Trump’s Embrace of Crypto Business Raises Ethics Alarms
58:39 Share

Support for KQED Podcasts comes from Star One Credit Union, now offering real-time money movement with instant pay. Make transfers and payments instantly between financial institutions, online or through Star One's mobile app. Star One Credit Union, in your best interest. Support for KQED Podcasts comes from the Exploratorium After Dark. Adults 18 plus discover mind-bending programs and grab a drink every Thursday from 6 to 10 p.m.

Tickets at Exploratorium.edu slash After Dark. From KQED. From KQED in San Francisco, I'm Mina Kim. Coming up on Forum, cryptocurrency markets are tumbling today on news of Trump's tariffs. After riding a high since the election, when candidate Trump promised to make the U.S., quote, the crypto capital of the planet.

He and Melania Trump have released meme coins featuring their images. And last week, the president's social media startup announced plans to expand into crypto. This hour, we take a closer look at the president's embrace of cryptocurrency and why it's raising not only ethics concerns, but also national security concerns. Join us.

Welcome to Forum. I'm Mina Kim. Just a few years ago, Donald Trump said that cryptocurrency seemed like a scam. Here he is in 2021. Bitcoin just seems like a scam. I don't like it because it's another currency competing against the dollar.

But after taking tens of millions of dollars in donations from the industry and making his own big investments in the technology, Trump is calling himself the first crypto president. Here he is at last year's Bitcoin conference. I'm laying out my plan to ensure that the United States will be the crypto capital of the planet and the Bitcoin superpower of the world. And we'll get it done.

We take a closer look this hour at Trump's about-face on crypto and why it's alarming ethics and national security experts and even some crypto industry leaders.

Joining me, Zeke Fox, an investigative reporter for Bloomberg and author of Number Go Up, Inside Crypto's Wild Rise and Staggering Fall. Zeke, thanks so much for being with us. Thanks for having me. Andrew Chow is also with us, a correspondent for Time. He covers technology, culture, and business and is the author of Cryptomania, Hype, Hope, and the Fall of FTX's Billion Dollar Fintech Empire. Andrew Chow, welcome to Forum. Hey, Mina, and hey, Zeke.

So glad to have you both on, Zeke. I'll start with you. Zeke, as I mentioned, Donald Trump was a crypto skeptic in his first term. So what happened? Talk a little bit about his evolution and how he got to now. So this was a real triumph of lobbying. Trump during his first term, like you said, was pretty against crypto and his Securities and Exchange Commission started some of the lawsuits that crypto people hate.

But in late 2022, Trump kind of signaled that he might be a little more open to crypto because he licensed his image for a series of non fungible tokens, which are basically like digital trading cards. And these are cartoons of like,

Trump looking really jacked, or he's an astronaut, or he's hunting. And they were sold for $99 each. And Trump made a couple million bucks off these NFTs. And Bitcoin promoters saw this, and they thought, hey...

Maybe this guy isn't so against crypto after all. And the person who was really influential in this campaign was David Bailey, who's the 33-year-old chief executive officer of Bitcoin Magazine. So believe it or not, this guy, together with another Bitcoiner he knew from Puerto Rico, got introduced to the Trump campaign by Paul Manafort, a

who was influential with Trump the first time around. And they promised to raise a ton of money for Trump. And what David Bailey said himself on a podcast, the campaign, they're used to BS artists all the time trying to sell them stuff. If you want it to progress, you've got to show them the money.

And he got together maybe a dozen, a couple dozen Bitcoiners. They all maxed out to the campaign. You can give $844,600 to Trump and then various committees. And this got the campaign's attention. He said, hey, Trump wouldn't have done this if he didn't already, you know, start, if he wasn't already starting to like Bitcoin. But David Bailey also said,

I've been shocked to discover over time the impact that a very, very small number of people can have. So this was...

you know, a few months before that Bitcoin conference that we were just listening to. And I was watching this. I couldn't I was very skeptical. I thought there's no way they'll get Trump to come to a Bitcoin conference during the campaign. This is a real niche issue. But sure enough, they promised to host this big fundraiser. And then there was Trump giving a speech and going through all of their favorite talking points.

Yeah. And Andrew Trump even held a crypto ball days before his inauguration. Right. In broad strokes, talk about what the industry is poised to get as a result of their investments in him. Absolutely. So I think another really important piece of Trump moving towards crypto and crypto moving towards Trump is,

was how much crypto was, I guess they would say, pummeled by Biden's SEC. So it's kind of funny because crypto grows enormously under Biden. Right after Trump leaves office in 2020, during the pandemic, there's this huge ramp up where Bitcoin goes from, you know, $10,000 all the way up to $69,000. But then it drops back down.

And a lot of people in the crypto industry blame Biden's SEC chair, Gary Gensler, who, you know, he runs securities regulation in the U.S. He's responsible for protecting consumers. And he starts suing crypto projects and companies he deems as violating security laws.

the crypto companies hate this because Well, he's suing small companies. He's doing big companies and they feel like you know, he's waging this what they say is, you know this Prosecutorial campaign against them driving crypto overseas, you know destroying the crypto ecosystem in America of innovation They're using all these big buzzwords and so

They fixate on Gary Gensler as crypto's public enemy number one. And their number one mission becomes they need to get Gensler out to have a more lenient regulatory regime. They also want to create new rules in Congress that will shift some of the regulation that

uh of crypto from the sec to a much smaller regulatory agency this is actually one of the big missions that sam bankman freed of ftx had in 2022 is try to get the sec's foot off of crypto's neck basically

So they're running this campaign and basically all of these Silicon Valley bigwigs who maybe used to support Obama or other Democrats, they see this wedge issue where they hate Gensler, they need to get Gensler out, and they think that maybe they can persuade Trump thanks to some of the methods that Zeke talked about. So some of the key leaders in Silicon Valley like Marc Andreessen, like David Sack,

David Sachs, sorry, announced that they're jumping over to Trump. This develops a lot of momentum for him. And so they think that basically Trump is going to deregulate

And that they can also get all these new Congress members in who are also going to provide a better legal structure for crypto to thrive in the U.S. Yeah. And essentially they get this, right? Gensler has left the SEC as of January 20th, is my understanding. And it looks like deregulation potentially with some of Trump's nominees and other appointments are on the horizon, plus the legitimization of

Crypto entrepreneurs. I want to invite listeners into the conversation. Listeners, what do you think about Trump's embrace of crypto and the administration's efforts around the industry? What questions do you have about cryptocurrency? You can email forum at kqed.org. Find us on our social channels at KQED Forum or call us at 866-733-6786, 866-733-6786.

And Zeke, I asked that question, what questions do listeners have about cryptocurrency? Because I feel like every time we do a show on this, we do need a bit of a refresher for those of us who are not immersed in this world. So can you just give us a just a quick overview of what crypto is?

Yeah, it's pretty confusing because the original idea for Bitcoin, which you might be most familiar with, is that this was decentralized digital money that was going to be used over the internet in place of dollars. And in practice, that hasn't really panned out. Very few people are actually using crypto to buy and sell everything.

everyday items and what has happened though is that there's tens of thousands of different cryptocurrencies which have become this kind of massive offshore casino where you can gamble on everything from trump coin to dogecoin to cardano and some of these cryptocurrencies represent almost like shares and companies others are kind of payment networks like the original idea was

And then others are pure gambling, pure speculation, like Dogecoin, a coin that you buy if you think other people might buy it, if you think that a dog joke could somehow attract more attention and get people excited. Right. So they have no inherent value. And Andrew, President Trump and Melania Trump introduced meme coins just before the inauguration. So what are those exactly? Can you just remind us, Andrew? Sure.

It is a pretty crazy world. I guess I just want to first echo Zeke's point that he just made to say that, you know, the origins of Bitcoin were actually to solve a real world problem. If you think about how we engage with our financial system.

uh right now in this digital world every time we try to touch money there's sort of this third party that is standing in between us and actually our money uh whether that's PayPal whether it's Venmo whether it's American Express um there's always some sort of intermediate intermediary that might have its own you know aims for you know

how it wants to engage with the financial system. And a lot of these third party systems work really well in the US to the point that we don't even notice them. But especially overseas and other countries where there isn't this financial infrastructure, the idea of Bitcoin

Which is this yeah again this financial infrastructure where maybe you don't need these third-party companies It becomes very appealing to move money in and out of countries perhaps without government oversight perhaps to fight you know the the rampant inflation of countries like Nigeria or El Salvador or Argentina so there is an actual problem that Bitcoin errs are trying to solve and

But as Zeke said, I think a lot of the crypto world has gotten pretty far away from these original intents. And that brings us all the way to meme coins.

Yeah. And actually, we're coming up on a break. And I'm just a little worried that if we start to get into it right this moment, you'll you'll be cut off. But I just do want to underscore your point about yes, there was a purpose. But the question now that I think is on people's minds, and you can tell me if this is true, Andrew, is whether or not the president should be investing in something along the lines of meme coins and various other investments that he's made, when he is also part of a government body that's supposed to regulate it, right? Yeah.

there are huge, huge conflict of interest concerns.

that I guess I would love to get into more after the break, maybe. Yeah, yeah. And we will talk about that. We are talking with Andrew Chow, correspondent for Time, who covers technology, culture, and business, and also Zeke Fox, investigative reporter for Bloomberg. We're talking about President Trump's embrace of cryptocurrency and why ethics and national security experts and even some industry insiders are sounding alarms. We're talking about it with them and with you listeners today.

Share your thoughts about Trump's embrace of crypto and the administration's efforts to boost the industry. Your questions about cryptocurrency at our social channels, at our email address forum at KQED.org and at our phone number 866-733-6786. I'm Mina Kim. Hi, I'm Bianca Taylor. I'm the host of KQED's daily news podcast, The Latest.

Powered by our award-winning newsroom, the latest keeps you in the know because it updates all day long. It's trusted local news in real time on your schedule. Look for the latest from KQED wherever you get your podcasts and stay connected to all things Bay Area in 20 minutes or less.

Welcome back to Forum. I'm Mina Kim. We're talking this hour about crypto and the president's embrace of crypto and why that's worrying ethics and national security experts and industry insiders. We're talking about it with Zeke Fox, investigative reporter at Bloomberg and author of Number Go Up, Inside Crypto's Wild Rise and Staggering Fall, and Andrew Chow, correspondent for Time.com.

who's also the author of Cryptomania, Hype, Hope, and the Fall of FTX's Billion-Dollar Fintech Empire. And you, our listeners, are sharing your questions and comments about crypto, the administration's efforts to boost the industry, and so on at the email address crypto.

Forum at kqed.org, on Blue Sky Facebook, Instagram, Threads, and other social channels at KQED Forum at our phone number 866-733-6786, 866-733-6786.

Noelle on Discord writes, as long as they don't use taxpayer money to prop up cryptocurrency, let them do whatever they want and let the dupes face the consequences if things go south. So Andrew, just before the break, we were talking about meme coins, and that's something that is incredibly volatile. So talk about the President Trump and Melania Trump meme coins, what they are and how this launch has gone so far.

So, as Zeke said earlier, meme coins are cryptocurrencies that have no inherent value. And most of the people who invest in them, they understand this. They understand that the price could easily go to zero.

But what they're betting is that there is going to be somebody else to take that asset off their hands, that because they buy in, other people are also going to buy in because of the enthusiasm and the hype around the asset, that the number is going to go up, and that they can make a whole lot of money very, very fast.

So maybe two days before Trump's inauguration, he launches this meme coin, which again has no inherent value. But because people are so excited about Trump, they think that maybe other people are going to buy and the number is going to go up and then they can make money. And that is sort of what happens for some people. The Trump meme coin goes all the way up to worth as much as $75 from basically nothing.

And then it goes all the way back down to about $18. So chopping that asset in a quarter in the span of two weeks. There are some people who bought in right at the top and maybe they made some money. And there's a lot of people who bought in at the top and have lost a lot. Now, as the listener just said,

There are some people who just view meme coins as a purely zero-sum game, and if you are dumb enough maybe to get in, then it's your fault. But there are people that I talk to that have real national security concerns about this meme coin. First of all, their huge conflict of interest concerns with Trump having so many businesses inside of a

industry that he's supposed to regulate and that regulators are supposed to protect consumers from the sort of fraud that we experienced three years ago with Sam Bankman-Fried and other crypto mavens. Trump doesn't only have a meme coin. He has another crypto project called World Liberty Financial, which no one quite knows what it is, I think. As Zeke said, he has the NFTs. He's very, very entwined with

in the crypto world and he keeps appointing crypto people to be in his cabinet. So Howard Lutnick is very involved in Tether, the stable coin which Zeke has done a lot of great work on.

David Sachs, the new crypto and AI czar, also is a VC who's sort of invested in the Solana ecosystem. Then there's Scott Besant, who leads treasury, and he's a pro-crypto hedge fund manager. So they're all these guys who basically come from that world and are incentivized to, I guess, take some of the guardrails off. Then talking specifically, just one more point, Sarah, I know I'm running quite long here, but about the Trump meme coins,

I talked to some people who are really worried that it can be used as a tool for perhaps bribery or to lean on Trump in financial ways that are outside of a clear system. So the idea that, you know, foreign nationals or groups now have a direct line to Trump's pocketbook.

where, you know, thanks to blockchain techniques, they can obscure the fact that they're giving, you know, millions or billions of dollars to Trump. Trump may be the only one who can see that, so you can sort of conduct backdoor deals that way. Or another fear is that maybe if...

a foreign adversary buys a lot of the Trump token, and then wields it over Trump's head, like, you know, if we sell it all off, we're going to crash the price. You know, your followers are not going to like that. So you know, you better do as I say. So those are Yeah, some of the concerns that people have. Yeah, exactly. I think it was in your article that you wrote, they allow foreign agents to buy large amounts of the tokens as leverage over Trump's policy decisions, the agents could buy tokens to win Trump's favor or threatened to sell them off, which could crash the

the token's price, and then also just the point you were making about the fact that it could also just be anonymous, at least to the rest of us, but not to Trump. I want to unpack so many of the things that you raised, Andrew. Thank you. First of all, Zeke, what is World Liberty Financial? Because I know that you reported on this.

Yes, and you I want to make something clear We've talked a little bit about Trump investing in crypto But Trump has not actually invested in crypto Trump has actually figured out the key way of making money in crypto Which is that you can make up virtual coins. It costs nothing You can just say hey Here's a billion Trump coins and then people will give you perfectly good real money for your made-up coins and so

I don't know if Trump's opinion of crypto has really changed so much as that he's realized, oh, these guys really like this crypto stuff. I guess I should do it and make some money off it. And the first one that he started promoting was World Liberty Financial. And this wasn't his idea. It was founded by these two online entrepreneurs, which is

Giving them too much credit. I'm one of them who I looked into his name's chase hero He's called himself the dirtbag of the internet. He used to sell 149 dollar a month get-rich-quick classes. He's been to jail for Marijuana dealing he sold colon cleanses online and he's actually said in a speech on YouTube that Regulators should kick people like him out of the industry so he

created world liberty with one of his buddies who used to be a professional pickup artist like he taught classes to men on how to pick up women um they are like hey we've got this new cryptocurrency they made a lot of promises about what they were going to do they got trump to endorse it and they started selling these world liberty coins and the funny thing is that these coins even by crypto standards were really unappealing they said that world liberty coins will not do anything

They do, even if World Liberty, the company is successful, that money does not go to the people who bought the coins. And in fact, you're not allowed to sell the coins. So there's no way, at least at this point, to make any money off them at all.

And at first, this offering was going really poorly, even though Eric Trump was saying, you know, this will make finance great again. People weren't buying it. But then this one kind of infamous crypto bro came in. His name is Justin Sun. He's based in Hong Kong and is very rich from running a crypto company called Tron.

Now, Justin Sun is facing an SEC fraud lawsuit in the US that he's fighting. He obviously wants to get that dropped. He invested $75 million into World Liberty coins. And the way that's set up, whatever you put into World Liberty, three quarters go straight to Trump. So he effectively gave Trump a $56 million gift worldwide.

while he has this pending case before the SEC. It's like this new form of buying influence that's never been possible before. Yeah. And do you know, Zeke, at least on paper, how much the Trumps have benefited from their meme coin?

The meme coin, it's actually surprisingly hard to figure out, but it seems like the best estimates of blockchain detectives are that maybe they made $100 million off the meme coin, and then maybe another $200 or $300 million off this World Liberty, because that has really taken off since he became president. A lot more people have been buying it. Why, Zeke, have some in the industry not been happy about the meme coins?

Well, they say that, oh, we're all doing such serious, important crypto stuff that's going to change the world. And isn't it a shame that Trump has started these frivolous projects that will make our industry look bad? And I think that's a little rich. Many of them are promoting, many of the people who are angry about the meme coins are, you

Doing their own far-fetched projects I think they're just mad because they wish Trump was promoting their cryptos instead of doing his own cryptos that Effectively compete with them their only hope is that Trump brings in and you see people talking about this on Twitter like crypto people They're hoping that Trump will bring in new

new buyers to the industry and that they can try and sell them some other stuff as long as they don't, these new people don't lose all their money on Trump coins first. But Andrew, didn't some crypto folks say that they also felt like it was predatory of the little guy who may not be so sophisticated in this space, but is a huge fan of Trump? I mean, yes, I would say

I mean, maybe you didn't hear it from me, but I would argue that it is very predatory. There are a lot of newcomers into crypto right now who, you know, because of the Trump name, it generates a lot of enthusiasm. And yeah, I think the crypto world, after really throwing their weight behind Trump in the lead up to the election, there's been a marked turn of sentiment around

where they're not so sure if Trump is good for them anymore. What they really wanted was legitimacy. They wanted to be taken seriously and to become sort of folded into the financial ecosystem. They also, like Zeke said, they wanted to offer all sorts of new innovative, they say, products of not just coins that are meaningless and valueless, but

Let's say if you attach a token to real estate, then will that make real estate more efficient? Now, that's a whole other conversation about whether that's legitimate. Or can you facilitate cross-border payments so that immigrants sending money back home don't have to jump through all these hoops or pay remittance fees? There are a lot of good ideas in the abstracts.

and then turning them into crypto ideas, it gets a little sticky. As Zeke says, the main focus and driver of crypto right now is this casino where people just want to make a lot of money really fast, and Trump is goosing the casino. Let me go to caller Shell in Castro Valley. Hi, Shell. Thanks for joining us.

Thank you. Hi. I wanted to mention that there was a woman before the 2008 crisis, Sheila Baer, I don't know if it was the FDIC, but she was telling the alarms with the federal government, and she's...

Focusing now in the private industry with cryptocurrency that can be regulated quite a bit more than the other sector of cryptocurrency. And she's saying it's just the Wild West and the stuff that they're allowed to do is...

should not be allowed. That's my comment. Yeah, Shell, thanks for the comment. Read on Blue Sky writes, Trump has never been constrained by ethics. And now that he has the power of the presidency in a compliant Congress and supplicant Supreme Court, he will not be constrained by the rule of law. Who will stand up against this? Who will stand up against this? I mean, Andrew, wouldn't the emoluments clause in the Constitution, which prevents a president from using their office to enrich themselves, have a role here?

Yeah, I mean, I think ethicists have been trying to pin Trump to the emoluments clause. Sorry, I garbled that. Since his first term. Crypto is very much not the first area of conflict of interest for Trump. There are some people who argue that maybe because he launched this meme coin before he was in office, that shields him a little bit. But

Yeah, I mean, I think he's in a gray area. I don't know if he has any more thoughts here. Well, also, Zeke, you know, would it be unlikely for members of Congress to push back very hard, given the fact that there are a lot of members of Congress, both

Republicans and Democrats who have been given money by the industry, especially when they were deciding to get really into politics, right? And putting more than $100 million in the 2024 election cycle. Does that mean that it's unlikely that we'll get much pushback or at least attention from Congress? Yeah, I mean, crypto is

is really a perfect issue for a special interest group because the average person does not really care about crypto. There's not like this big push of support for crypto regulation. Meanwhile, the industry is incredibly profitable and they actually spent more than any other industry on this election, something like $150 million. Now, their ads, because people don't care about crypto, do not mention crypto. But people in Congress can see, hey, if I endorse crypto,

I might get millions of dollars in donations or I might avoid having ads taken out against me. And there's no angle in it to them to be against crypto other than, you know, standing up for consumer protection or for the safety of our financial system. So I don't think we would see much opposition from them. And we mentioned before the conflict of interest issue.

Trump has said that his SEC is supposed to make new rules about crypto. Now, what are the odds those new rules would say Trump's meme coin is not allowed? Like, clearly, there's going to be intense pressure on whoever is forming these new crypto rules to say that. In fact, Trump's crypto ventures are on the up and up.

Well, as listener Sam writes, Trump has said he will create a national Bitcoin reserve. Will this happen? And what are the implications? Is there any arguable policy reason to do this? Zeke, I'll go back to you on that.

This is one of the craziest proposals. He made it in his speech at that Bitcoin conference. And you can kind of split up crypto people into two camps. There's like the crypto exchange, venture capital people. And then you have the Bitcoiners who are just like Bitcoin is the one true coin. And the most important thing is that this is...

is digital gold and the price is going to go up and up and up. And those people really supported this Bitcoin reserve. And the idea is that the government would use federal money to acquire Bitcoins. And the argument for it is that if the price of Bitcoin goes up, the government would make money. Now, this isn't something the government traditionally does, like gamble on financial assets. And

Even the biggest proposals for this one from Senator named Cynthia Lummis would have the government buying a hundred billion dollars of Bitcoin Which isn't really enough to make a tent in our national debt or something like that? Um, but it certainly is enough to make the price of Bitcoin go up more So people who have Bitcoin now are very excited about it. This would be great for them and

And they're really pushing Trump to do it. It remains to be seen whether he actually will. Right now, I think he's formed a committee to study the issue. Let me go to caller Luna in San Francisco. Hi, Luna, you're on.

Hi. Yeah, you know, I just wanted to disagree a little bit and push back on the idea that there isn't legitimate financial reasons for crypto. You know, I think that there are actually a bunch of useful purposes for various crypto products. And I guess I am in that camp of people who feel

feels that what the Trump administration is doing with it is actually really hurting its reputation, whereas there is actually some positive to it. Yeah, Luna, thanks. Actually, Andrew, you were saying that there were legitimate reasons for crypto and what it entered the space to be able to do right. But yeah, that this meme coin thing, I guess, is raising concerns, which is being reflected in Luna's comment. Yeah. Yeah.

I think going back to the comment from a previous caller, we tied it sort of into the 2008 financial crisis. Bitcoin was born in the ashes of the 2008 financial crisis. And when people both on the left and the right had a lot of really legitimate concerns over the centralization of banking and just the way that Wall Street controlled so many aspects of our whole financial system. So I think, you know, in the abstract, again, Bitcoin

if decentralized, could be a powerful tool to sort of dislodge some of these really powerful financial forces. Again, we're not quite seeing that yet. If anything, a lot of...

And Bitcoin is just getting centralized into these major players over again. And then, you know, I think there is some nuance here in terms of, you know, a lot of people want to view regulation of crypto as being. And we'll get into that nuance more right after this. Stay with us, listeners. This is Forum. I'm Mina Kim.

Coming up tomorrow on Forum, three of President Trump's most contested nominees, Kash Patel, Tulsi Gabbard, and Robert F. Kennedy Jr., sat for confirmation hearings last week, facing scathing questions from Democrats about their qualifications, judgment, and ability to lead critical federal departments. We look at the status of the nominations, along with other breaking national political news. Listen to past Forum shows by going to Spotify or Apple, or wherever you get your podcasts.

And join me tomorrow, February 4th, to learn about how much work goes into an opera production. Maestro Eun Sun Kim of the San Francisco Opera joins us for an evening of musical performances. Join us at KQED Live, in person, or online.

Welcome back to Forum. I'm Mina Kim. We're talking this hour about Donald Trump's embrace of cryptocurrency and what it might mean for the industry, the economy and national security. Andrew Chao is a correspondent for Time who covers tech, culture and business. Zeke Fox is an investigative reporter for Bloomberg. And you, our listeners, are joining the conversation with your questions and reactions to this turn toward crypto by the Trump administration. And

And whether or not you think it's a good idea, the email address is forum at kqed.org. You can find us on our social channels of Blue Sky, Facebook, Instagram, and Threads at KQED Forum. You can call us at 866-733-6786, 866-733-6786. Maybe you're an investor or work in crypto and have some thoughts about this as well. Maybe you have concerns about ethics and national security issues.

Feel free to share your thoughts. This listener on Discord writes, the dinosaurs and government are unprepared and unqualified to regulate this, just as they are for artificial intelligence. There certainly are technical ways to differentiate pump and dump coins from other coins, but

But not nearly enough effort has been put in to develop those ways. And I think that's some of what we were getting at before the break, Andrew, just in terms of nuance. And even if maybe some of...

People in the crypto industry are having a tiny bit of buyer's remorse when it comes to Trump. It sounds like on balance, they have gotten some significant wins, especially in terms of some of the appointments that you mentioned earlier in the program. And I want to get into those. I'm wondering if you could just tell us who David Sachs is and how he has basically been given the appointment as Trump's AI and crypto czar.

David Sachs is a major VC in Silicon Valley. He's also very influential because he hosts one of the most popular tech podcasts in the Bay and was really one of the first major Silicon Valley leaders to jump ship and really start arguing vociferously for Trump in the summer. I guess that has paid off for him because he is

AI and crypto czar. It's a little bit unclear sort of how much power this position has, how much he is actually inside the government because there are ethics rules that actually cap

his number of hours inside the government. He also did not want to divest from his VC fund. So he's trying to sort of straddle both worlds. But he does now have an even bigger mouthpiece and a voice within the Oval Office to, I guess, speak on behalf of the industry. Actually, today it was announced that he's going to give some sort of big crypto talk

this month. So yeah, he's quite influential within Trump circles in terms of crypto and AI. And Zeke, you broke a big story about Trump's Commerce Secretary nominee Howard Lutnick and his ties to Tether, which Andrew mentioned earlier. Tell us about that.

so tether is one of the most popular cryptocurrencies which is kind of a bit funny because it's tied to the dollar so every tether is supposed to always be worth one dollar because it's backed by real dollars in the bank somewhere and it tethers been controversial for years it's gotten huge there's more than a hundred billion tethers out there and for

For years, there were questions about whether they really had enough money to back these Tethers. And they'd been sued by regulators in the U.S. for lying about their reserves. Now, Tether has said that they had the money. And in recent years, they formed this partnership with Howard Lutnick, who runs a big New York investment bank called Cantor Fitzgerald. And he started vouching for Tether. And

And now he has been nominated to be Trump's commerce secretary. And we at Bloomberg have reported that Tanner Fitzgerald actually even owns a stake in Tether. And this was controversial at his nomination hearing because he

Among the many people who use Tether are a lot of criminals. And there have been reports that North Korea's regime has used it, Mexican drug traffickers, human traffickers in Southeast Asia, all kinds of scammers. The Deputy Treasury Secretary complained last year that Russia was using Tether to circumvent sanctions because...

on the blockchain you can move value around the world you know instantly without revealing your real name um and all sorts of criminals and money lenders are realizing that this is uh super handy but

Even criminals don't want a currency that could drop 10% overnight, so they're choosing the one that's backed by real dollars. So Democrats were grilling Lutnik about this at his hearing. He says Tether doesn't do business with criminals, they try to stop crime, and he's helped them be even more compliant. It remains to be seen if this is going to affect anyone's vote on his nomination.

He also promised to divest, right, from all of his business interests? Yes. So he has said he'll sell Cantor Fitzgerald. So he's, in addition to being the CEO of the company, he owns about half of it. And it's that company that owns the stake in Tether. So he said, I'm going to sell this. There's been some speculation that sell might mean sell to one of his children. But we'll see. And do you think he'll be confirmed? It sounds like it.

If I had to guess, I would say so. It was only Democrats that were making an issue of this. And as you say more broadly, it's not necessarily something that enough people know a lot about to be able to be fully interested or putting up really vocal opposition to someone like a

a lot, Nick, for his ties to the crypto industry, though as Commerce Secretary, you know, he oversees trade as well as these other, this, and would have a role, not directly, but

Yeah, and he actually would be there's supposed to be some sort of crypto advisory board that Trump has formed. And the Commerce Secretary is supposed to be on that. And Lutnick has also said that he owns a shed load of Bitcoin. So I don't know if that would be included in his divestment plans. But he would have an interest in having a big Bitcoin strategic reserve, which would help pump up the value of his own holdings.

So the Cisner writes, has President Trump provided any plan or concepts of a plan for how he'd implement crypto into our daily lives? Should we expect to receive tax refunds in Bitcoin, see more crypto ATMs or buy groceries with Bitcoin? Or is this just an elaborate way to increase his wealth? Andrew, I'll go to you on that question. It's a great question. I would just say that Trump's meme coin you can now buy like Trump merch with.

So, that might be the first step of him trying to integrate more of this stuff, allowing you to buy things with crypto. But I think that sort of seems outside his scope. I think a lot will depend on Congress, and there are a lot of really pro-crypto or crypto-friendly folks in this new Congress.

Obviously, they have so many different priorities right now. Some people would argue that, you know, these Congress people were happy to take crypto money on the front end. And then we're actually going to see how much they care about it to get, you know, pro-crypto regulation in place.

His user on Discord writes, I was listening to a money chat last night and someone whined about how all the money bailouts from the economy created inflation. I'm thinking how much, quote, money has been added into the system through crypto. Another listener on Discord writes, let's not forget Trump pardoned Silk Road founder Ross Ulbricht. Was that a gift to crypto, Zeke?

It was in a way. So Silk Road, if you're not familiar, was this online marketplace about a decade ago that was mainly used to sell drugs. And you paid with Bitcoin and people would mail you cocaine, heroin, whatever. And believe it or not, in the early years of Bitcoin, this was one of the applications that really got popular.

Bitcoin going it was one of the first things that made people want to buy Bitcoin and use it and so within the Bitcoin industry

Albright has become this kind of cult figure. And there's this belief that his sentence was unfair and that he deserves to be pardoned or have his sentence commuted. So that was a big applause line in Trump's speech at the Bitcoin conference and something that all the Bitcoiners have really celebrated. Even though, even if you believe that

Running a drug marketplace online shouldn't result in a 25-year sentence. There was evidence that Albright also ordered several assassinations and paid for them, though they were not carried out. So that wasn't part of his sentence, but prosecutors introduced that evidence at his trial. So it's kind of crazy to see him pardoned. Let me go to caller Alana in Richmond. Hi, Alana, you're on.

Hi, I just want to say that Bitcoin and other cryptocurrencies require a huge amount of energy to support and any investment.

investment in this stuff by anyone is a real strike against our environmental safety globally. Alana, your views are being echoed by Nancy who writes, my understanding is that, quote, coining crypto requires massive amounts of energy. Given climate change, why should this industry even be permitted?

We're talking about Trump's embrace of cryptocurrency, why ethics and national security experts and even industry insiders have sounded alarms about this. We're also hearing from our listeners about the environmental impacts that are concerning them as well. Share your thoughts, questions, or concerns with us by emailing forum at kqed.org, finding us on our social channels, Blue Sky, Facebook, Instagram, Threads, and others at KQED Forum. Call us at 866-733-6786.

866-733-6786.

So, Andrew, earlier you mentioned, you know, one of the key aims of the crypto industry in terms of investing in politics was to try to get cryptocurrencies moved from being regulated under the SEC to an entity, the Commodity Futures Trading Commission, actually, to make it a commodity and potentially regulated very differently and in a way more friendly to crypto. Is that true?

Are you seeing movement toward that happening? Is it dependent on these nominees, you know, getting placed and then making these things happen? I'm just curious where that stands. Yeah, so that would be up to Congress to pass a bill creating that oversight shift. There was some progress last year in the House, but really this sort of framework bill didn't come close to passage.

As I said, there is more support in Congress for crypto now. And the crypto lobby is very, very strong. And they have over $100 million left over that they didn't even use from the last elections and have basically threatened to use this huge war chest in the next election.

like in the midterms as sort of leverage to get these Congress people to keep their word and try to pass pro-crypto regulation. They're also looking at potential stablecoin bills. We'll see where of a priority crypto is for this very, very busy Congress. Well, let me remind listeners, you are listening to Forum. I'm Mina Kim.

And Adele writes, I think Trump getting the country to boost up the crypto industry is a natural necessary step. The questions of impropriety are side issues. Crypto is not something that will go away. And the United States and its allies need to get a good hold on participation in crypto. What do you think, Zeke?

So I think that if you don't dig in too deep to crypto, some of the ideas can seem appealing and you might think this is just another innovation that, you know, is going to lead to something really cool like the Internet, which had its own skeptics in the early years. But.

I've spent years traveling the world trying to find out what crypto is good for. And what I've seen is a lot of scams, a lot of Ponzi schemes, and a lot of hot air, and really very little that is helping anybody in the real world. I was just reading an interview with Bill Gates, where he was asked what he thought about crypto. He said it was useless, and that there are people with high IQs who have fooled themselves on that one.

And I think a lot of the activity in crypto is people who come up with innovations that are helping someone like move one crypto to another blockchain or trade cryptos more efficiently, but they haven't come up with anything that's really useful in the real world. And in the long run, if that doesn't happen, people are going to lose interest.

And Andrew, I want to put that listener's question to you as well, just in terms of this is a necessary step and that the issues are sort of side issues, the issues of impropriety and so on. I think there are some promising parts of crypto, um,

I think stable coins are not a bad idea in allowing people to move money around the world more easily. Obviously, as Zeke said, there are all sorts of issues with potential criminality there. That's what Tether is, right? Yes, exactly.

The question for me is that all these crypto people keep saying, you know, like all these bad parts of crypto, they're just sort of byproducts on our road to glory. That, you know, like the casino is necessary to growing these better technologies that might underpin our new beautiful internet web 3.0 technology.

And so far, I would argue that the casino is the product and that we're not on our way to something, but rather a bigger and bigger casino. And if the better products emerge at a later point, then maybe it's possible that was it worth it given all of the instability it's added to our financial ecosystem globally? But I think we're talking about sort of generally crypto as an investment or the future of the industry, right? But...

In this case, we're really examining whether or not the president of the United States should be invested in it to the extent that this particular president is. Right. I mean, that's like a separate question in a way. Right.

Yeah, I mean, Trump should decide how to regulate crypto based on whether he thinks that this is good for the country rather than based on whether it will help him make more money from his crypto ventures. It's really unprecedented. It's a crazy conflict of interest. Yes, a crazy conflict of interest on the ethics side. And then, as you were all pointing out,

potentially dangerous, right, on the fact that there is a direct channel where Trump could be bought, essentially.

Zeke? Oh, I mean, it totally beats renting a room in one of his hotels, which there was all this concern during the first Trump administration. Could people try to gain favor with him by spending money in his hotels? Now you can buy his cryptocurrencies and put money right in his pocket with no limit. And you can announce that to the world to get his attention or you can do it secretly. So what are you going to be watching for, Zeke, in the

weeks ahead, the crypto and the Trump administration? Well, I'm watching what will happen at the SEC. Trump, his new chairman, Paul Atkins, who's yet to be confirmed, has said that he wants to cut back on these crypto lawsuits, these cases against crypto companies for violating securities laws.

And I want to see whether these cases are dropped and settled and how far that goes. Because some of these SEC cases are about, you know, big time frauds. Will those get dropped too? And Andrew, what about you? What are you watching for? 20 seconds.

I'm looking at how Bitcoin is going to be impacted by these bigger macroeconomic forces. We've seen how Bitcoin moves like a tech stock, a risky tech stock, which is why it dropped from $105,000 back to $91,000 due to the Trump tariffs. So all these headwinds are going to affect crypto and Bitcoin immensely. Yeah, I wonder if there will be a backlash. Well, Andrew, thank you so much for talking with us.

Thank you. Andrew Chow is a correspondent for Time. Zeke also really appreciate having you on as well. Thanks, Mina. Zeke is an investigative reporter for Bloomberg, Zeke Fox. My thanks to Dan Zoll for producing today's segment. And thank you listeners for your questions and comments. You've been listening to Forum. I'm Mina Kim.

Funds for the production of Forum are provided by the John S. and James L. Knight Foundation, the Generosity Foundation, and the Corporation for Public Broadcasting.