–Analysis–
SÃO PAULO — I was so absorbed by Elon Musk’s shameless purchase of the White House that I failed to notice a new digital mafia forming a solid alliance around U.S. President-elect Donald Trump — one that has already profited immensely since the fateful Nov. 5 election.
They are the crypto barons. For those who haven’t noticed: since Trump’s victory, cryptocurrencies have reached historic valuations. Bitcoin surpassed $80,000, setting a new record. It is estimated that the cryptocurrency market gained $230 billion in just 24 hours.
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This surge is largely because they anticipate a presidency that will be completely favorable to cryptocurrencies, which in recent years have faced criminal charges related to fraud, while confronting the possibility of not advancing with the friendly regulations they desire.
Moreover, for those who claim that U.S. President Joe Biden’s administration has been poor, I suggest looking into the actions taken to regulate the digital Wild West. In addition to various actions against Big Tech, cryptocurrencies have also been targeted.
Biden administration vs. cryptocurrencies
The U.S. Securities and Exchange Commission (SEC), which regulates stock markets, has made them a major focus of investigations. Under the leadership of Chairman Gary Gensler, a former MIT professor and investor, the SEC has sued crypto exchanges like Binance and Kraken, as well as Ripple Labs, which issues the cryptocurrency XRP. Interestingly, Ripple’s CEO campaigned openly against Biden and in favor of Trump.
In early October, Gensler demonstrated how he has become the “enemy” of crypto in the United States. During an event at New York University (NYU), he stated that cryptocurrencies are unlikely to ever be considered real currencies. In his view, they serve merely as a store of value — like paintings or works of art. One of his main concerns is that the crypto industry is rife with “a lot of fraudsters, a lot of grifters, a lot of scams.”
In a corrupt country like the U.S., it’s a classic case of “you scratch my back, I’ll scratch yours.
“With all respect,” he said, “the leading lights of this field in [2024] are either in jail or awaiting extradition right now.”
Gensler’s position is grounded in economic science; he explained to the audience that according to Gresham’s Law, bad money drives out good money. That is why countries tend to have only one national currency.
“I’m just going to say this — These debates literally go back to Plato and Aristotle. This is 3,000 years of history. Hundreds of great nations, thousands of nation-states – we tend to have one currency per geographic economic state,” Gensler said.
Trump’s pro-crypto actions
Without mentioning Plato or Aristotle, Trump promised during his campaign that he would get rid of Gensler “on day one” of his administration. The most likely replacement is Dan Gallagher, a crypto enthusiast who previously worked at the SEC and is now a lawyer for Robinhood, a fintech company that trades cryptocurrencies and stocks via an app.
Trump also promised to free Ross Ulbricht, founder of Silk Road — an “anything goes” store powered by bitcoins — who has been serving a life sentence since 2013.
Trump went further by embracing the “crypto cause” during his campaign, appearing at the Bitcoin Conference in Nashville, Tennessee, this July — during which he offered a private meeting for anyone willing to pay 0,000. There, he promised to turn the United States into a “Bitcoin Superpower.”
Not one to miss an opportunity, he also launched his own cryptocurrency called World Liberty Financial, backed by a crypto token named WLFI. In October, his company announced plans to raise up to million from investors. According to CNBC News, an entity called DT Marks DEFI LLC — linked to the president-elect — is set to receive 75% of the net revenues from this currency.
As always happens in power games, none of this occurred spontaneously. It results from actions taken by certain crypto investors who decided to fund candidates favorable to them.
Corruption in the United States…
An excellent report from Bloomberg outlines this situation. According to it, Brian Armstrong — a billionaire founder of Coinbase who was sued by the SEC just three months prior — announced at a conference in New York that the industry could convince the government to implement more favorable rules.
“We need to be realistic. Money moves the needle,” Armstrong stated.
Thus, he supported Fairshake PAC — a Political Action Committee is a tax-free organization that raises money to elect and defeat candidates — and encouraged other investors to do likewise. Fairshake and affiliated groups spent 5 million on elections; they succeeded: 47 out of 56 candidates they supported secured seats in Congress. Although this PAC stayed out of the presidential race, other investors like the Winklevoss twins (founders of the Gemini exchange) and Jesse Powell (co-founder of Kraken) spent millions on Trump’s campaign.
All bad things happening in the U.S. can inspire opportunists in Brazil.
Other Trump supporters could hardly contain their joy at his victory. Richard Teng, CEO of crypto exchange Binance (which was fined .3 billion for money laundering and SEC violations), and Alex Thorn, head of research at Galaxy Digital, were among them.
In a corrupt country like the U.S., it’s a classic case of “you scratch my back, I’ll scratch yours.”
…and in Brazil
I do not believe that “what happens in the United States happens in Brazil,” as former Tourism Minister Gilson Machado Neto said, hopeful for Jair Bolsonaro’s return to power like Trump’s. But I am sure that all bad things happening in the U.S. can inspire opportunists here.
In fact, some are already profiting from the cryptocurrency fever following Trump’s election. Just in recent days, the website of the Brazilian radio network Jovem Pan published three sponsored articles praising cryptocurrencies with headlines like “Trump presidency boosts Bitcoin (BTC) and may help another cryptocurrency soar up to 30,000% in 10 months.”
All contained links that led back to Empiricus, a publishing company specialized in providing financial information, with a focus on cryptocurrencies. And although these texts are sponsored, Empiricus’ name as sponsor is hidden in small print.
In other words: keep your eyes open; we will see an explosion of crypto offerings and inventions here too. Good winds are blowing for digital con artists.
