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    ‘I have never seen such open corruption’: Trump’s crypto deals and loosening of rules shock observers

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    Cryptocurrency multibillionaire Justin Sun could barely contain his glee.Last month, Sun publicly flaunted a $100,000 Donald Trump-branded watch that he was awarded at a private dinner at Trump’s Virginia golf club. Sun had earned the recognition for buying $20m of the crypto memecoin $Trump, ranking him first among 220 purchasers of the token who received dinner invitations.Trump’s much-hyped 22 May dinner and a White House tour the next day for 25 leading memecoin buyers were devised to spur sales of $Trump and wound up raking in about $148m, much of it courtesy of anonymous and foreign buyers, for Trump and his partners.Memecoins are crypto tokens that are often based on online jokes but have no inherent value. They often prove risky investments as their prices can fluctuate wildly. The $Trump memecoin was launched days before Trump’s presidential inauguration, spurring a surge of buyers and yielding tens of millions of dollars for Trump and some partners.Trump’s private events on 22 May to reward the top purchasers of $Trump have sparked strong criticism of the president from ethics watchdogs, ex-prosecutors and scholars for exploiting his office for personal gain in unprecedented ways. But they fit in a broader pattern of how Trump has exploited the power and lure of his office to enrich himself and some top allies via cryptocurrencies.“Self-enrichment is exactly what the founders feared most in a leader – that’s why they put two separate prohibitions on self-benefit into the constitution,” said former federal prosecutor Paul Rosenzweig. “Trump’s profiting from his presidential memecoin is a textbook example of what the framers wanted to avoid.”Scholars, too, offer a harsh analysis of Trump’s crypto dealings.“I have never seen such open corruption in any modern government anywhere,” said Steven Levitsky, a professor of government at Harvard University and an expert on authoritarian regimes who co-authored the book How Democracies Die.Such ethical and legal qualms don’t seem to have fazed Trump or Sun. The pair forged their ties well before the dinner as Sun invested $75m in another Trump crypto enterprise, World Liberty Financial (WLF), that Trump and his two older sons launched last fall and in which they boast a 60% stake.The Chinese-born Sun’s political and financial fortunes, as well as those of other crypto tycoons, have improved markedly since Trump took office and moved fast to loosen regulations of cryptocurrency ventures at the Securities and Exchange Commission (SEC), the justice department and other agencies to upend Joe Biden’s policies.As the SEC has eased regulations and paused or ended 12 cases involving cryptocurrency fraud, three Sun crypto companies that were charged with fraud by an SEC lawsuit in 2023 had their cases paused in February by the agency, which cited the “public interest” and reportedly has held settlement talks.Trump’s and Sun’s mutually beneficial crypto dealings symbolize how the US president has boosted his paper wealth by an estimated billions of dollars since he returned to office, and worked diligently to slash regulations fulfilling his pledges to make the US the “crypto capital of the planet” and end the “war on crypto”.After the 22 May dinner, Sun posted: “Thank you @POTUS for your unwavering support of our industry!”Although Trump’s crypto ventures are less than a year old, the State Democracy Defenders Fund watchdog group has estimated that as of mid-March they are worth about $2.9bn.In late March, Reuters revealed that WLF had raised more than $500m in recent months and that the Trump family receives about 75% of crypto token sales.Trump’s pursuit of crypto riches and deregulation represents a big shift from his comments to Fox News in 2021, when he said that bitcoin, a very popular crypto currency, “seems like a scam”.View image in fullscreenIn July 2019, Trump posted that “Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade”, and noted that their value was “highly volatile and based on thin air”.Now, Trump’s new pro-crypto policies have benefited big campaign donors who lead crypto firms as well as Elon Musk, the world’s richest person, who spent almost $300m to help elect Trump, and who boasts sizable crypto investments in bitcoin through his electric car firm Tesla and his other ventures. Though Trump and Musk have since fallen out, the mogul’s crypto fortunes seem to have improved due to the president’s deregulatory agenda.Trump’s special envoy to the Middle East, Steve Witkoff, is a real estate billionaire who helped found WLF, in which he has a stake; Trump’s two oldest sons, Eric and Don Jr, and Witkoff’s son Zach have played key roles promoting WLF in the Middle East and other places.Trump’s use of his Oval Office perch to increase his wealth through his burgeoning crypto businesses while his administration rapidly eases regulations is unprecedented and smacks of corruption, say scholars, many congressional Democrats and some Republicans.“To me, Trump’s crypto dealings seem pretty explicit,” Julian Zelizer, a Princeton University professor who focuses on political history, told the Guardian. “Policy decisions are being made regarding parts of the financial industry that are being done not to benefit the nation, but his own financial interests … It’s hard to imagine what he’s doing benefits the nation.”Rosenzweig stressed that “not only do Trump’s extravagant crypto ventures benefit him personally as his administration slashes crypto regulations and takes pro-crypto steps at the SEC; they also benefit his tech bro backers who will take full advantage of the end of regulatory enforcement”.In Congress, leading Democrats, including Richard Blumenthal, a senator from Connecticut, and Jamie Raskin, a representative from Maryland, in May announced separate inquiries by key panels in which they are ranking members into Trump’s crypto dealings, and attacked Trump for using his office to enrich himself via his crypto operations.“With his pay-for-access dinner, Trump put presidential access and influence on the auction block,” Blumenthal told the Guardian. “The scope and scale of Trump’s corruption is staggering – I’ll continue to demand answers.”Last month, too, the Democratic senator Jeff Merkley, from Oregon, and the Senate minority leader, Chuck Schumer, introduced the “end crypto corruption” bill, which 22 other Democrats have endorsed.“Trump’s crypto schemes are the Mount Everest of corruption,” Merkley told the Guardian. “We must ban Trump-style crypto corruption so all elected federal officials – including the president, vice-president and members of Congress – cannot profit from shady crypto practices,” which his bill would curtail.Some former congressional Republicans are also incensed by Trump’s blatant use of his presidency to peddle $Trump. “Nobody should be allowed to use their public positions while in office to enrich themselves,” said ex-Republican congressman Charlie Dent of Pennsylvania, who once chaired the House ethics panel. “A member of Congress would not be permitted to engage in the kind of memecoin activities which the president has been doing.”Trump and his family have dismissed critics concerns about the 22 May events and his other crypto ventures.Before the 22 May dinner, Trump’s press secretary, Karoline Leavitt, told reporters that the president would attend his crypto gala in his “personal time” and it was not a White House event, but declined to release names of the many anonymous and foreign attendees.To allay criticism, the Trump Organization said in January that Trump’s business interests, including his assets and investments, would be placed in a trust his children would manage and that the president wouldn’t be involved in decision-making or daily operations. Trump’s family also hired a lawyer as an ethics adviser.But those commitments have been dwarfed by Trump’s public embrace of his crypto ventures and strong deregulatory agenda. In March, for instance, Trump hosted the first-ever “crypto summit” at the White House, which drew a couple dozen industry bigwigs who heard Trump promise to end Biden’s “war on crypto”.Trump’s crypto critics worry that the president’s strong push for less industry regulation may create big problems: the crypto industry has been battered by some major scandals including ones involving North Korean hackers and has been plagued by concerns about industry’s lack of transparency and risks.For instance, a report last December by leading research firm Chainalysis found that North Korean hackers had stolen $1.34bn of cryptocurrency in 2024, a record total and double what they stole the year before.The report concluded that US and foreign analysts believe the stolen funds were diverted in North Korea to “finance its weapons of mass destruction and ballistic missile programs”.Other crypto fraud schemes in the US have spurred loud alarms.In an annual report last September, the FBI revealed that fraud related to crypto businesses soared in 2023 with Americans suffering $5.6bn in losses, a 45% jump from the previous year.Sam Bankman-Fried, who founded the now bankrupt FTX crypto exchange, was sentenced to 25 years in prison in March 2024 by a New York judge for bilking customers out of $8bn.Nonetheless, a justice department memo in April announced it was closing a national cryptocurrency enforcement team that was established in 2022, which had brought major crypto cases against North Korean hackers and other crypto criminals.The memo stressed that the justice department was not a “digital assets regulator” and tried to tar the Biden administration for a “reckless strategy of regulation by prosecution”. The memo stated that a pro-crypto Trump executive order in January spurred the justice department’s policy shift.Ex-prosecutors and ethics watchdogs worry increasingly that crypto scandals and conflicts of interest will worsen as the Trump administration moves fast to ease crypto oversight at the justice department, the SEC and other agencies.Some of WLF’s high-profile crypto deals have involved overseas crypto firms which have had recent regulatory and legal problems in the US, fueling new concerns, watchdogs and ex-prosecutors say.View image in fullscreenOne lucrative deal raised eyebrows when WLF was tapped to play a central role in a $2bn investment by Abu Dhabi financial fund MGX that is backed by the United Arab Emirates in the world’s largest crypto exchange, Binance.As part of the deal, the Abu Dhabi fund bought $2bn of a WLF stablecoin, dubbed USD1, to invest in Binance. Stablecoins are a popular type of cryptocurrency that are often pegged to the dollar.The WLF deal comes after Binance in 2023 pleaded guilty to violating US money-laundering laws and other violations and the justice department fined it a whopping $4bn.Furthermore, Binance’s ex-CEO and founder, Changpeng Zhao, pleaded guilty in the US to violating the Bank Secrecy Act and failing to maintain an effective anti-money-laundering program.Zhao, who still owns 90% of Binance, served a four-month jail term last year.WLF’s $2bn deal was announced at an Abu Dhabi crypto conference on 1 May that drew Eric Trump two weeks before Trump’s visit to the UAE capital, sparking concerns of foreign influence and ethics issues.Increasing WLF’s ties further with Binance, the crypto exchange announced on 22 May that it had begun listing the stablecoin for trading purposes. Binance got some good news at the end of May, too, when the SEC announced the dismissal of a civil lawsuit it filed in 2023 against the exchange for misleading investors about surveillance controls and trading irregularities.Paul Pelletier, a former acting chief of the justice department’s fraud section, noted that SEC moves back in February “to emasculate its crypto enforcement efforts sent crypto fraudsters a welcome mat of impunity”.He added: “The recent dismissal of the SEC’s lawsuit against Binance for mishandling customer funds, days after it began listing the Trump family’s cryptocurrency on its exchange, seemed to be the natural consequence of such enforcement laxity. Victims be damned.”Other agency deregulatory moves that favor crypto interests can boost Trump’s own enterprises and his allies, but pose potential risks for ordinary investors, say legal scholars.Columbia law professor Richard Briffault noted that as part of the Trump administration’s wide-ranging and risky crypto deregulatory agenda which can benefit Trump’s own crypto ventures, the Department of Labor in late May nixed a Biden-era “extreme care” warning about 401K plans investing in crypto.“[The labor department] has rescinded the red light from the Biden years for 401K retirement plans, which is another sign of the Trump administration’s embrace of crypto,” Briffault said.Briffault, an expert on government ethics, has told the Guardian more broadly that Trump’s crypto ventures and his 22 May memecoin bash are “unprecedented”.“I don’t think there’s been anything like this in American history,” he said. “Trump is marketing access to himself as a way to profit his memecoin. People are paying to meet Trump and he’s the regulator-in-chief. It’s doubly corrupt.”In late May, in a new crypto business twist, the Trump Media and Technology Group, the parent of Truth Social, said it had sealed a deal to raise $2.5bn to be used to buy bitcoin, creating a reserve of the cryptocurrency.Meanwhile, Trump’s stablecoin fortunes and those of many industry allies could get boosts soon from a Senate stablecoin bill, dubbed the “genius act”, that’s poised to pass the Senate on Tuesday but which critics have said loosens regulatory controls in dangerous ways unless amended with consumer protections and other safeguards.Senators Merkley and Elizabeth Warren, of Massachusetts, led unsuccessful efforts to amend the bill to thwart potential criminal abuses, protect consumers and prevent Trump from using his office to profit his crypto businesses.“The ‘genius act’ fails to prevent sanctions evasion and other illicit activity and lets big tech giants like Elon Musk’s X issue their own private money – all without the guardrails needed to keep Americans safe from scams, junk fees or another financial crash,” Warren told the Guardian.“Donald Trump has turned the presidency into a crypto cash machine,” Warren said. The Genius act, Warren stressed, should have “prohibited the President AND his family from profiting from any stablecoin project.”More broadly, Kedric Payne, the general counsel and ethics director at the Campaign Legal Center, said: “President Trump’s financial stakes in the crypto industry at the same time that he is determining how the government will regulate the industry is unprecedented in modern history. This is precisely the type of conflict of interest that ethics laws and norms are designed to stop.” More

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      Cryptocurrency will not save the Democratic party | Alex Bronzini-Vender

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      Twice rejected by American voters in favor of Donald Trump, the Democratic party now faces its most severe crisis of identity in four decades. Nowhere is the party’s search for relevance in Trump’s America more desperate than in its embrace of cryptocurrency, a sector whose existence depends upon its ability to circumvent the financial regulatory state the Democrats spent a century constructing. How else to explain the Democratic representative Ritchie Torres – whose South Bronx district is the poorest in the United States – joining forces with the Republican Tom Emmer to champion cryptocurrency through their newly formed congressional Crypto caucus.Congressional Republicans have always been uniform in their support for cryptocurrency: in May 2024, just three Republican House members voted against a bill to significantly relax regulations on digital tokens. But since 2016, the cryptocurrency industry has made steady inroads into the Democratic party. That convergence, if it continues, will represent a return to the pre-New Deal financial politics that the party spent a century rejecting.Throughout American history, the politics of money and financial risk have been central to party coalitions. Not since the election of 1896, however, have the Democrats been the party of deflationary, restrictive “hard money”. As the historians Anton Jäger and Noam Maggor explain, the de-facto fusion of the Populist party with the Democratic party transformed it into a vehicle for those who saw money not as a neutral store of value, but as a political instrument that could serve developmental ends – in this case, directing investment to credit-starved regions of the country.William Jennings Bryan’s defeat drove the party to moderate its more radical monetary positions. But notwithstanding the occasional inconsistencies, Democrats generally maintained the anti-deflationary stance established in 1896. Thirty years later, the Great Depression provided Franklin D Roosevelt with the mandate and the crisis necessary to complete this transformation: the United States abandoned the gold standard in 1933.“Consumer protection” in its contemporary form only truly entered the American political lexicon in the 1960s, but this period established the contours of America’s politics of financial risk. The Banking Act of 1933 (often referred to as Glass-Steagall) separated commercial and investment banking to protect ordinary depositors from speculative excesses. The Securities Acts of 1933 and 1934 imposed disclosure requirements on financial markets and established the Securities and Exchange Commission (SEC). Most critically, the creation of the Federal Deposit Insurance Corporation (FDIC) ended the era of devastating bank runs by insuring deposits.Collectively, these measures represented a fundamentally new relationship between citizens, banks and financial risk: the state would actively shape financial markets rather than simply enforcing contracts within them.The post-war era saw the Democratic party further articulate that approach to “market-making”. The Employment Act of 1946 declared it the government’s responsibility to maintain “maximum employment”, while the Federal Reserve, treasury, SEC and FDIC enforced financial stability through interest rate caps, capital controls and heavy regulation of financial institutions. While occasionally inefficient, these policies contributed to remarkable stability. As the economists Carmen Reinhart and Kenneth Rogoff have documented, the period from 1945 to 1971 saw virtually no banking crises in advanced economies.The Clinton administration’s financial deregulation – culminating in the repeal of the Glass-Steagall Act in 1999 and the deregulation of derivatives in 2000 – represented a significant retreat from these principles, and ended in the catastrophe of 2008. But, if only to offset the mounting risk they allowed the private sector to assume, the Clinton administration frequently sought to expand the FDIC’s responsibilities.Pro-crypto Democrats, from Torres to the disgraced New York City mayor Eric Adams, argue that cryptocurrency aligns with progressive principles. “Blockchain technology can liberate the lowest income communities from the high fees of the traditional financial system,” Torres said at an industry-organized summit last year. Kamala Harris herself appealed to cryptocurrency as an opportunity for Black men. But cryptocurrency, at its core, subverts the tools for economic management Democrats have championed for decades.The FDIC was created precisely because uninsured deposits catalyzed routine bank runs; cryptocurrency exchanges offer no comparable protection. The Federal Reserve’s sovereignty over the American monetary base enables it to expand the money supply during downturns to maintain employment; Bitcoin’s fixed supply explicitly rejects this responsibility. The SEC was established because unregulated securities markets harmed ordinary investors; cryptocurrency’s decentralization enables exchanges like Uniswap to operate outside its protective frameworks.The industry’s “political investments” – to borrow the political scientist Thomas Ferguson’s terminology – are an undeniably defining force in American politics. By some counts, nearly half of all corporate campaign contributions in 2024 came from the crypto sector. But despite Kamala Harris’s substantial concessions to the industry, the top three crypto PACs leaned red by a margin of nearly 2:1. Harris’s promises to the industry were never enough to outweigh the Trump campaign’s proposal, running since late July, to enshrine crypto as a “permanent national asset” through a national bitcoin “stockpile”.Modest deregulation is simply not what crypto is in the political game for. It requires nothing less than the seizure of the American state. And until Democrats can outmatch Trump’s handouts to the sector, crypto will stay with the Republican party.Volatility is the basic roadblock to crypto’s further adoption. It is simply too risky for most people. No amount of regulatory tweaks will change that fundamental affliction: as long as cryptocurrencies are predominantly held as investments rather than used for transactions, their prices will remain highly sensitive to investor demand fluctuations. And the absence of traditional stabilization mechanisms, like central banks or reserve assets, contributes to the high volatility of crypto tokens. Put simply: if crypto is to grow, it’ll need both state backstopping and displacement of the traditional banking system altogether.Trump has set about doing exactly this. His administration’s recently established “strategic bitcoin reserve” is, in effect, a state backstop for cryptocurrency. But the Trump administration’s designs extend far beyond “de-risking” crypto: their goal, as the political economist Martijn Konings observes, appears to be the destabilization of the traditional banking system itself.At the behest of Elon Musk’s s0-called “department of government efficiency” (Doge) – itself named after Dogecoin, Musk’s cryptocurrency of choice – the Trump administration’s “deferred resignation” packages and layoffs have already reduced the FDIC’s workforce by 10%. And Trump issued an executive order in mid-February requiring that the formerly independent agency submit to White House oversight.The Trump team has floated replacing the already enervated FDIC with a gutted insurance scheme housed in the treasury, merging it with the office of the comptroller of the currency, or simply defanging it through mass layoffs and employee transfers. In either case, tighter executive control over banks’ balance sheets will render the financial system’s solvency contingent upon whether a particular bank is favored or disfavored by the president. It’s easy to imagine a resulting loss of confidence in the traditional banking system – an outcome that crypto advocates believe would work to their advantage.If the Democrats wish to outcompete the Republican party for crypto dollars, then, they’ll need to offer the “industry” much more than deregulation. They’ll have to become active participants in engineering a return to the pre-New Deal politics of money and financial risk – the very positions against which the modern Democratic party defined itself. That would be a capitulation unprecedented even in the Democratic party’s long history of betraying the American working class.

      Alex Bronzini-Vender is a writer living in New York More

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      Trump to host crypto leaders after creating strategic reserve of bitcoin

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      Cryptocurrency industry elite are set to meet with Donald Trump at the White House on Friday to discuss how the government will enact Trump’s vision of making the country the “crypto capital of the world”. The day before, the president signed an executive order creating a strategic reserve of cryptocurrency for the United States.Trump will host players including Michael Saylor, co-founder and the executive chair of MicroStrategy, and Zach Witkoff, one of the founders of the president’s own crypto business, World Liberty Financial, according to the executives’ social media posts.Vlad Tenev, the CEO of Robinhood Markets, will also attend, according to a spokesperson for Robinhood. Witkoff and Saylor did not respond to requests for comment. Attenders expect the event to focus on Trump’s plans to build the strategic reserve, which the president said will contain bitcoin and four other coins. Trump directed the secretaries of treasury and commerce to develop “budget-neutral strategies” for acquiring additional bitcoin that have no “incremental costs” on taxpayers.“For the first time, industry leaders feel they’re walking into a collaborative discussion,” said Les Borsai, co-founder of Wave Digital Assets, a crypto investment adviser, who said he did not receive an invitation.Participants said they were focused on any further details on the strategic reserve, a government stockpile of crypto assets.The reserve will be capitalized with bitcoin owned by the federal government that was forfeited as part of criminal or civil asset forfeiture proceedings, the White House “crypto czar”, billionaire David Sacks, said in a post on social media platform X.“This [strategic reserve] is going to be the biggest point of contention for many of us,” said JP Richardson, co-founder and CEO of Exodus, a bitcoin wallet developer. Although he owns the four other coins that Trump has suggested including in the reserve, he does not think they have a place in a strategic reserve.“Crypto has made big strides, but it’s still a relatively nascent industry,” Richardson said. The other coins are smaller and function in a very different way, one he said may create more risk. Brian Armstrong, co-founder and CEO of Coinbase, posted on X on Sunday that a bitcoin-only reserve was “probably … the best option”. Both Richardson and Armstrong will attend the summit.In a post on X, Brad Garlinghouse, the CEO of Ripple, who also confirmed his attendance at the summit, hailed Trump’s recognition that “we live in a multichain world” stretching beyond bitcoin. XRP, the coin tied to Ripple, is one of the four other cryptocurrencies Trump has suggested may be added to a crypto reserve. Attendees said they were optimistic about working with an administration that views crypto as a mainstream asset class and expressed hope for a straightforward regulatory process.skip past newsletter promotionafter newsletter promotion“What everyone really needs to have at this point is clarity on what the level of scrutiny and intensity of regulation will be, who the key regulators will be,” said Yesha Yadav, the associate dean and a professor of law at Vanderbilt University. That could speed up the process of approval by the Securities and Exchange Commission of a flurry of new listings of exchange-traded funds.Trump’s family has launched cryptocurrency meme coins and he also holds a stake in World Liberty Financial, a crypto platform, which has sparked some conflict-of-interest concerns. His aides have said Trump has handed over control of his business ventures, which are being reviewed by outside ethics lawyers. The White House did not respond to a request for comment. More

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      Bitcoin price hits six-week high after Trump backs cryptocurrency

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      Bitcoin has hit its highest level in more than six weeks after Donald Trump said at the weekend he would end the “persecution” of the crypto industry if he wins the US presidential election.The cryptocurrency’s price rose by more than 3% on Monday to peak at about $69,745, the highest since 12 June when the currency changed hands at more than $69,800.The increase comes after supportive comments from Trump at the Bitcoin 2024 convention in Nashville, Tennessee, where he said on Saturday he would make the US the world’s cryptocurrency leader and embrace a more pro-bitcoin stance than his rival, Kamala Harris.The former president said: “I pledge to the bitcoin community that the day I take the oath of office, Joe Biden and Kamala Harris’s anti-crypto crusade will be over … If we don’t embrace crypto and bitcoin technology, China will, other countries will. They’ll dominate, and we cannot let China dominate. They are making too much progress as it is.”He also said he would sack the chair of the US financial watchdog the Securities and Exchange Commission (SEC), on the first day of his presidency if he won the election. “On day one, I will fire Gary Gensler,” Trump said, to cheers of approval from the audience.Gensler is a noted sceptic about cryptocurrencies, despite aiding them in January by approving exchange-traded funds (ETFs) – a basket of assets that can be bought and sold like shares on an exchange – that track the price of bitcoin.The SEC chair said in a statement approving the ETFs that bitcoin was a “speculative, volatile” asset used for illegal activities including ransomware and terrorist financing. Since 2023 the SEC has launched more than 40 crypto-related enforcement actions.Speaking at the bitcoin convention, Trump said he would establish a crypto presidential advisory council and create a national “stockpile” of bitcoin using cryptocurrency the US government held that was largely seized in law enforcement actions.skip past newsletter promotionafter newsletter promotion“Never sell your bitcoin,” Trump said. “If I am elected, it will be the policy of my administration, the United States of America, to keep 100% of all the bitcoin the US government currently holds or acquires into the future.”The Financial Times also reported on Saturday that Harris’s advisers had approached top crypto companies to try to “reset” the relationship between the Democratic party and the sector. Approaches had been made to the Coinbase crypto exchange, the stablecoin company Circle and the blockchain payments group Ripple Labs, the FT said. More

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      Peter Thiel’s Bitcoin Paranoia

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      Silicon Valley billionaire Peter Thiel finds himself in a confusing moral quandary as he struggles to weigh the merits of his nerdish belief in cryptocurrency against his patriotic paranoia focused on China’s economic rivalry with the United States. Participating in “a virtual event held for members of the Richard Nixon Foundation,” Thiel, while reaffirming his position as a “pro-Bitcoin maximalist,” felt compelled to call his faith into doubt due to his concern that China may use bitcoin to challenge US financial supremacy.

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      According to Yahoo’s Tim O’Donnell, Thiel “thinks Beijing may view Bitcoin as a tool that could chip away at the dollar’s might.” He directly quotes Thiel who wonders whether “Bitcoin should also be thought [of] in part as a Chinese financial weapon against the U.S.”

      Today’s Daily Devil’s Dictionary definition:

      Financial weapon:

      The role any significant amount of money in any one person’s, company’s or nation’s hand is expected to play to assert power and obtain undue advantages in today’s competitive capitalism

      Contextual Note

      Thiel may be stating the obvious. Money is power and concentrations of money amount to concentrated power. The point of power is to influence, intimidate or conquer, depending on how concentrated the power may be. It is ironically appropriate that the event at which Thiel spoke was organized by the Nixon Foundation. Richard Nixon was known for putting the quest for power above any other consideration. He was also known for opening the relationship with China, which many Republicans today believe led to a pattern of behavior that allowed China to eventually emerge as a threat far more menacing than the Soviet Union during the Cold War. Nixon was also the president who destroyed the Bretton Woods system that set the financial rules ensuring stable international relations in the wake of World War II.

      Thiel’s thoughts are both transparently imperialistic. They follow Donald Trump’s “America First” logic, while at the same time revealing Thiel’s uncertainty about how to frame it in the context of Bitcoin. His version of “America First” has less to do with the Trumpian idea that America should worry first about its own internal matters and later deal with the world than with the idea of the neocon conviction that the US must impose itself as the unique hegemon in the global economy. In Thiel’s mind, this sits uncomfortably alongside his made-in-Silicon Valley belief that cryptocurrencies represent the trend toward something that might be called “financial democracy.”

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      According to O’Donnell, Thiel “explained that China isn’t fond of the fact that the U.S. dollar is the world’s major reserve currency because it gives the U.S. global economic ‘leverage,’ and he thinks Beijing may view Bitcoin as a tool that could chip away at the dollar’s might.” O’Donnell is guilty of somewhat hypocritical understatement when he claims that it is all about China not being “fond of” the dollar’s status as the world’s major reserve currency. Who besides the US would be “fond of” such a thing? Those are O’Donnell’s words, not Thiel’s. As for the idea that Bitcoin might chip away at the dollar’s might, Thiel avoids making that specific point and prefers a more vaguely paranoid reading of events as he suggests a kind of plot in which China may be using Bitcoin to undermine US hegemony.

      Thiel’s phrasing places him clearly in the realm of what might be called diplomatic paranoia. He begins with a statement of speculative uncertainty as he expresses his concern with China’s turning Bitcoin into a financial weapon. Here are his exact words: “I do wonder whether at this point Bitcoin should also be thought in part of as a Chinese financial weapon against the US where it threatens fiat money but it especially threatens the US dollar and China wants to do things to weaken it.”

      “I do wonder whether at this point Bitcoin should also be thought … of” expresses a deviously framed insinuation of evil intentions by a Fu Manchu version of the Chinese government. This is a popular trope among Republicans and even Democrats today, who vie with each other to designate China as an enemy rather than a rival. But Thiel’s admission that it’s really about “wondering” tells us that we are closer to Alice’s Wonderland than to the CIA book of facts.

      Thiel then adds the temporal detail of “at this point,” which introduces a surreal notion of time that has more to do with a fictional dramatic structure than the reality of contemporary history. It is tantamount to saying: This is where the plot thickens. And his suggestion of how it “should be thought of,” besides being manipulative, indicates that we are invited into accepting the plot of a paranoid fantasy made up of thought rather than reality.

      He then explains what he means by “a Chinese financial weapon against the US.” Though he claims to be a believer in the unfettered freedom of cryptocurrency, he accuses it of violating what might be called “the rule of law” insofar as “it threatens fiat money,” which is the privilege of every nation on earth. But that worry has little merit compared to the fact it “especially threatens the US dollar,” which — it goes without saying — China wants to weaken.

      Thiel knows where the money is. It lies in the primacy of the US dollar. That is why the US has 800 military bases across the globe.

      Historical Note

      Since the dismantling in 1971 of the Bretton Woods system by US President Richard Nixon — in whose name the Richard Nixon Foundation was created — the dollar has functioned as the ultimate and most devastating financial weapon in history wielded by a single government. The Bretton Woods agreement, signed in 1944 by 44 countries, allowed the dollar to play a controlled role as the world’s reserve currency thanks to its convertibility with gold. When the growing instability of the dollar, due in part to the Vietnam War, threatened the order established by Bretton Woods, Nixon unilaterally broke the link with gold. Instantaneously, the US was free to weaponize the dollar for any purpose it judged to be in its interest.

      Nixon produced one of the greatest faits accomplis in history. As with many successful unnoticed revolutions, Nixon’s administration presented the uncoupling of the dollar and gold as a temporary measure, the response to a momentary crisis. It took two years for the world to notice that Bretton Woods had definitely collapsed. The era of floating currencies began. Money could finally be seen for what it is: a shared imaginary repository of value that could eventually become the focus of what Yuval Noah Harari has called the religion of capitalism in his book, “Money.”

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      For many people, Bitcoin has become a kind of alternative religion, or rather a vociferous radical sect on the fringes of the global religion of neoliberal capitalism. Bitcoin as a concept highlights the lesson brought home by the collapse of Bretton Woods: that the value of money people exchange, despite Milton Friedman’s objections, is literally based on nothing and therefore meaningless. That also means — though the faithful are not ready to admit it — that its value is infinitely manipulable. It appears to derive from economic reality but is anchored in little more than what a small group of people with excess cash may think of it on a given day. Elon Musk ostentatiously manipulated its value when he announced that Tesla had purchased $1.5 billion worth of bitcoin. 

      For anyone with billions to throw around, it’s an easy game to play. The manipulation by Musk, Peter Thiel’s former associate as co-founder of PayPal, doesn’t worry Thiel. Wondering about whether China might, in some imaginary scenario, use Bitcoin for nefarious purposes does trouble him.

      Thiel represents our civilization’s new ruling elite. It consists of individuals who sit between two hyperreal worlds, one dominated by the mystique that surrounds means of payment (cash) and the control of financial flows, complemented by another that seeks political control and the hegemony required to enforce the now imaginary “civilized” rules governing financial flow. Since the demise of Bretton Woods, those rules have lost all meaning. That means the rules themselves can be weaponized. It’s a monopoly that Thiel, his fellow members of the Nixon Foundation and most people in Washington insist on reserving for the US.

      *[In the age of Oscar Wilde and Mark Twain, another American wit, the journalist Ambrose Bierce, produced a series of satirical definitions of commonly used terms, throwing light on their hidden meanings in real discourse. Bierce eventually collected and published them as a book, The Devil’s Dictionary, in 1911. We have shamelessly appropriated his title in the interest of continuing his wholesome pedagogical effort to enlighten generations of readers of the news. Read more of The Daily Devil’s Dictionary on Fair Observer.]

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More