WSJ: The Democratic Party has set its sights on Trump's encryption empire

Original Title: Trump crypto deals provoke Senate backlash and calls for investigation Original authors: Eric Lipton, David Yaffe-Bellany, The New York Times Original text compiled by: zhouzhou,

Editor’s Note: The Trump family is suspected of profiting from cryptocurrency by issuing stablecoins and collaborating with an Abu Dhabi fund, which has sparked strong opposition from Senate Democrats. The originally promising GENIUS Act has been hindered as multiple Democrats are calling for amendments to the bill or a thorough investigation into potential corruption, expressing concerns over national security and money laundering issues.

The following is the original content (original content has been reorganized for better readability):

Trump's cryptocurrency trading has triggered a strong backlash from the Senate, leading to calls for an investigation.

Senate Democrats are calling for changes to the cryptocurrency legislation pending in Congress, partly due to increasing evidence that the Trump family is leveraging its network and Donald Trump's power to profit from cryptocurrency trading.

Later last week, after a closed-door meeting among Senate Democrats, this opposition further escalated. Democratic leader Chuck Schumer told colleagues at the meeting that they should not commit to supporting the so-called "GENIUS Act" - a bill backed by the crypto industry.

For several months, the bill was originally thought to pass smoothly with bipartisan support and was scheduled for procedural voting this week. However, during the meeting, Democratic senators expressed concerns, pointing out that the legislation would directly benefit the Trump family's crypto business, based on reports from The New York Times.

According to lawmakers, one of the concerns they mentioned is that the cryptocurrency company "World Liberty Financial," associated with Trump, has recently reached an agreement with a government-backed UAE venture fund to accept a deposit of $2 billion—this news was disclosed by The New York Times last week.

"This is a transaction of influence, it is a conflict of interest, it is a large-scale corruption we have never seen before," said Oregon Democratic Senator Jeff Merkley in an interview, reiterating his remarks during the meeting, "This behavior must be stopped."

Massachusetts Democratic Senator Elizabeth Warren also urged other Democrats to take a stand on the matter.

Senator Elizabeth Warren stated in a statement: "This Senate legislation will make it easier for the president and his family to line their pockets. This is blatant corruption, and no senator should support it."

These ethical concerns have heightened the Democrats' broader unease about the bill, with some senators also pointing out other issues, arguing that the bill lacks adequate safeguards for anti-money laundering.

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The company "World Liberty" did not immediately respond to the request for comment.

White House spokesperson Anna Kelly stated that Trump does not have a conflict of interest because his assets are placed in a trust managed by his children. (Nevertheless, Trump will still gain financial benefits from these investments.) Kelly said in a statement: "Stablecoin legislation should be pushed through jointly by both parties. President Trump is committed to making the United States a global crypto hub and fundamentally transforming our digital financial technology."

Executives in the cryptocurrency industry have been lobbying for months to push the passage of the GENIUS Act. The bill aims to make it easier for American companies to use stablecoins, which are cryptocurrencies that maintain a price around $1.

This will be the first time that U.S. lawmakers officially establish a regulatory framework for the industry, helping its development in the United States. Since stablecoins do not fluctuate as violently as other cryptocurrencies, many traders prefer to use them for various business transactions.

However, this favorable policy for the industry will also directly benefit World Liberty Company, thereby expanding the market for its recently launched stablecoins. The Trump family and its partners are already in a favorable position to potentially earn tens of millions of dollars or more annually from these stablecoins.

This prospect has triggered a strong backlash from Democratic lawmakers.

At last Thursday's meeting, Democrats raised a series of objections to the bill, which included both the conflicts of interest posed by Trump and the fact that certain wording in the bill could allow overseas stablecoin companies to evade some of the new regulations.

On Saturday, nine Democrats, including four who had previously voted to support the bill in the Senate Banking Committee, issued a joint statement saying they would no longer support the bill unless significant changes were made. They pointed out that the bill lacks strong provisions to prevent money laundering and has insufficient regulatory mechanisms for foreign cryptocurrency companies, but did not mention Trump's cryptocurrency business.

Republican senators need at least seven Democratic senators to vote in favor in order to overcome procedural hurdles for the bill. Therefore, the emergence of this opposition could jeopardize the legislation and pose a significant blow to the efforts of the crypto industry to push for policy in Washington.

During the 2024 election cycle, cryptocurrency companies invested over $130 million in supporting congressional candidates, including key Democratic candidates in battleground districts, such as Senator Elissa Slotkin from Michigan and Ruben Gallego from Arizona. Gallego had voted in favor of the GENIUS Act in the banking committee, but he also signed a statement expressing concerns about the bill this weekend.

Merkley and Warren separately submitted requests on Monday for the Office of Government Ethics to investigate the Trump family's growing cryptocurrency trades, stating that they "exhibit astonishing foreign influence and may pose risks of conflicts of interest that threaten national security."

Currently, there is also a version of the stablecoin bill under review in the House of Representatives. Democratic leaders plan to collectively walk out during Tuesday's hearing regarding the industry to protest Trump's role in the sector.

California Democratic Congressman Sam Liccardo, who supports legislation for stablecoins, stated that the recent actions of the Trump family have left cryptocurrency executives, who have been pushing Congress to pass the bill, feeling frustrated.

"I am increasingly hearing concerns from leaders in the crypto industry in Silicon Valley - they are extremely uneasy about Trump's plan to involve this industry in a 'thieves' rule' controlled by his sons," Ricardo said.

Even some Senate Republicans and long-time supporters of cryptocurrency have expressed concerns about Trump and his family's attempts to profit from it. "We're talking about my president, but I have to admit this does give me some concern," Wyoming Republican Senator Cynthia Lummis said last week to NBC News.

Trump, who once held a skeptical attitude towards cryptocurrency, publicly changed his stance during last year's campaign, promising to make the United States the "global crypto capital." In September of last year, he announced the establishment of World Liberty, a company that will issue its own digital currency, along with his two sons.

After Trump took office, he appointed a group of federal agency heads who support the cryptocurrency industry and quickly halted the regulatory crackdowns of the Biden administration. The core goal of the cryptocurrency industry in Washington is to promote legislation to secure a legitimate status for itself within the U.S. financial system.

The "GENIUS Act" has become the first bill to gain momentum. In March of this year, the Senate Banking Committee passed the bill with a vote of 18 to 6, with five Democrats including Gallego voting in favor. However, it was soon discovered that the provisions regarding stablecoins in the bill would be directly linked to Trump's business interests. About two weeks after the committee's vote, World Liberty announced the launch of a stablecoin named "USD1"—which could bring substantial profits to the Trump family.

Stablecoin issuance companies operate similarly to banks: they take deposits from users, issue tokens, and then invest those funds to earn returns, with the profits belonging to the company.

Just last week, a founder of World Liberty announced at a cryptocurrency conference that a venture capital fund backed by the Abu Dhabi government will be conducting a major industry deal using USD1 tokens worth $2 billion — this amounts to a direct injection of substantial funds into a business led by the family of the U.S. president.

The recent report by The New York Times on the Abu Dhabi trades and other conflicts of interest related to World Liberty has spread rapidly on Capitol Hill. According to documents obtained by The New York Times, Senate Democrats distributed a research memorandum last week that cited these investigations, vehemently criticizing the legislation as a tool for the Trump family to "profit corruptly through cryptocurrency schemes." California Congresswoman Maxine Waters even read the relevant article from the newspaper in full during a committee hearing.

During a Senate Democratic meeting, Senate Majority Leader Chuck Schumer expressed concerns about certain provisions in the bill. According to congressional aides, he is particularly worried that Tether, a foreign company, may use this legislation to issue stablecoins in the U.S. without having to comply with most regulatory provisions. He called on Democratic lawmakers to carefully review the confidential briefing materials on Tether provided by the Banking Committee.

A spokesperson for Tether did not respond to a request for comment. Axios had previously reported some details of the meeting.

Senate aides said on Monday that bipartisan lawmakers are continuing negotiations to address some concerns raised by Democrats. Several lawmakers, including the bill's co-sponsor, New York Democratic Senator Kirsten Gillibrand, are working to find a viable path to advance the legislation.

But Trump shows no signs of backing down. On Monday, he posted an illustration of himself raising his fist on his social platform Truth Social, calling on supporters to buy a cryptocurrency called $Trump. This is one of the latest ventures he has engaged in, which has brought over $100 million in profits to his family and partners.

In addition, on Monday evening, a fundraising dinner hosted by cryptocurrency executives for the pro-Trump Super PAC will be held at the Trump National Golf Club in Virginia, with participants required to donate $1.5 million each.

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