WASHINGTON (AP) — Crypto.com was under siege.
For more than a year, the company had been under investigation by President Joe Biden’s Democratic administration, part of an aggressive campaign to regulate the largely unregulated cryptocurrency industry. Financial regulators had told the company that enforcement action was likely.
Then Donald Trump won the 2024 election and the company’s legal peril dissipated.
Crypto.com increased its spending on a lobbyist close to Trump and donated $11 million to political committees linked to the Republican president, records show. A few months later, the investigation was abandoned. In August, Crypto.com announced that it would invest approximately $1 billion in assets into a venture with a new partner – Trump’s social media company.
Legal and ethics experts say Crypto.com’s journey from investigative target to Trump business partner is a case study of conflicts of interest that arose during Trump’s second presidency. Unlike any of his modern-era predecessors, Trump has allowed his family businesses to enter into lucrative deals with federally regulated companies, some of which have benefited from his administration’s actions.
In this case, the deal with Crypto.com was favorable to the president’s social media company, which has lost hundreds of millions of dollars since its launch in 2021. Trump Media and Technology Group invested little money, but received a substantial stake in Crypto.com’s new Cronos token treasury.
Historically, presidents have gone to great lengths to “avoid even the appearance that they are using their office for personal gain,” said Kedric Payne, former senior counsel for the Office of Congressional Ethics.
“This appears to be another example of pay-to-play administration,” said Payne, who directs the ethics program at the nonpartisan Campaign Legal Center in Washington. “There is clearly a perception that in order to obtain favorable policies and actions from the administration, a company must provide a financial benefit to the president.”
In a statement, Crypto.com spokesperson Victoria Davis did not address concerns raised by legal and ethical experts.
“Crypto.com is looking to partner with companies that are pro-crypto and share our vision for its future,” said Davis, who called Trump Media a “pioneer in digital media.”
Trump Media did not respond to specific questions about the arrangement. In a brief statement, a company spokeswoman, Shannon Devine, called the story “obviously spoon-fed” to the Associated Press “by political operatives.”
The White House has repeatedly said Trump took appropriate steps to avoid conflicts of interest, pointing to his decision shortly after the presidential election to place his assets in a trust controlled by his sons.
“Neither the President nor his family have ever engaged, nor will ever engage, in conflicts of interest,” White House press secretary Karoline Leavitt said in a statement.
Trump Media Goes Into Crypto
Trump Media and Technology Group, which is majority-owned by Trump, was not created with cryptocurrency in mind. Its flagship Truth Social platform launched in early 2022, giving the then-former president a megaphone after Twitter and Facebook banned him for his role in fomenting the Jan. 6, 2021, attack by a mob of his supporters on the U.S. Capitol. Trump was reinstated on both platforms.
Truth Social faced obstacles getting started. A shell company — a SPAC in financial parlance — that raised money for the company was investigated by the Securities and Exchange Commission for misleading investors, resulting in a multimillion-dollar fine. A SPAC board member was sentenced to prison for insider trading.
When it went public in 2024, Trump Media was forced to fend off litigation from two co-founders who accused the company of defrauding them out of their shares.
Trump Media has yet to turn a profit. Last year, it lost more than $400 million. Its stock price closed Monday at around $10.50 per share, down from a high of around $62 reached when trading began in March last year. Over the past year, company executives have branched out into new lines of business, including a streaming platform, financial services and cryptocurrencies.
WATCH: Trump family’s cryptocurrency ties spark concerns as administration eases regulations
The shift to crypto reflects a complete evolution of Trump’s thinking on digital currencies. Shortly after leaving office in 2021, he said that Bitcoin, one of the leading cryptocurrencies, “looks like a scam.” Three years later, during his presidential campaign, he had a very different view. His family launched their own crypto company, World Liberty Financial, began selling tokens and pledged to roll back regulation of the industry.
Among those who have had business troubles: Changpeng Zhao, the billionaire founder of Binance, who was pardoned by Trump several months after participating in a complex sovereign wealth fund deal for the United Arab Emirates. As part of this deal, $2 billion was invested in World Liberty Financial to purchase its new crypto stablecoin.
In a statement, Binance said it was “erroneous and grossly misleading” to describe the company’s business engagements with World Liberty Financial as a “conflict of interest.” The company added that the decision to use World Liberty’s stablecoin to complete the deal was made by the UAE’s sovereign wealth fund.
The SEC also suspended an investigation into Justin Sun after the crypto mogul said he purchased around $200 million in crypto offerings from Trump.
Sun did not respond to requests for comment made through his company.
SEC investigation
Crypto.com spent much of 2023 and 2024 fighting potential regulatory actions from the Biden administration. After Trump defeated Biden, the crypto company began distributing donations to political committees affiliated with the president-elect.
Crypto.com donated $1 million to Trump’s inauguration last December, followed by a $10 million contribution in February to MAGA Inc., the president’s super PAC. In late 2024, Crypto.com began increasing its lobbying spending on Jeff Miller, a Trump global power broker and GOP fundraiser who presided over the finances of the new president’s inaugural festivities.
Miller, who did not respond to a request for comment, has lobbied the White House and the SEC on regulatory issues, according to disclosure reports. The investigation was officially closed on March 27.
A Crypto.com spokeswoman said Miller “had no involvement” in the SEC investigation. The company declined to comment on the nature or severity of the charges the SEC was considering bringing against it.
Agency commissioners during Biden’s presidency authorized the filing of charges against Crypto.com. But the company’s lawyers negotiated with the SEC to delay filing any enforcement action until after Trump takes the presidency. In exchange, Crypto.com withdrew a countersuit filed against the SEC. Such negotiations are common before the SEC files a lawsuit.
“Ultimately, the investigation was closed because there was no legitimate case to pursue,” Davis, the spokeswoman, said. “There is absolutely no connection between this decision and the political activities of Crypto.com.”
“Any assertion to the contrary is completely inaccurate,” she added.
Days before Crypto.com revealed that the SEC investigation had been dropped, Trump Media was breaking news of its own.
Looking for new partners
When it launched a series of investment funds in March focused on “Made in America,” Trump Media announced that Crypto.com had been chosen to be the funds’ digital host.
However, Trump Media was eyeing even more deals, and early forays between the two companies offered a glimmer of what was to come.
In April, officials at the social media company reported that they were looking for a telecommunications, media or technology company to acquire. They partnered with a financial services company and launched a SPAC to raise money for the company.
Four months later, Trump Media and Crypto.com announced the creation of Trump Media Group CRO Strategy. They said the new company would serve as a treasury for Crypto.com’s Cronos token, although company officials did not reveal many details.
Under the terms of the deal, which has not yet been finalized, Crypto.com is obligated to contribute the lion’s share of capital, plunging what was then valued at $1 billion of its Cronos token into the company. Yorkville Advisors, a financial services company that has worked closely with Trump Media, offers a line of credit. Trump Media’s contribution is more limited and includes “a license to use certain intellectual property,” according to an SEC filing.
The three companies will have a “majority stake” in the new venture, according to a company press release. But the share that Trump Media will hold has not yet been revealed.
“Considering that the investigation into (Crypto.com) was dropped, the economics of this case look more like a plea deal than a business deal,” said Corey Frayer, a cryptocurrency policy expert who was a senior SEC official during Biden’s presidency.
Hilary Allen, a law professor at American University who specializes in banking and cryptocurrencies, said the deal was ethically troubling.
With Crypto.com, “we have an abandoned investigation and an investment (in a Trump company) after the fact,” Allen said. “People can draw their own conclusions.”
Trump Media Chairman and CEO Devin Nunes told a conservative commentator in August that the new company offered consumers “two names” — Trump Media and Crypto.com — “that you can trust.”
“This is really going to become the future of finance,” said Nunes, a former congressional Republican and close Trump ally.
Crypto.com appears keen to make further deals with Trump Media. The crypto exchange announced in October the creation of an online marketplace that will allow Truth Social users to bet on a wide range of global events.
Among those on which users will be able to bet: the outcome of the elections.
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