Original Title: What Trump’s Embrace of Crypto Has Unleashed
Original Author: David Yaffe-Bellany, Eric Lipton, The New York Times
Original Compilation: Chopper, Foresight News
This summer, a group of corporate executives pitched a business plan to Wall Street financier and former Trump presidential advisor Anthony Scaramucci. They hoped Scaramucci would join a publicly traded company with a unique strategy: boosting the company’s appeal to investors by hoarding massive amounts of cryptocurrency assets.
“They really didn’t need to say much.” Scaramucci recalled. Soon after, he joined three obscure companies adopting this strategy as an advisor, “the entire negotiation process went very smoothly.”
However, this frenzy didn’t last long. This fall, the cryptocurrency market plummeted, and the stock prices of the three companies Scaramucci participated in plummeted accordingly, with the worst-performing one dropping over 80%.
The rise and fall of these companies epitomizes the cryptocurrency frenzy ignited by Trump. The self-proclaimed “first cryptocurrency president” not only ended regulatory crackdowns on cryptocurrency firms but also publicly promoted cryptocurrency investments at the White House, signed bills supporting cryptocurrency development, and even issued a meme coin named TRUMP, propelling this once-niche field to the forefront of the global economy.
Now, the ripple effects of Trump’s strong support for cryptocurrency are gradually emerging.
This year, a large number of new cryptocurrency ventures pushing industry boundaries have emerged one after another, drawing more people into this highly volatile market. Over 250 publicly traded companies have begun hoarding cryptocurrencies—digital assets whose price volatility characteristics are no different from traditional investments like stocks and bonds.
2024, Trump’s former advisor Anthony Scaramucci attends the UAE Bitcoin Conference
A wave of companies has launched innovative products, lowering the barrier to including cryptocurrencies in brokerage accounts and retirement plans. Meanwhile, industry executives are lobbying regulators, planning to issue crypto tokens pegged to publicly traded company stocks, creating a stock trading market based on encryption technology.
This radical innovation wave has already exposed many problems. Over the past two months, mainstream cryptocurrency prices have plunged sharply, pushing companies heavily invested in crypto assets to the brink of collapse. Other emerging projects have also raised warnings from economists and regulators, indicating accumulating market risks.
The core issue causing concern is the continuous expansion of borrowing. By this fall, publicly traded companies had borrowed heavily to purchase cryptocurrencies; investors’ futures contract positions for cryptocurrencies exceeded $200 billion, with most of these trades relying on leveraged funds, potentially yielding huge profits but also hiding liquidation risks.
More alarmingly, a series of new initiatives in the cryptocurrency industry have deeply intertwined the crypto market with the stock market and other financial sectors. Once a crisis erupts in the cryptocurrency market, risks could spread throughout the financial system, triggering a chain reaction.
“Today, the lines between speculation, gambling, and investment have become blurred.” Timothy Massad, who served as Assistant Secretary of the Treasury for Financial Stability after the 2008 financial crisis, stated bluntly, “This situation deeply worries me.”
White House Press Secretary Karoline Leavitt responded that Trump’s policies are “helping the United States become a global cryptocurrency hub by fostering innovation and creating economic opportunities for all Americans.”
Cryptocurrency industry executives argue that these emerging projects demonstrate the potential of encryption technology to reshape the outdated financial system. In their view, market volatility is precisely an opportunity for profit.
“High risk often accompanies high returns.” said Duncan Moir, President of 21Shares, which issues cryptocurrency investment products, “Our mission is to bring these investment opportunities to more people.”
The rise of this innovation wave is inseparable from the comprehensive relaxation of the regulatory environment, marking the most friendly regulatory window for cryptocurrency firms. For years prior, the U.S. Securities and Exchange Commission (SEC) had been in legal battles with the cryptocurrency industry; but in January this year, the agency established a cryptocurrency task force and has held meetings with dozens of companies seeking regulatory support or product listing approvals.
An SEC spokesperson stated that the agency is committed to “ensuring investors have sufficient information to make rational investment decisions.”
U.S. Securities and Exchange Commission Headquarters Building in Washington, D.C.
Notably, many of these emerging companies are linked to the Trump family’s expanding cryptocurrency business empire, blurring the lines between business and government.
This summer, executives from Trump’s cryptocurrency startup World Liberty Financial announced joining the board of publicly traded company ALT5 Sigma. Originally in the recycling business, this company now plans to raise $1.5 billion to enter the cryptocurrency market.
Capital Frenzy: An Out-of-Control Crypto Gamble
Cryptocurrency enthusiasts have dubbed this high-risk investment frenzy catalyzed by the Trump administration “The Summer of Crypto Treasury Companies.”
Crypto Treasury Companies (DATs) refer to publicly traded companies whose core goal is hoarding cryptocurrencies. Data from cryptocurrency consulting firm Architect Partners shows that among these emerging companies, nearly half focus on hoarding Bitcoin, the most well-known cryptocurrency, while dozens of others have announced plans to purchase non-mainstream coins like Dogecoin.
Number of Crypto Treasury Companies Established Each Month in 2025. Data Source: Architect Partners, statistics as of December 16
The operational model of these companies is often straightforward: a group of executives identifies a niche company trading on public markets (e.g., a toy manufacturer), persuades it to pivot to cryptocurrency hoarding; then partners with the company to raise hundreds of millions from high-net-worth investors, ultimately using the funds to purchase cryptocurrencies.
The core purpose is to allow more people to participate in cryptocurrency investment by issuing traditional stocks pegged to cryptocurrency prices. This strategy theoretically offers considerable profit potential. Many investment funds and asset management institutions have been hesitant to directly invest in cryptocurrencies due to complex and costly storage processes and vulnerability to hacking.
Investing in Crypto Treasury Companies essentially outsources the logistics like cryptocurrency storage. But these companies also harbor significant risks: many are hastily established, with management lacking experience operating public companies. Architect Partners data shows these companies have collectively announced plans to borrow over $20 billion to purchase cryptocurrencies.
“Leverage is the culprit behind financial crises.” warned Corey Frayer, former cryptocurrency advisor to the SEC, “And the current market is generating massive leverage.”
Some Crypto Treasury Companies have already fallen into operational difficulties or management crises, causing investors huge losses.
Publicly traded company Forward Industries pivoted to a Crypto Treasury Company, heavily investing in SOL. In September, the company raised over $1.6 billion from private investors, and its stock price once soared to nearly $40 per share.
Allan Teh from Miami, managing assets for a family office, invested $2.5 million in Forward Industries this year. “At that time, everyone thought this strategy was foolproof, and crypto asset prices would keep rising.” Allan Teh recalled.
However, as the cryptocurrency market plummeted, Forward Industries’ stock price fell to $7 per share this month. The company announced plans to spend $1 billion on stock buybacks over the next two years, but this move failed to halt the stock’s decline.
“The music stopped, the game’s over. Now I’m starting to panic, can I get out unscathed?” Allan Teh has lost about $1.5 million, “How much will this investment ultimately lose?” Forward Industries declined to comment.
The proliferation of Crypto Treasury Companies has alarmed the SEC. “Clearly, we are very concerned about this.” SEC Chairman Paul Atkins said in an interview at the Miami cryptocurrency conference last month, “We are closely monitoring developments.”
Behind this new cryptocurrency track lies strong support from the Trump family.
World Liberty Financial’s founders include Trump’s son Eric Trump and Zach Witkoff
In August, World Liberty Financial announced that its founders (including the president’s son Eric Trump) would join the board of ALT5 Sigma. This publicly traded company plans to hoard the crypto token WLFI issued by World Liberty Financial (Eric Trump’s current title is Strategic Advisor and Board Observer).
This collaboration seemed poised to quickly profit the Trump family. According to the revenue-sharing agreement published on World Liberty Financial’s website, business entities owned by the Trump family receive a cut whenever WLFI tokens are traded.
Subsequently, ALT5 Sigma’s operations took a sharp downturn. In August, the company disclosed that an executive at one of its subsidiaries had been convicted of money laundering in Rwanda, and the board was investigating other “undisclosed matters.” Soon after, ALT5 Sigma announced suspending its CEO and terminating contracts with two other executives.
Since August, the company’s stock price has plummeted 85%. An ALT5 Sigma spokesperson stated the company “remains confident about its future development.”
Flash Crash: $100 Billion in Market Cap Evaporated Overnight
The recent turmoil in the cryptocurrency market can be traced back to one night in October.
Driven by Trump’s policies, the cryptocurrency market had been rising for most of this year. But on October 10th, prices of Bitcoin, Ethereum, and dozens of other cryptocurrencies collectively crashed, experiencing a flash crash.
The immediate trigger for this crash was Trump’s announcement of new tariffs on China, which caused severe global economic turbulence. The reason the cryptocurrency market was hit so hard lies in the massive leveraged funds that had been driving the market up.
On cryptocurrency trading platforms, traders can borrow fiat currency using their crypto holdings as collateral or increase their cryptocurrency investment positions with leveraged funds. Data from cryptocurrency research firm Galaxy Research shows that in the third quarter of this year, global cryptocurrency borrowing grew by $20 billion in a single quarter, reaching a historic peak of $74 billion.
Previously, the riskiest cryptocurrency leverage trading mostly occurred overseas. But in July, the largest U.S. cryptocurrency trading platform Coinbase announced launching a new investment tool allowing traders to bet on Bitcoin and Ethereum futures prices with 10x leverage. Prior to this, federal regulators had withdrawn guidance restricting such leverage trading, paving the way for Coinbase’s new product.
In July this year, Coinbase trading platform launched a 10x leverage cryptocurrency trading tool
Although October’s flash crash didn’t cause an industry catastrophe like the 2022 bankruptcy of several major cryptocurrency firms, it served as a wake-up call, signaling systemic risks lurking in the cryptocurrency space.
The nature of leverage trading is that losses are magnified when the market declines. Trading platforms force liquidations, selling clients’ collateral assets, a process that often further exacerbates price drops.
Data from cryptocurrency data firm CoinGlass shows that on October 10th, at least $19 billion worth of cryptocurrency leverage trades were liquidated globally, affecting 1.6 million traders. This liquidation wave was concentrated on platforms like Binance, OKX, and Bybit.
The crash triggered a surge in trading volume, causing technical failures on several major platforms, preventing traders from moving funds promptly. Coinbase stated it was aware some users “experienced delays or degraded system performance while trading.”
Derek Bartron, a software developer from Tennessee and also a cryptocurrency investor, revealed his Coinbase account was frozen during the flash crash. “I wanted to close my position and exit, but couldn’t operate.” Derek Bartron said, “Coinbase effectively locked users’ funds; we could only watch asset values plummet, powerless.”
Derek Bartron said that in the days following the flash crash, his cryptocurrency assets lost about $50,000, partly because he couldn’t close positions in time to limit losses.
A Coinbase spokesperson responded that the company provides automated risk management tools, “These tools functioned normally during this market volatility, and our trading platform remained stable throughout the event.”
A Binance spokesperson acknowledged the platform “experienced technical issues due to surging trading volume” and stated measures had been taken to compensate affected users.
Crazy Experiment: The Regulatory Dilemma of the Tokenization Wave
One summer night, cryptocurrency entrepreneurs Chris Yin and Teddy Pornprinya, dressed in formal attire, appeared at the Kennedy Center in Washington, D.C., attending a grand black-tie dinner.
The dinner was star-studded. Chris Yin, wearing a tuxedo bought the previous night, met U.S. Vice President JD Vance, who had previously been involved in Silicon Valley venture capital; he and Teddy Pornprinya also spoke with former hedge fund manager and current U.S. Treasury Secretary Scott Bessent; they even took a photo with Trump, with the president giving a thumbs-up to the camera.
Chris Yin and Teddy Pornprinya were there to pave the way for their startup Plume. The company is advancing an industry-disrupting innovation plan, attempting to extend the underlying technology of cryptocurrencies to broader financial fields.
For months, Plume has been seeking approval from U.S. regulators to build an online trading platform issuing crypto tokens pegged to real-world assets to clients, covering various entities like publicly traded company stocks, farms, oil wells, etc.
Plume founders Chris Yin and Teddy Pornprinya at the Empire State Building
Currently, Plume has launched such tokenized products overseas, where clients can trade these asset tokens like cryptocurrencies. But this business, known as asset tokenization, exists in a legal gray area in the U.S.; securities laws enacted decades ago impose strict regulatory rules on equity offerings for various assets, requiring issuers to disclose detailed information to protect investor rights.
This year, asset tokenization has become the hottest concept in the cryptocurrency industry. Industry executives claim tokenized stocks can make stock trading more efficient and faster, creating a global, 24/7 trading market. Major U.S. cryptocurrency trading platform Kraken has already launched crypto-based stock trading services for clients overseas.
Cryptocurrency industry executives say cryptocurrency trading, based on public ledger records, is more transparent than the traditional financial system. “All transactions are traceable and auditable.” said Kraken CEO Arjun Sethi, “It almost has no risk.”
Representatives from Kraken and Coinbase have met with the SEC to discuss regulatory rules for tokenized assets; meanwhile, Plume is also seeking legal pathways to expand its business within the U.S.
But this race for tokenized products has raised concerns among current and former regulatory officials, as well as executives from traditional financial giants.
In September, Federal Reserve economists warned that asset tokenization could lead to cryptocurrency market risks spreading throughout the financial system, “weakening policymakers’ ability to maintain payment system stability during market stress.”
SEC Chairman Paul Atkins holds a positive view on tokenized stocks, calling them a “major technological breakthrough.” “Under securities laws, the Commission has broad discretion to provide regulatory support for the cryptocurrency industry. I am determined to advance this work.” Atkins said at an asset tokenization industry roundtable in May.
To make their business compliant, Chris Yin and Teddy Pornprinya took a series of steps. In May, they met with the SEC’s cryptocurrency task force; they also provided chart support for the White House’s cryptocurrency industry report; and established Plume’s U.S. headquarters on the 77th floor of the Empire State Building.
At that Washington black-tie dinner this summer, Trump’s aides showed keen interest in the two founders. “They knew about Plume.” Teddy Pornprinya recalled, “Everyone was somewhat familiar with our business.”
A few weeks later, Plume announced a key partnership, establishing a business relationship with the Trump family’s World Liberty Financial.
