The New York Times: The Untold Stories Behind Trump’s Embrace of Crypto

Written by: David Yaffe-Bellany and Eric Lipton, The New York Times

Translated by: Chopper, Foresight News

This summer, a group of business executives pitched a business plan to Wall Street financiers and former Trump presidential advisor Anthony Scaramucci. They wanted Scaramucci to join a publicly listed company with a unique strategy: to boost the company's appeal to investors by hoarding massive amounts of cryptocurrency assets.

"They really didn't have to say much," Scaramucci recalled. Not long after, he joined three little-known companies employing this strategy as an advisor. "The whole negotiation process went very smoothly."

However, this craze did not last long. In the fall, the cryptocurrency market plummeted, and the stock prices of the three companies Scaramucci was involved with tumbled, with the worst-performing one dropping by more than 80%.

The rise and fall of these companies is a microcosm of the cryptocurrency boom ignited by Trump. This self-proclaimed "first crypto president" not only ended regulatory crackdowns on crypto companies but also publicly promoted crypto investments at the White House, signed legislation supporting crypto development, and even issued a meme coin called TRUMP, catapulting this once-niche sector to the forefront of the global economy.

Now, the chain reaction of Trump's support for cryptocurrency is gradually unfolding.

Since the beginning of this year, a large number of boundary-breaking new crypto companies have emerged, drawing more people into this highly volatile market. More than 250 publicly listed companies have begun hoarding cryptocurrencies—these digital assets fluctuate in price much like traditional investments such as stocks and bonds.

In 2024, former Trump advisor Anthony Scaramucci attends the UAE Bitcoin Conference

A wave of companies has launched innovative products to lower the threshold for including cryptocurrencies in brokerage accounts and retirement plans. At the same time, industry executives are lobbying regulators to issue crypto tokens pegged to listed company stocks, aiming to create a stock trading market based on crypto technology.

This wave of radical innovation has already exposed many problems. In the past two months, mainstream cryptocurrency prices have plunged, putting companies heavily invested in crypto assets at risk of collapse. Other emerging projects have also triggered warnings from economists and regulators, as market risks continue to accumulate.

The core issue causing concern is the continued expansion of borrowing. By this fall, listed companies had borrowed heavily to buy cryptocurrencies; investors' open interest in crypto futures contracts surpassed $200 billion, with most of these trades relying on leveraged funds, which can bring huge profits but also hide the risk of liquidation.

Even more alarming, a series of new initiatives in the crypto industry have deeply bound the crypto market to the stock market and other financial sectors. If a crisis erupts in the crypto market, the risk could spread to the entire financial system, triggering a chain reaction.

"Now, the line between speculation, gambling, and investing has become blurred," said Timothy Massad, who served as Assistant Secretary for Financial Stability at the U.S. Treasury after the 2008 financial crisis. "This situation makes me deeply worried."

White House Press Secretary Karoline Leavitt responded that Trump's policies are "helping the U.S. become the global center of cryptocurrency by promoting innovation and creating economic opportunities for people across the country."

Crypto industry executives argue that these new projects demonstrate the potential of crypto technology to reshape the outdated financial system. In their view, market volatility is precisely an opportunity for profit.

"High risk often comes with high returns," said Duncan Moir, president of 21Shares, a company issuing crypto investment products. "Our mission is to bring these investment opportunities to more people."

The rise of this innovation wave is inseparable from a comprehensive relaxation of regulations, marking the most favorable regulatory window for crypto companies. For years, the U.S. Securities and Exchange Commission (SEC) had been in court battles with the crypto industry; but in January this year, the agency set up a special crypto task force and has held meetings with dozens of companies seeking new regulatory support or product listing approvals.

A spokesperson for the SEC said the agency is committed to "ensuring that investors have sufficient information to make rational investment decisions."

Headquarters of the U.S. Securities and Exchange Commission in Washington

It is worth noting that many of these emerging companies are connected to the ever-expanding crypto business empire of the Trump family, blurring the line between business and government.

This summer, executives from Trump's crypto startup World Liberty Financial announced they were joining the board of listed company ALT5 Sigma. This company, originally focused on recycling, now plans to raise $1.5 billion to enter the crypto market.

Capital Frenzy: An Out-of-Control Crypto Gamble

Crypto enthusiasts have dubbed the high-risk investment boom sparked by the Trump administration the "Summer of Crypto Treasury Companies."

Crypto Treasury Companies (DAT) are publicly listed companies whose core goal is to hoard cryptocurrencies. According to crypto consulting firm Architect Partners, nearly half of these emerging companies focus on hoarding bitcoin, the most well-known cryptocurrency, while dozens of others have announced plans to buy non-mainstream coins such as dogecoin.

Number of Crypto Treasury Companies established each month in 2025. Source: Architect Partners, data as of December 16

The operating model of these companies is often simple and crude: a group of executives identifies a niche company traded on the public market (such as a toy manufacturer), persuades it to pivot to crypto hoarding, then partners with the company to raise hundreds of millions of dollars from high-net-worth investors, ultimately using the funds to buy cryptocurrencies.

The core purpose is to allow more people to participate in crypto investing by issuing traditional stocks pegged to crypto prices. In theory, this strategy offers considerable profit potential. Many investment funds and asset managers have been hesitant to invest directly in crypto due to complex storage processes, high costs, and vulnerability to hacking.

Investing in a Crypto Treasury Company is equivalent to outsourcing the storage and logistics of crypto assets. But these companies also carry huge risks: many are hastily established, and their management teams lack experience running public companies. According to Architect Partners, these companies have collectively announced plans to borrow more than $20 billion to buy cryptocurrencies.

"Leverage is the culprit behind financial crises," warned Corey Frayer, a former crypto 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 to suffer huge losses.

After listed company Forward Industries pivoted to a Crypto Treasury Company, it heavily invested in SOL. In September, the company raised more than $1.6 billion from private investors, and its stock price once soared to nearly $40 per share.

Allan Teh from Miami manages assets for a family office and invested $2.5 million in Forward Industries this year. "At the time, everyone thought this strategy was foolproof and that crypto asset prices would keep rising," Allan Teh recalled.

However, as the crypto market crashed, Forward Industries' stock price fell to $7 per share this month. The company announced plans to spend $1 billion to buy back shares over the next two years, but this move failed to stop the stock's decline.

"The music stopped, the game ended. 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 drawn the attention of the SEC. "Obviously, we are very concerned about this," said the agency's chairman Paul Atkins in an interview at the Miami crypto conference last month. "We are closely monitoring developments."

And behind this new crypto track is the strong support of the Trump family.

World Liberty Financial's founders include 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 listed company plans to hoard the WLFI crypto token issued by World Liberty Financial (Eric Trump currently holds the title of strategic advisor and board observer).

This partnership appears to allow the Trump family to profit quickly. According to the revenue-sharing agreement published on World Liberty Financial's website, every time a WLFI token transaction occurs, business entities under the Trump family receive a cut.

Subsequently, ALT5 Sigma's business situation deteriorated rapidly. In August, the company disclosed that an executive of a subsidiary had been convicted of money laundering in Rwanda, and the board was investigating other "undisclosed matters." Shortly after, ALT5 Sigma announced the suspension of its CEO and terminated contracts with two other executives.

Since August, the company's stock price has plummeted 85%. An ALT5 Sigma spokesperson said the company "remains confident about its future development."

Flash Crash Panic: Hundreds of Billions in Market Value Wiped Out Overnight

The recent turmoil in the crypto market can be traced back to a night in October.

Driven by Trump's policies, the crypto market had been rising for most of the year. But on October 10, the prices of dozens of cryptocurrencies, including bitcoin and ethereum, collectively plunged in a flash crash.

The immediate trigger for this plunge was Trump's announcement of new tariffs on China, which caused global economic turmoil. The root cause of the crypto market's heavy losses, however, lay in the massive leverage that had driven prices up.

On crypto trading platforms, traders can use their crypto holdings as collateral to borrow fiat currency or use leverage to increase their crypto positions. According to crypto data firm Galaxy Research, in the third quarter of this year, global crypto lending grew by $20 billion in a single quarter, reaching a record high of $74 billion.

Previously, the riskiest leveraged crypto trades mostly took place in overseas markets. But in July, Coinbase, the largest U.S. crypto exchange, announced a new investment tool allowing traders to bet on bitcoin and ethereum futures prices with 10x leverage. Prior to this, U.S. federal regulators had lifted restrictions on such leveraged trading, clearing the way for Coinbase's new product.

In July, Coinbase launched a 10x leveraged crypto trading tool

The October flash crash, while not causing the kind of industry-wide disaster that saw multiple large crypto companies go bankrupt in 2022, sounded the alarm for the market, signaling the systemic risks lurking in the crypto space.

The essence of leveraged trading is that losses are multiplied when the market falls. Trading platforms forcibly liquidate positions, selling off customers' collateral, which often further accelerates price declines.

According to crypto data firm CoinGlass, on October 10 alone, at least $19 billion worth of leveraged crypto trades were forcibly liquidated globally, affecting 1.6 million traders. The liquidation wave was mainly concentrated on Binance, Okx, Bybit, and other platforms.

The crash triggered a surge in trading volume, causing technical failures at several major exchanges and preventing traders from moving funds in time. Coinbase stated that it was aware some users "experienced delays or degraded system performance during trading."

Derek Bartron, a software developer from Tennessee and also a crypto investor, revealed that his Coinbase account was frozen during the flash crash. "I wanted to close my position and exit, but there was no way to operate," Derek Bartron said. "Coinbase effectively locked users' funds, and we could only watch our assets plummet in value, powerless."

Derek Bartron said that in the days following the flash crash, he lost about $50,000 in crypto assets, partly because he couldn't close his positions in time.

A Coinbase spokesperson responded that the company provides automated risk management tools, "which functioned normally during this market volatility, and our exchange remained stable throughout the event."

A Binance spokesperson admitted the exchange "experienced technical failures due to the surge in trading volume" and said measures had been taken to compensate affected users.

Mad Experiment: The Regulatory Dilemma of the Tokenization Wave

On a summer night this year, crypto entrepreneurs Chris Yin and Teddy Pornprinya, dressed in formal attire, attended a grand black-tie dinner at the Kennedy Center in Washington.

The dinner was star-studded. Chris Yin, wearing a tuxedo he had bought the night before, met U.S. Vice President JD Vance, who had previously been active in Silicon Valley venture capital; he and Teddy Pornprinya also spoke with former hedge fund manager and current U.S. Treasury Secretary Scott Besant; the two even took a photo with Trump, who gave 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 a disruptive innovation plan, seeking to extend the underlying technology of crypto to broader financial sectors.

For months, Plume has been seeking permission from U.S. regulators to build an online trading platform that issues crypto tokens pegged to real-world assets for clients, with underlying assets ranging from listed company stocks to farms and oil wells.

Plume founders Chris Yin and Teddy Pornprinya at the Empire State Building

Currently, Plume has launched such tokenized products in overseas markets, allowing clients to buy and sell 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 set strict rules for the issuance of equity in various assets, requiring issuers to disclose detailed information to protect investors' rights.

This year, asset tokenization has become the hottest concept in the crypto industry. Industry executives claim that tokenized stocks can make stock trading more efficient and create a global, round-the-clock trading market. Major U.S. crypto exchange Kraken has already launched crypto-based stock trading services for clients in overseas markets.

Crypto industry executives say that crypto trading is based on public ledger records, making it more transparent than traditional finance. "All transactions are traceable and auditable," said Kraken CEO Arjun Sethi. "It is virtually risk-free."

Representatives from Kraken and Coinbase have met with the SEC to discuss regulatory rules for tokenized assets; meanwhile, Plume is also seeking a legal path to expand its business in the U.S.

But this race to launch tokenized products has raised concerns among current and former regulators, as well as executives at traditional financial giants.

In September, Federal Reserve economists warned that asset tokenization could transmit crypto market risks to the entire financial system, "undermining policymakers' ability to maintain payment system stability during times of market stress."

SEC Chairman Paul Atkins, however, holds a positive view of tokenized stocks, calling them a "major technological breakthrough." "Under securities law, the Commission has broad discretion to provide regulatory support for the crypto industry. I am determined to push this work forward," Atkins said at an asset tokenization industry roundtable in May.

To promote compliance, Chris Yin and Teddy Pornprinya have taken a series of measures. In May, they met with the SEC's crypto task force; they also provided charts for the White House's crypto industry report; and they established Plume's U.S. headquarters on the 77th floor of the Empire State Building.

At the Washington black-tie dinner this summer, Trump's staff showed great interest in the two founders. "They knew about Plume," Teddy Pornprinya recalled. "Everyone was aware of our business."

A few weeks later, Plume announced a key partnership with the Trump family's World Liberty Financial.