Molly White's Citation Needed - Issue 80 – Aimed at benefiting the digital assets industry

Episode Date: March 28, 2025

As the US government lays a very favorable groundwork for the crypto industry, Trump positions himself for maximum personal profit. Originally published on March 28, 2025.

I'm Molly White, and you're listening to the audio feed for the citation-needed newsletter. You can see the text version of the newsletter online at citation-needed.news. Issue 80, aimed at benefiting the digital assets industry. As the U.S. government lays a very favorable groundwork for the crypto industry, Trump positions himself for maximum personal profit. This issue was originally published on March 28, 2025. As the U.S. government pushes forward plans to establish the friendliest possible environment for the cryptocurrency industry, Trump builds up his own crypto-related ventures to ensure maximum personal profits.

Meanwhile, the SEC invites crypto companies to write their own rules, and the head of the White House Crypto Advisory Council mulls-swapping U.S. gold reserves for Bitcoin. In the Courts. Gottbit co-founder Alexei Andrianin, who was recently extraded, indicted to the United States after he and his firm were indicted on fraud charges pertaining to alleged market manipulation, has pleaded guilty to wire fraud and conspiracy to commit market manipulation and wire fraud. The company has also agreed to a guilty plea on these charges. As a part of the plea deal, prosecutors will recommend a reduced sentence of two years in prison for Andrianin,

and Gottbitt will forfeit approximately $23 million in stable coins. The group overseeing the remnants of FTX has dismissed its adversary case against Joseph Bankman and Barbara Freed, the parents of convicted fraudster and former FTX CEO Sam Bankman-Fried. The company sued Bankman and Freed in September 2023, alleging they were unjustly enriched by the FTX fraud in the form of around $30 million in benefits that included a $10 million luxury property in the Bahamas. While the lawsuit alluded to behavior that sounded potentially criminal in nature, including Freed's close involvement in the political contributions that later amounted to criminal wire fraud charges for FTCS executive Ryan Salem,

and Bankman's involvement in the company's day-to-day financial operations, the parents were never criminally charged. It's not evident why FTX decided to dismiss the case, or if a settlement was reached. Crypto influencer Ben Armstrong, perhaps better known as Bitboy Crypto, has been sued for defamation by Mr. Wonderful Kevin O'Leary, only a few days after Armstrong posted on Twitter, Hey, Kevin O'Leary, what the fuck are you going to do with me? You can't sue me. You can't stop me. You can't shut me up. Armstrong has been recently and repeatedly accusing O'Leary of being a, quote, murderer, referring to a 2019 boating accident in which O'Leary and his wife collided with another boat, killing its two occupants. O'Leary claims in this defamation suit that it was his wife operating the boat,

and notes that she was acquitted of any wrongdoing. It's not clear whether Armstrong is aware that he's been sued yet. On March 25th, he was arrested for sending threatening emails to the judge in a different defamation case he's facing from his former business partners after he publicly accused them of various crimes. These are only the latest woes for Bitboy, who appears to have been in a protracted downward spiral for the better part of three years. You may recall him being arrested in September 2023, after appearing outside the home of a former associate, and screaming in the street that he had been, quote, extorted for his Lambo.

Anyway, this is one of those lawsuits that tends to appear in the crypto world where I hope everybody loses. In the White House. Any sense of relief that may have followed the March executive order's stipulation that a strategic Bitcoin reserve would not incur cost to taxpayers has melted away, with news that the White House is already looking for creative ways to acquire Bitcoin in a, quote, budget-neutral way. Bo Hines, the baffling choice of executive director for the White House's Crypto Advisory Council, sat for an interview in which he commented that, quote, there's a lot of high IQ people working on countless ideas to pump Bitcoin prices to profit

Bitcoin holder, I mean, acquire additional Bitcoins for the reserve, including, quote, realizing the gains on U.S. gold reserves. Asked by the interviewer if he might consider selling some of the country's gold reserves to swap them for Bitcoin, Heinz answered, quote, if it's budget neutral and doesn't cost a taxpayer a dime. In the same interview, he commented that Bitcoin, quote, is different from the other crypto assets like Ether, Ripples, XRP, Solana, or Cardanos, Ada. Quote, it's unique. It's a commodity, not a security. Evidently, Heinz has not been briefed that they are not supposed to admit anymore that these other crypto assets are securities. Trump Business Interests. As the Trump

administration continues the process of establishing a regulatory environment maximally beneficial to the cryptocurrency industry, Trump is doing the only thing you might expect of him, increasing his business interests in the crypto sector so that he too can personally profit. His Trump media organization, which is the business entity behind the truth social platform, has announced a partnership with a Singapore-based crypto.com to launch various exchange-traded products of the both-cryptial and non-crypto varieties. The overseas crypto.com is a bit of an odd choice in partner, given the press releases emphasis that the project will have a, quote, made in America focus.

Though the details were scarce, the press release suggested the crypto ETS would, quote, include a unique ETF basket of cryptocurrencies incorporating Bitcoin, Kronos, and other crypto assets. Kronos is the token issued by Crypto.com subsidiary Kronos Labs. All of this will happen via the truth.5 brand, a business venture announced by Trump Media in February. There has been some controversy over this deal in the crypto world, centering around a decision by crypto.com and Kronos to fund the deal by, quote, reissuing tokens notionally worth $7 billion that had been burned, that is, ostensibly permanently destroyed, in 2021.

The proposal was unpopular among many Kronos holders. and comments on the proposal were universally negative. Quote, veto. Reversing a burn is a violation of trust and integrity of the ecosystem, commented one community member. Quote, this is a disaster on so many levels I don't even know where to begin. This should be a firm no with a veto. It feels more like a rugpole from crypto.com, where they're essentially seeking exposure to the U.S. Reserve using customers' money, argued another.

Most Kronos validators voted no on the proposal. However, at the last minute, a sudden surge in yes votes came in from validators operated by crypto.com, which controls 70 to 80 percent of the voting power in Kronos, forcing through the proposal. Three Trump media executives have also filed paperwork for a new special purpose acquisition company, or SPAC, which they aim to focus on, quote, the cryptocurrency and blockchain, data security, and dual-use technologies markets. Explaining why the crypto industry was among their targets, they wrote, quote, the current administration has taken unprecedented steps to integrate digital assets into the national financial strategy. They also noted the establishment of a strategic Bitcoin reserve

and were even blunter than the Trump administration about the reserve's purpose, explaining that it was, quote, aimed at benefiting the digital assets industry. They are looking to raise $179 million. World Liberty Financial, the crypto project from which Trump earns 75% of the revenue, has announced plans to issue a stable coin that they plan to call USD1. Trump and other Republicans have been vehemently opposed to any talk of establishing a central bank digital currency, or CBDC, and Trump's January 23rd executive order on crypto established a prohibition on the creation of such a thing. Trump has described CBDCs as, quote, a dangerous threat to freedom,

adding that, quote, such a currency would give a federal government, our federal government, absolute control over your money. They could take your money and you wouldn't even know it's gone. These concerns apparently don't apply when it is the president himself who has absolute control over your money. Although the project's WLFI token ostensibly grants holders, quote, the right to vote and take an active role in the governance of the World Liberty Financial Protocol, including, quote, the overall WLF protocol direction and plans, no governance vote was held regarding this decision. At the SEC. As the SEC has dropped a majority of its ongoing lawsuits and investigations into cryptocurrency firms, most recently the immutable Web3 gaming company,

a few firms seem to be getting a little nervous. Univoccurring. Univis. a firm that announced shortly after Trump's election that they would breach the 2024 standstill agreement they had reached with the SEC and then did so, is now writing letters to the agency asking why their case has yet to be dropped. Quote, we thought the war was over and we said to the SEC, hey, we're resuming our activity, explained Unicoin's CEO Alex Konanyakin. Like some other industry executives, Kananikin has gone beyond merely asking for an end to the enforcement case. and in his letter seeks retribution against the SEC employee who led the investigation into his company. Ripple has been considerably more successful in their similar efforts thus far,

and perhaps can thank their nearly $70 million in political spending for their position at the top of the SEC's to-do list. The SEC has recently announced that they will return $75 million of the $125 million fine Ripple was ordered to pay in 2023, after a federal judge determined the company had violated securities laws in their institutional sales. At the time, the SEC seemed disappointed that the judge ordered a fine that was much lower than the $2 billion they had sought, but now they've just turned around and given most of it back. Meanwhile, crypto companies are busy writing their own rules for the game, now that they've successfully lobbied for the previous rule set to be put through the shredder.

SEC Commissioner and Crypto Task Force lead Hester Pierce invited input in a request containing 48 questions, though some of those questions seem asked merely so they can say they asked them. For example, the questions about the status of various crypto assets as securities have already been undercut by the SEC's moves to drop crypto-related enforcement cases, given that it's not likely that the SEC is going to turn around and say, actually, after we thought about it, we've determined these assets are probably securities after all, and reopen the cases. Andresen Horowitz has submitted a 49-page response that only gets through the first six questions, with a note that they will shortly produce additional letters responding to the remaining 42. Coinbase submitted 41 pages of their own.

Other submissions have come from Robin Hood, Cumberland DRW, and Ripple, as well as a number of lawyers, including Cryptoskeptic Lee Reiner's. Riner's wrote, quote, As excited as I am to participate and comment, I must admit that the whole endeavor seems performative and intended to justify a predetermined outcome. While the stated purpose of the task force is to develop a, quote, comprehensive and clear regulatory framework for crypto assets, the commission has proceeded to front run the task force by either dismissing or pausing nearly every outstanding crypto-related case and investigation, often with prejudice.

In several court submissions stipulating that ongoing crypto litigation will be dismissed, as well as in press releases announcing the dismissal, the commission justifies the action by referencing the work of the crypto task force in, quote, helping the commission develop the regulatory framework for crypto assets. Has the task force already concluded that every named crypto asset in outstanding enforcement actions is not a security? These actions open the commission up to allegations of politicization. The very same allegations leveled at the commission by the crypto industry just months earlier. The crypto industry raised over $238 million this past election cycle in a successful effort to support industry-friendly candidates in congressional races. And just three days before his

inauguration, President Trump and the First Lady issued their own meme coins, netting the Trump organization significant profits. Is the public expected to think it is just a coincidence then, when the commission's division of corporate finance issues a staff statement expressing their view that meme coins, quote, do not involve the offer and sale of securities under the federal securities laws. Perhaps more concerning, the commission has paused cases involving credible allegations of fraud and misconduct. To my surprise, and to the SEC's credit, they invited several crypto-sceptics and consumer protection advocates to a March 22nd roundtable on crypto-regulation. Reiner's ex-SEC John Reed Stark and Better Markets Benjamin Schifrin were mixed in among the various industry lawyers.

However, I share the concern Reiner's voiced in his written submission, which is that this feels like more of an empty gesture than a genuine request for input in the context of the SEC's actions over the past few months. The SEC subsequently announced plans for four more of these events between now and June, focused on topics including custody, tokenization of non-crypto assets, often called real-world assets, and decentralized finance. Paul Atkins, Trump's nominee for SEC chair, finally had his confirmation hearing in front of the Senate, alongside the nominee to head the office of the comptroller of the currency, Jonathan Gold.

Both faced surprisingly few crypto-related questions, though prior to the hearing, Atkins received multiple letters from Senator Warren, a Democrat from Massachusetts, highlighting concerns around his substantial conflicts of interest with financial institutions of both crypto and non-crypto varieties, including a former advisory position with FTX. In 2023, he blamed FTX's collapse, not on the massive fraud at the company, but on, quote, the U.S. not making our rules accommodating to this new technology. Atkins serves on the board of the blockchain advocacy and lobbying group Digital Chamber of Commerce and the blockchain company securitize and holds up to $6 million in crypto-related assets

among his fortune of approximately $328 million, though much of that comes via his wife, an heiress of an evidently lucrative roofing shingles manufacturer. In Other Regulators, speaking of the Office of the Comptroller of the Currency, the Bureau has issued an interpretive letter stating that banks may participate in crypto custody and stablecoin activities and may run blockchain nodes. They've rescinded an interpretive letter published in November 2021 that required banks to notify their supervisory authorities of any intentions to engage in these crypto activities and to undergo risk management evaluations to obtain a non-objection letter. The acting director has also announced that the agency, which oversees

national banks will no longer consider banks' reputation risk as a factor in examinations. This is a direct result of crypto industry outcry over supposed debanking, and several congressional hearings on the topic featured concerns that this reputation risk evaluation was being used to unfairly target not just banks involved with the crypto industry, but with other, quote, disfavored groups. The move mirrors proposed legislation from Senate Banking Committee Chairman Tim Scott, a Republican from South Carolina, aimed at eliminating the consideration of this factor by any federal banking regulator. While the bill and the OCC announcement are clearly pandering to crypto industry complaints and broader Republican feelings of political victimhood, the change is likely

a good thing overall. And I wonder if Republican-led efforts to target the groups they disfavor in their ongoing campaigns against DEI and ESG and whatever other big bad acronym they come up with, next may later trip up on the changes they themselves have proposed. The Office of Foreign Assets Control, or OFAC, has removed the Tornado Cash cryptocurrency mixer from its list of sanctioned entities after adding it in August 2022. In a statement, they said the removal was the result of a, quote, review of the novel legal and policy issues raised by use of financial sanctions against financial and commercial activity occurring within evolving technology and legal environments. This follows a November

2024 ruling that the Cryptomixer's smart contracts could not be sanctioned. Sanctions against Tornado Cash co-founder Roman Seminoff, however, remain in place. While Cryptofocus super PACs have mostly been hard at work preparing to launch a 2024-esque funding onslaught on the 26 midterms, they're not twiddling their thumbs until then. After, after, panic at the White House and among Republican Congress people that their favorite candidates were being outrazed, the Republican-focused arm of the crypto lobby, Defend American Jobs, dumped $1.2 million in ad spending to support Randy Fine in his Florida special election against Democratic opponent Joshua Wheel. Musk's America PAC followed shortly after to fund a text message blast.

A television ad funded by the Defend American Jobs Pack states, Florida voters, President Donald J. Trump has an urgent message. President Trump needs Randy Fine in Congress. Fine and Trump will drive prices down and end the border crisis once and for all. And you can count on Randy Fine to tackle our high insurance rates head on. Florida approved Trump endorsed. Stand with Trump. Vote Randy Fine for Congress.

Defend American jobs is responsible for the country. As usual, for ads from these super PACs, cryptocurrency is not mentioned. The two candidates are battling to secure the seat vacated by Michael Waltz, Trump's new national security advisor who has wasted no time in making a name for himself after adding the editor-in-chief of the Atlantic to a top-secret war planning group chat. Oopsie. Fine has been a member of Florida's state legislature since 2016, and prior to that, he worked as an executive and then consultant for the

the casino industry. Defend American Jobs dropped another $345,000 on ads supporting Republican Jimmy Petronus in his campaign against Democrat Gay Valemont. The two were competing in the special election to fill the seat vacated by its also illustrious former occupant Matt Gates, who resigned in confidence that he would be confirmed as Trump's pick for Attorney General before withdrawing his nomination after it became clear that that pesky child sex abuse scandal might prove challenging to overcome. Patronus is a career politician who currently serves as the chief financial officer for the state of Florida. In October, he advocated that Florida state pension funds look into investing in crypto. While both districts are heavily read, and both

Republican candidates are strongly favored to win, the nervousness around these races reveals Republican fear that Americans concerned about the horrors of the past few months might channel it into elections. Elsewhere in crypto, a preprint from researchers at University College London, suggests that fewer than 500, quote, masterminds are responsible for significant pump and dump schemes across the decentralized finance world. According to the researchers, quote, pump and dump manipulators swindled $241.6 million in profit. in 2023 in Defy, amounting to 10% of the total trading volume. The Coinbase Ventures-backed firm Harpy has shut down, stating, quote,

we attempted to create a theft-free crypto ecosystem, but unfortunately could not create a sustainable business model around it. The Web 3 is going just great recap. There were six entries between March 20th and March 28, averaging 0.75 entries per day. $33.5 million was added to the Grift Counter. All my magic internet money gone. For the second time, someone has stolen magic internet money from the Abercadabra project, which was named as though its creator specifically wanted to ensure the Web3 is going great entries

would be as funny as possible. An attacker using a flash loan attack to take advantage of a smart contract vulnerability, was able to make off with 6,262 East. or approximately $13 million. This attack follows a January 2024 attack in which $6.5 million was stolen from the project. Polymarket bet outcome manipulated. Bets on the polymarket platform where the outcome is not clear are resolved using an oracle system called UMA or universal market access. Holders of the UMA token participate in a vote to determine the outcome of challenged market resolutions.

Recently, $7 million was spent in a polymarket market over whether Ukraine would agree to Trump's proposed mineral deal. Although no mutual agreement was reached, the market resolved to yes. When it was challenged, a large holder of the UMA token cast a substantial number of yes votes to sway the outcome of the resolution, leaving the outcome in place. Although polymarket acknowledged that, quote, this market resolved against the expectations of our users and our clarification, referring to a polymarket clarification that the resolution was too early as no mutual agreement was reached, they also refused to issue any refunds, writing that, quote, this wasn't a market failure. Quote, this is an unprecedented situation, and we have been in war rooms all day internally and with the UMA team to make sure this won't happen again. This is not a part of the future we want to build, the team member added.

Everything else. Galaxy Digital agreed to a $200 million settlement over the alleged Luna manipulation. Hyperliquid lost $13.5 million in alleged jelly jelly market manipulation, and Zoth was hacked for nearly $8.3 million in a second theft in two weeks. Worth a read. Ed Zichon published a piece titled, the phony comforts of AI optimism. In his newsletter, Where's Your Ed at? This time, he focused on the coverage of the AI boom in the technology media. I particularly enjoyed this one quote, which I think is applicable to the tech media

far beyond AI. Quote, the result of a lack of true skepticism and criticism is that the tech industry has become captured by people who are able to create their own phony and comfortable realities. With the White House flooding the zone, with one horrific, thing after another, it can be easy to miss important news. One such recent development is the slashing of funding to the Institute for Museum and Library Services, which makes up a whopping 0.005% of the federal budget, but provides unquantifiable services to the public. And the recent announcement from the acting head of the IMLS that he will, quote, restore focus on patriotism, ensuring we preserve our

country's core values, promote American exceptionalism, and cultivate love of country in future generations. Last I checked, freedom of speech and expression was a core American value. But that seems to be rapidly changing, as the Trump administration aims to make libraries into propaganda machines. Now, as ever, is a great time to support your local library. You can read more about this in book riots article titled The Institute for Museum and Library Services is now a propaganda machine. In the news, I appeared on Columbia Journalism Reviews, The Kicker podcast, to discuss the cryptocurrency world and the challenges to journalists attempting to cover and decipher it, as well as the desperate need for quality coverage of the crypto world at this moment. This followed a separate piece by

Lauren Watson in CGR titled The Lessons of Crypto Media. You can find the podcast, podcast episode titled Molly White knows you don't understand crypto. I also went on the bunker podcast with Andrew Harrison to discuss the cryptocurrency industry's entrance into politics and amassing of substantial influence in the White House. That episode was titled, has crypto captured the Trump

administration? That's all for now, folks. Until next time, this has been Molly White. Thanks for listening to this issue of the citation-needed newsletter. If you would like to support my work with a free or pay what you want subscription to the citation needed newsletter, or if you would like to receive these issues in your email, go to citation needed.news slash sign up.

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