pattern is reminiscent of a common cryptocurrency market tactic known as a ‘pump and dump,’ where insiders profit from a new crypto before its price collapses. The firm promoted a “Dinner with Trump” initiative to revive interest, which again spurred a sharp increase in the coin’s price. This has raised concerns about insider trading and the potential exploitation of the President’s influence to benefit his family and business associates.

The letter from Blumenthal noted that President Trump’s financial entanglements with the TRUMP coin, as well as the attempted use of the White House to host competitions to prop up the value of TRUMP, represent an unprecedented pay-to-play scheme. This scheme provides access to the Presidency to the highest bidder, further fueling concerns about ethical violations.

WLFI is also under scrutiny. The firm’s website lists President Trump as its “Chief Crypto Advocate,” with his sons, Eric, Donald Jr., and Barron, serving as the DeFi project’s “Web3 Ambassadors.” Blumenthal claimed that President Trump’s financial ties to WLFI allow and invite anyone in the world, including foreign governments and unscrupulous individuals, to directly enrich the President and his family. This threat is not hypothetical, as WLFI has received significant investments from foreign nationals, including $75 million from TRON founder Justin Sun, who is facing allegations of market manipulation in an ongoing civil fraud case with the SEC. Additionally, WLFI’s stablecoin USD1’s involvement in the $2 billion Binance and Abu Dhabi-based MGX collaboration has sparked concerns, as Binance admitted to intentionally violating anti-money laundering, sanctions, banking, and financial crimes laws in January 2023.

Furthermore, DWF Labs has invested $25 million in WLFI, but the firm is linked to market manipulation and has ties to Russian banks, bypassing sanctions. The Subcommittee is now investigating both companies’ financial operations and foreign dealings, requesting detailed records from both Fight Fight Fight LLC and WLFI regarding their ownership structures, financial relationships with Trump-affiliated entities, and communications with foreign governments. The Subcommittee is also probing whether either firm has implemented sufficient policies to prevent insider trading, foreign influence, and violations of US sanctions and anti-money laundering laws.

Senator Chris Murphy and Congressman Sam Liccardo of California recently introduced the Modern Emoluments and Malfeasance Enforcement (MEME) Act. This bill prohibits the President, Vice President, Members of Congress, senior Executive Branch officials, and their immediate families from issuing, sponsoring, or endorsing digital assets, including meme coins. Senator Murphy directly targeted the TRUMP meme coin, describing it as “the most unethical, the most corrupt thing a President of the US has done.” He stated that it is essentially a way for corporate CEOs, Saudi princes, or foreign oligarchs with business before the Trump administration to send Trump money privately and secretly, whispering to the Trump administration about how much money they have sent in favor of what they need.

Blumenthal’s investigation and the MEME Act signal a broader push by Democratic lawmakers to address ethical concerns surrounding cryptocurrency in politics. The White House has not yet responded to inquiries regarding the investigation or the proposed legislation.