Molly White's Citation Needed - Issue 82 – E-moluments

Episode Date: April 24, 2025

As Celsius victims detail their devastation even under the weak crypto regulations of the past, the Trump administration continues to dismantle those same rules while he pumps his personal memecoin with promises of private access. Originally published on April 24, 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 82. E-Molluments. As Celsius victims detail their devastation, even under the weak crypto regulations of the past, the Trump administration continues to dismantle those same rules, while he pumps his personal meme coin with promises of private access. This issue was originally public. on April 24, 2025.

Trump is continuing to enrich himself through his various crypto projects, most recently attempting to pump the price of his Trump meme coin by enticing the top 220 holders with invitations to a private dinner with him at his Washington, D.C. golf course. The top 25 of those receive a, quote, exclusive reception before dinner with your favorite president and a special VIP tour. It seems to be working. As of writing, the top entry on the leaderboard is a wallet that purchased 400,000 Trump tokens

shortly after the announcement for around $5.3 million. Another later purchaser achieved the number seven spot by purchasing over 650,000 Trump tokens for a whopping $8 million, interestingly funded by a Binance account, suggesting that the wallet holder is not based in the United States. In second place is Justin Sun, who has used the Trump holdings belonging to who is HTX cryptocurrency exchange, notionally priced at $14.6 million to secure an invite. Before we jump into that and the rest of the crypto news, I also want to mention that I'm trying to get back into doing more short video content, mostly on TikTok, but I've been trying to

crosspost to YouTube, blue sky, etc., where reasonable. There are a lot of people, especially younger folks, who prefer to stay informed via those platforms rather than going to blogs or email newsletters, and I think it's important to try to meet them where they are. If you have a TikTok account, consider following me there to see what I've been working on. And if you don't, don't worry. Anything important I published there will make it into the newsletter. If you're interested, you might enjoy my behind-the-scenes video about how I create these news letters or my various other videos where I talk about the usual cryptocurrency and political news. In the Courts. Alex Michinsky and Celsius. Celsius CEO Alex Machinsky has filed his

sentencing submission for his upcoming sentencing on May 8th. After pleading guilty to fraud and market manipulation just ahead of his scheduled trial, Machinsky is now asking to be sentenced to no more than a year in prison. Sentencing guidelines recommend a sentence of 30 years. Prosecutors have not yet filed their submission, although they have submitted more than 200 victim impact statements. These are heart-wrenching, and there are numerous statements from elderly or otherwise vulnerable people who are coaxed to put their life savings into Celsius. The letters really drive home a point I try to make often. Some people dismiss the cryptocurrency industry's abuses

as though it only harms those who deserve it, often picturing a caricature of a young, greedy crypto bro who fully understands the risks he's taking, gambling away money he can afford to lose. In reality, we frequently see the crypto industry actively targeting the most vulnerable, and these are the people who are worst harm during crypto's regular disasters.

In fact, the FBI just published its 2024 internet crime report, showing that Americans over 60 suffered the most out of reported losses involving crypto, measured both by the number of complaints, 33,369, and the monetary amount lost, $2.8 billion. In Celsius's case, Mishinsky repeatedly insisted to his customers that his company was safer than a bank, and some customers believe their funds were protected by FDIC insurance. Many expressed the belief that U.S. regulators would never permit such a disaster to happen under their watch. Mind you, these very same limited regulations and failures in enforcement that led to the Celsius disaster are the very same ones that the cryptocurrency industry has been arguing are stifling innovation

and making it impossible for them to operate in the United States. Some excerpts from the submissions. Quote, I'm ashamed to admit to you family and friends how much Alex Mishinsky took from me. Decades of hard work that would have created generational wealth for my family is gone. Every day that I have to keep waking up at 6 a.m. to work a physical labor, dead-end job, I'm reminded what you stole from me. Quote, I'm now 59, and lost my entire life savings, nearly nine Bitcoin, in the Celsius bankruptcy case. Needless to say, at my age, it was absolutely devastating.

I had retired and had no income and was planning to rely on the Bitcoin to live on. I lost my apartment, I could no longer help my very sick mother, I had to liquidate everything else I own just to scrape by. I literally had to camp out of my vehicle for nearly a year until I could begin to get back on my feet. Quote, the financial devastation triggered constant arguments and fights between my wife and me. The economic strain put so much pressure on a relationship that my wife eventually asked for a divorce. Over time, the situation became unbearable, and my wife returned to the Netherlands with my daughter,

leaving me behind in Spain. Now I am not only financially ruined, but also alone and separated from my daughter. Quote, I'm a blind father of three that hasn't worked, and then the rest of the sentence is redacted. I was desperate and sought yield and ran across Celsius, and placed a significant portion of my net worth there, and now let's just say we are struggling. I'm now $50,000 in credit card debt just trying to survive with inflation and very small disability checks. Virgil Griffith. Virgil Griffith, a former Ethereum developer, has been released from prison to a halfway house after serving about 36 months of his sentence for conspiring to aid North Korea

in sanctions evasion. He was sentenced to 63 months imprisonment in April 2022, though his sentence was later reduced to 56 months as he was a first-time offender. Now he's joined FTX's Sam Bankman-Fried and Binance's Chang Peng Zhao on the growing list of crypto-convicts reportedly seeking a presidential pardon, hoping to join Silk Road founder Ross Ulbricht and BitMex executives in actually receiving one. Since around 2018, Griffith worked to help North Korea develop its cryptocurrency infrastructure, knowing it could help the country circumvent sanctions.

North Korea has since become one of the largest players in cryptocurrency crime, a one $1.5 billion crypto heist by state-sponsored thieves earlier this year, boosted the country's spoils throughout the last 10 years to over $6 billion, much of which has reportedly gone to its nuclear program. Chang Peng Xiao and Justin Sun. The Wall Street Journal has reported that Chang Peng Xiao earned that slap-on-the-rest-rest-on-the-rist four-month jail sentence by snitching on Tron-foundor Justin. Yes, the same Justin Sun who's about to cozy up to Trump at dinner next month. The journal also reported that Binance is working to remove the Treasury Department's compliance monitor that was installed at the company as a part of its plea agreement,

originally intended to remain in place for at least three years. These conversations are happening as Binance is reportedly in talks with Trump and his various crypto projects, including talks about the Trump's taking a stake in Binance U.S. and about Binance listing USD1, a dollar-pegged stable coin recently issued by Trump's World Liberty Financial project. Zhao was incensed at the journal's report, as usual, writing on Twitter that, quote, people who become government witnesses don't go to prison. They are protected, shrug emoji. Apparently forgetting that only a few months ago, Caroline Ellison started her two-year prison term, despite being the star witness against her former FTX boss, Sam Bankman-Fried. Zhao continued by firing

back at the journal, claiming that, quote, I heard someone paid Wall Street Journal employees to smear me. Sun also popped up to refute the claims, writing that, quote, CZ is both my mentor and a close friend. If Zhao did indeed trade intel on Sun prior to his November 23 sentencing, he did it just in the nick of time. Since the change in administration in the United States, Sun has cozied up to Trump, including by buying $75 million in World Liberty Financial tokens in exchange for an advisory position at World Liberty Financial. Despite Sun's widely known shady past, the likelihood of any just, Justice Department action against him under the Trump regime now seems very slim. Despite the rapidly disappearing interest from the Justice Department and the SEC,

Justin Sun is facing new legal trouble, this time from a company called First Digital Trust, which has sued him for defamation in a Hong Kong court. Sun alleged that First Digital was insolvent and unable to fulfill its stablecoin redemptions, allegations which caused the company's FSUSD stablecoin to lose its dollar peg for a day or The allegations came after other Hong Kong court documents revealed that Justin Sun had paid over $450 million to bail out his true U.S.D. stable coin, alleging that First Digital, its reserve custodian, had improperly poured that amount of the stablecoin's reserves into illiquid investments. Sun later alleged that First Digital had committed fraud and publicly offered a $50 million

reward to, quote, recover the TUSD reserves misappropriated by bad actors, including First Digital Trust. In a statement, First Digital described Sun's claims as, quote, a typical Justin Sun's smear campaign to try to attack a competitor to his business. Everything else. Prosecutors have filed their sentencing memo in Avi Eisenberg's case, requesting a six-and-a-half to eight-year prison term for both his crypto fraud and C-Sam convictions. Richard Kim, the crypto founder accused in bankruptcy court of gambling away the money

investors had given him to start a crypto casino, has now also been accused in criminal court. That's the thing about issuing public apologies for your crimes. While taking responsibility might help redeem your reputation, it also might end up becoming a page and a half of your seven-page indictment. Kim was arrested and released on $250,000 bond. A Pennsylvanian crypto trader has pleaded guilty to tax fraud after filing false tax returns that underreported his income by around $13 million in 2021 and 2022. Most of this amount came from flipping Cryptopunk's NFTs. He probably wouldn't have had the same opportunity for such a crime these days,

given that someone just sold a Cryptopunk NFT for a $10 million loss amid the broader collapse in NFT trading. Trump's business interests. Trump has released a second batch of Trump meme coins onto the market following their scheduled unlock, though the token price has long since dwindled to a mere $8 or so from its previous highs of around $75. On April 23rd, five days after the new coins were added to circulation,

Trump tried to juice the disappointing price by enticing buyers with promises that the top 220 holders would be invited to a private dinner with the president at his Washington D.C. golf club on May 22nd. This was moderately successful, briefly boosting the token price to almost $15, before it fell back to around $12. The website for the meme coin was updated with a leaderboard of, quote,

time-weighted Trump holdings, meaning that as time goes on, people will have to buy more Trump tokens to rank on the leaderboard. Several people have already shelled out multiple millions of dollars following the announcement to secure their positions on the list, and in second place is Justin Sun, who has used the approximately $14.6 million in Trump holdings belonging to his HTX cryptocurrency exchange to take the second spot on the invite list. It's worth noting that this weakens Trump's claim that the meme coin is not a security,

as the SEC's February statement exempting meme coins from its authority describes tokens with, quote, limited or no use or functionality, and quote, lack of utility other than for entertainment or other non-functional purposes. By using the Trump token to gate access to an event with the president, Trump and his team have essentially morphed the token into a utility token. DWF Labs has purchased $25 million of the WLFI tokens issued by the Trump family's World Liberty Financial project. Trump has a direct claim on almost $19 million of this, as he receives 75% of protocol revenues. DWF Labs is a market-making firm based in Abu Dhabi, although they announced, along with the WLFI token purchase, that they would be opening an office in New York.

Prior to founding DWF, its managing partner, Andre Graachev, ran Huobie, Russia. A May 24th, Wall Street Journal article implicated DWF labs in market manipulation to pump token prices. Sounds like a great choice of investor. In the White House. Not long after he suggested that the White House might try to use U.S. gold reserves to buy Bitcoin for the Strategic Reserve, crypto advisory council executive director Bo Hines has floated the idea of using tariffarmes. revenue for the same purpose. In an interview with Anthony Pompliano, Heinz made it clear that the council is searching for, quote, creative ways to acquire additional bitcoins to add to the reserve,

while still technically abiding by the restriction that additional purchases be, quote, budget neutral and do not impose incremental costs on United States taxpayers. Hines said, quote, everything is on the table, and like we've said, we want as much as we can get, so we're going to make sure that no stone is unturned. Brandon Lutnik, Commerce Secretary Howard Lutnik's son, who replaced him as chair of Cantor Fitzgerald when he, quote, divested his interest, is launching a Bitcoin investment vehicle called 21 Capital. The company is backed by the notorious Tether Stablecoin issuer and its sister company BitFinex, with a minority stake held by SoftBank. The venture is launching with 42,000 Bitcoin, putting its value at launch at around $3.6 billion, and it seeks to be a micro-strategy-esque, quote, public stock built by bitcoins for bitcoins.

Howard Lutnik already faced scrutiny during his Senate confirmation about his firm's close links to tether, and this move only deepens his and his family's ties to the business. Jay Clayton, Trump's pick for the U.S. attorney for the Southern District of New York, was sworn in on April 22nd. His interim appointment follows a massive shake-up at the prosecutor's office, which oversees many of the largest white-collar crime prosecutions, including those against Trump, and which has already chewed through three acting U.S. attorneys

since Damien Williams' resignation in November. Danielle Sassoon, a familiar name to those who followed my FTX trial coverage and observed her as the lead prosecutor in the case against Sam Bankman-Fried, spent only three weeks in the role before she resigned in protest, instead of agreeing to drop corruption charges against New York mayor Eric Adams. Trump had tried to install Clayton in the role during his first presidency, but then U.S. Attorney Jeffrey Berman, who was handling cases involving Trump associates, refused to resign.

Eventually, Trump fired Berman, who agreed not to fight the firing when he was informed that his deputy would take the role instead of Clayton. Clayton was eventually installed as the SEC chair under the first Trump administration. Now, Trump has named Clayton as an interim appointee, apparently in an effort to exploit a loophole allowing Clayton to serve without going through the normal confirmation process. Clayton has no prosecutorial experience. In Regulators.

Cryptobank Anchorage Digital is reportedly under investigation by the Department of Homeland Security, according to reporting by Barrens. It's not clear precisely why the DHS is interested in the company, although the arm of the agency probing the bank is tasked with, quote, disrupting and dismantling transnational money laundering organizations. Anchorage Digital has been a vocal supporter of the Trump administration's planned cryptocurrency and financial regulatory changes, with CEO Nathan McCauley testifying in a February Senate hearing on crypto industry debanking.

Jack Dorsey's block will pay a $40 million penalty to, to settle charges from the New York Department of Financial Services that it failed to properly implement anti-money laundering controls and cryptocurrency compliance programs in its cash app product. This follows a separate settlement in January, where Block paid $80 million to a group of 48 other state regulators to settle similar allegations. SEC Crypto Advocate and Project 2025 architect Paul Atkins has been sworn in as the new chair of the Securities and Exchange Commission.

Atkins was previously an SEC commissioner from 2002 to 2008, and some of his deregulatory moves during that time were later implicated as contributing to the 2008 financial crisis. Since then, he's established a career as a consultant and lobbyist for traditional finance and crypto companies, including FTX, whose collapse he later blamed on the U.S. not being sufficiently, quote, accommodating to blockchain technology. When the official Twitter accounts for both the White House and the House Financial Services Committee Republicans

announced his confirmation, they tagged either a fake or hacked account purporting to be him, which quickly posted a list of crypto wallet addresses and encouraged, quote, crypto believers to, quote, keep the dream alive, send some love my way. Both of the announcement tweets were belatedly deleted. The SEC has effectively dropped the case against Hex and its founder Richard Hart, after opting not to amend a complaint in their ongoing case to establish jurisdiction. Hart was celebratory, though this is hardly the end of his legal troubles. Since December, Hart has been listed on Europe's most wanted list,

on warrants from Finland, alleging hundreds of millions of euros in tax evasion, and physical assault on a minor. The SEC has also settled its recently filed case against Nova Labs, the company behind helium, which had falsely claimed to have big-name partnerships with companies like Salesforce and Lyme. Nova has paid a meager $200,000 fine, and the SEC has dropped its claim that the company's tokens were unregistered securities.

The SEC tried to negotiate a settlement with Unicorn, a crypto company under investigation by the agency. Following in the vein of his March demands for retribution against the agency, Unicoin CEO Alex Konniken refused to attend the settlement negotiation meeting, claiming the SEC had made, quote, unacceptable demands, and reiterating his charge that the agency had caused, quote, multi-billion dollar damage to his company. The SEC has charged Ramele Palafox for running a $200 million, quote, Ponzi-like scheme called PGI Global, in which he used around $57 million of the proceeds to purchase Lamborghinis and

other luxury items. The scheme was operational from 2020 to 2021, and promised investors' high returns from crypto and Forex trading. As one might expect, following the SEC's recent abandonment of crypto enforcement, the case shies away from anything crypto-specific, although it does seek to prohibit Palafox from participating in, quote, offer or sale of securities and offerings of crypto assets bought or sold as a security, a category that the SEC has recently become rather unwilling to use. State regulators.

While federal regulators are backing off the crypto industry under orders from Trump administration, some state regulators are stepping up. Oregon Attorney General Dan Rayfield has filed a case against Coinbase, saying that he believes, quote, states must fill the enforcement vacuum being left by federal regulators who are abandoning these cases under the Trump administration. The lawsuit makes similar allegations as the original SEC case, but under Oregon state securities laws. Coinbase is predictably furious, with Coinbase's chief legal officer and designated Twitter attack dog Paul Greywall, tweeting that, quote, this type of political jockeying is an embarrassing waste of Oregon taxpayer dollars. I can certainly think of some wasteful and embarrassing

political jockeying, but it's not happening in Oregon State. A judge has denied most of DCG's arguments in the company's motion to dismiss a lawsuit from the New York Attorney General over the losses of its now bankrupt Genesis subsidiary related to its partnership with Gemini. Two claims were dismissed as duplicative, but the majority of the case will be allowed to proceed, as the judge has found that the NYAG has adequately argued at this stage that the Gemini Earned lending program was a security. At the federal level, the portion of an SEC case against Gemini has been paused pending potential resolution. The portion targeting Genesis had already been settled in March 24 with a $21 million penalty. In Congress. Congress is still working on stable coin regulation,

though it's not been without snags. I noted last issue that even Republican House Financial Services Committee Chair French Hill from Arkansas had noted that Trump's crypto endeavors were, quote, complicating Congress's work in passing stablecoin legislation. Now there's infighting among the crypto lobbyists pushing to get these new rules through Congress, with reports that Coinbase is trying to convince Congress to pump the brakes on standalone stablecoin bills in favor of passing one giant bill that would combine stablecoin and crypto market regulation changes. It seems that they're concerned that goodwill for crypto is drying up somewhat in Congress,

and their priority is a market structure bill that might definitively safeguard their company from the bigger threat of crypto assets being designated as securities. An anonymous source quoted by decrypt explained their reasoning. Quote, if we only do stablecoin, they think that there might not be enough interest or appetite or time, left to also do market structure. According to the outlet, this is, quote, causing friction in the tight-knit world of crypto policy as the Genius Act approaches a floor vote. This is a sentiment shared by some outside of politics, with analysts from the major investment bank T.D. Cohen commenting that, quote, political threats could intensify to the point where they become a threat

to legislative and regulatory reforms for crypto, citing controversy around the Trump family's crypto involvement. Quote, we increasingly worry about escalating political risk as actions by the Trump family business and his administration could spark a backlash that derails positive government action, commented analysts from the firm's Washington Research Group. Congress has passed several resolutions under the Congressional Review Act that impact the cryptocurrency world. One overturns an IRS rule, known as the defy broker rule, which would treat crypto platforms, including defy platforms, as brokers and require them to collect taxpayer information, which the crypto industry has argued is impossible. The rescission of the rule was signed into law by the president on April 10. Another resolution

is seeking to overturn the CFPB interpretive rule that would have required more robust consumer protections by tech firms that offer fintech products like cash app or Apple pay, cryptocurrency platforms, and video game companies. This has passed both the House and the Senate, and the Senate has indicated that Trump will sign it into law, although he hasn't yet. Outside the U.S., Russia's central bank and finance ministry have announced that they will be launching a crypto exchange for, quote, highly qualified investors, which they say, quote, will legalize crypto assets and bring crypto operations out of the shadows. Although Russians are allowed to buy and hold crypto, there has not been a centralized Russian

exchange, meaning Russians have had to use foreign platforms to purchase crypto. are also not permitted to use crypto for payments within the country, although the 2024, quote, experimental law under which this exchange is being created, also legalized international crypto payments. These moves are part of a softening towards crypto by Russia, largely spurred by the major sanctions on the country as a result of the invasion of Ukraine. Argentina's Congress has voted to form a commission to investigate the collapse of the Libra meme coin and its ties to the country's President Millay. They also approved summonses for various government officials and formal requests for information from the executive branch. The Web 3 is going just great recap. There were three

entries between April 9 and April 24, averaging 0.2 entries per day. 1.25 million dollars was added to the grift counter. Five million dollars in tokens were stolen from ZKSink, but later recovered. KiloX was exploited for $7.5 million, although they were. that was later recovered as well, and the mantra token price suddenly collapsed by 90%. Worth a read. Just after I published my recent piece on Trump's cryptocurrency empire, the former SEC official John Reed Stark and Duke Policy Fellow Lee Reiner's both published an op-ed in the New York Times on the same topic, titled What Trump is Doing with Crypto

should worry us all. While the warnings are grim, it's good to see them making it into the newspapers of record. They write, quote, this state of affairs brings to mind a similar moment in our history, the 1920s, when insider trading, market manipulation, and lack of transparency, destroyed public confidence in the system and helped set off the stock market crash that in turn played a part in the Great Depression. Public Citizen is tracking the quid pro quo deals between Trump donors and the Trump administration. Their tracker is similar to the follow the crypto quid pro quo tracker that I recently launched to follow the benefits crypto donors have received in exchange for their support, but public citizens' version goes much wider

than just the crypto industry. They wrote a press release titled Trump's inauguration donor pool includes $50 million in contributions from corporations under investigation or facing federal enforcement. In the news, I joined Tim Miller in the bulwark to discuss my recent article on the Trump family's crypto self-enrichment, as well as the regulatory changes rolling back consumer and market protections in the crypto world. That's a video titled Trump's biggest grift yet, we have receipts. I also had a wide-ranging discussion with Rachel Donald on her Planet Critical podcast, where we discussed the tech industry and the billionaires who shape it, the current U.S. political

environment, and the billionaires who shape that too, and the cryptocurrency world. That's in an episode titled Popping the Tech Bro bubble. You can also catch me again in another PBS segment on meme coins and in a radio interview with Radio New Zealand. 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 citationneeded.com. If you enjoyed the podcast version of this episode, please consider leaving a rating or review in your podcast player of choice.