Trump-Backed Crypto Firms Face Share Collapse: Regulatory Risk and Investor Sentiment in the Post-FTX Era

The collapse of FTX in late 2022 marked a watershed moment for the cryptocurrency market, triggering a wave of regulatory scrutiny and eroding investor confidence. Fast-forward to 2025, and the legacy of that collapse continues to reverberate through the fortunes of high-profile crypto ventures, particularly those backed by the Trump family. Eric Trump and his associates have seen mixed results in their crypto-related investments, with American Bitcoin (ABTC) and ALT5 Sigma (ALTS) serving as case studies in the interplay between regulatory risk, investor sentiment, and market volatility.

The Trump-Backed Crypto Experiment: A Tale of Two Stocks

American Bitcoin, a joint venture involving Eric Trump, Donald Trump Jr., and Hut 8, made a splash on the Nasdaq in September 2025. The stock surged over 100% intraday before settling at $8.04, a 16.5% increase from its opening price of $6.90SEC Crypto Roundtables Illuminate Regulatory Path for …^[5]. By the close of trading, the Trump family's combined stake was valued at over $1.5 billionRegulatory Volatility in Crypto: Navigating SEC Policies & Market^[4]. This success was driven by a $220 million merger with Gryphon Digital Mining, which provided capital to expand Bitcoin mining operations and increase treasury holdingsTop 7 Cryptocurrency Trends (2025 and Beyond) - Exploding Topics^[2]. However, the optimism surrounding ABTC contrasts sharply with the fate of ALT5 Sigma, another Trump-linked firm.

ALT5 Sigma's stock plummeted 60% after announcing a $1.5 billion treasury of World Liberty Financial (WLFI) tokens in August 2025Clarifying the CLARITY Act: What To Know About the …^[1]. By September 24, shares had dropped 9.76% to $3.42 amid an SEC investigation into potential stock manipulation and inflated earnings tied to the WLFI partnershipSEC Crypto Roundtables Illuminate Regulatory Path for …^[5]. The firm's decision to reclassify Eric Trump from a board director to an observer—following Nasdaq compliance discussions—further eroded trustEric Trump backed company crashes after controversial move^[3]. These divergent outcomes highlight the fragility of crypto-related investments in a post-FTX environment, where regulatory uncertainty and investor skepticism dominate.

Regulatory Risk: The SEC's Evolving Stance

The U.S. Securities and Exchange Commission (SEC) has played a pivotal role in shaping the post-FTX landscape. Initially criticized for its enforcement-heavy approach, the agency has shifted toward a more collaborative strategy under Acting Chair Mark Uyeda. The 2025 Crypto Task Force, led by Commissioner Hester Peirce, has prioritized rulemaking over litigation, aiming to clarify how digital assets are classifiedSEC Crypto Roundtables Illuminate Regulatory Path for …^[5]. This includes efforts to define crypto assets as either securities, commodities, or permitted payment stablecoins under the proposed CLARITY ActClarifying the CLARITY Act: What To Know About the …^[1].

Despite these efforts, regulatory ambiguity persists. The SEC's ongoing investigation into ALT5 Sigma underscores the risks of navigating a fragmented framework where the CFTC and SEC vie for jurisdictionClarifying the CLARITY Act: What To Know About the …^[1]. For investors, this duality creates a “regulatory whack-a-mole” effect, where compliance costs and legal exposure remain high. As one analyst noted, “The lack of a unified regulatory approach has turned crypto into a high-stakes game of guesswork for both firms and investors”Regulatory Volatility in Crypto: Navigating SEC Policies & Market^[4].

Investor Sentiment: From Hype to Hesitation

Investor sentiment in the crypto market has undergone a profound transformation since 2022. The FTX collapse shattered trust in centralized exchanges, prompting a shift toward institutional-grade products like spot Bitcoin ETFs, which gained SEC approval in early 2024Top 7 Cryptocurrency Trends (2025 and Beyond) - Exploding Topics^[2]. These ETFs attracted institutional capital by offering a familiar, regulated vehicle for crypto exposure, reducing the need for direct ownership of volatile assets.

However, retail investors remain a wildcard. Social media sentiment and online platforms continue to drive short-term price movements, as seen in the WLFI token's initial hype and subsequent crashSEC Crypto Roundtables Illuminate Regulatory Path for …^[5]. The Trump family's involvement in crypto has amplified this dynamic, with their political clout generating both media attention and regulatory scrutiny. For example, World Liberty Financial's $5 billion paper gainEric Trump backed company crashes after controversial move^[3] was offset by the SEC's skepticism, illustrating how celebrity endorsements can backfire in a market demanding transparency.

The Path Forward: Balancing Innovation and Caution

The Trump-backed crypto ventures exemplify the broader challenges facing the sector. While ABTC's Nasdaq debut demonstrates the potential for institutional validation, ALT5 Sigma's collapse underscores the perils of speculative strategies in a regulatory gray zone. For investors, the key takeaway is clear: crypto remains a high-risk, high-reward asset class where regulatory clarity and corporate governance are paramount.

The SEC's 2025 initiatives, including the CLARITY Act and Crypto Task Force, offer a glimmer of hope for a more structured market. Yet, as long as enforcement actions and political entanglements persist, volatility will remain a defining feature. As one market commentator put it, “The crypto market is now a test of resilience—both for regulators trying to catch up and for investors learning to navigate a landscape where trust is earned, not assumed”Regulatory Volatility in Crypto: Navigating SEC Policies & Market^[4].