Molly White's Citation Needed - Issue 86 – State power sponsored by Coinbase

Episode Date: June 19, 2025

The GENIUS Act passes the Senate after explicit threats to Democrats from the crypto lobby, and shady crypto billionaire Justin Sun cozies up even closer to the Trump family. Originally published on June 19, 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 86, state power sponsored by Coinbase. The Genius Act passes the Senate after explicit threats to Democrats from the crypto lobby, and shady crypto-billionaire Justin Sun coeses up even closer to the Trump family. This issue was originally published on June. 19, 2025. 18 Democratic senators joined nearly all Senate Republicans to vote for the Genius Act

Stablecoin Bill, which aims to establish a federal regulatory framework for stablecoins and will serve to lend the asset class governmental in Prameter. The 68 to 30 vote followed shortly after Lever News published leaked messages from a secret group chat of Democratic strategists and cryptocurrency industry advocates, where the political operatives opined that Democratic Congresspeople could, quote, not afford to alienate a very vocal and wealthy group of donors by opposing the bill. One such donor, Avichal Garg from Electric Capital, was very explicit, quote, if Dems bail on this bill, they will get zero dollars going forward. Garg and his firm contributed around $680,000 to various PAC's last election cycle.

In addition to the crypto industry's 2024 election contributions, various cryptocurrency firms and lobbying groups, as well as traditional financial institutions, have spent millions on Senate lobbying related to the Genius Act. Crypto.com, Cracken, Digital Currency Group, Paradigm, Tether, Circle, and Coinbase have altogether spent over $2 million in lobbying related to the bill. While Senate Majority Leader John Thune, a Republican from South Dakota, had previously promised Democrats that if they supported the closer vote, they could later amend the bill during an open amendment process on the floor, he quickly reneged on that promise, leaving Democrats unable to force votes on amendments seeking to limit President Trump's ability to personally profit from stable coins, prevent big tech companies from issuing their own stable coins, or eliminate the possibility of federal bailouts for state. stable coins. The bill ultimately passed the Senate without any amendments. Some Republican senators who had previously opposed the idea of Facebook issuing its own token back in 2019, such as Senator Kennedy, the Republican from Louisiana, who said, quote, Facebook now wants to control the money supply, what could possibly go wrong, or evidently perfectly happy to support this bill. Some Democrats in Congress have expressed concerns about the fact that President Trump is

already profiting from his own stable coin venture, the USDA 1 token issued by his World Liberty Financial Company. Representative Laccardo, a Democrat from California, speaking about a companion stable coin bill in the House, explained, quote, we want to avoid the inevitable conflicts of interest that arise when the president's appointees, such as the Secretary of the Treasury, are regulating the very product that provides unique and exclusive financial benefit to the president and his family. Other legislators had more structural concerns about the bill, particularly to do with insufficient consumer protections, poor anti-money laundering and national security controls, and the possibility of federal bailouts for stablecoin issuers. Quote, the Genius Act lacks the basic safeguards

necessary to ensure that stablecoins don't blow up our entire financial system, argued Senator Warren, who also pressed her fellow Democrats to, quote, show a little spine. The Democrats who voted for the bill were mostly the same as the ones who voted in support of the closure motion last month. Also Brooks from Maryland, Booker from New Jersey, Cortez Mastow from Nevada, Fetterman from Pennsylvania, Gallego from Arizona, Gila Brand from New York, Hassan from New Hampshire, Heinrich from New Mexico, Lujon from New Mexico, Ossoff from Georgia, Padilla from California, Rosen from Nevada, Schiff from California, Slotkin from Michigan,

and Warner from Virginia. Senator Blunt Rochester, from Delaware, is the only Democrat who supported the closure motion but later voted against the bill. New Democratic support came from Senator's Hickenlooper from Colorado, Kim from New Jersey, and Warnock from Georgia. All Republicans voted to support the bill, except for Holly from Montana and Paul from Kentucky who opposed, and Cotton from Arkansas, who did not vote. The House has been working on its own stable coin legislation,

called the Stable Act, and the two bills have some significant differences. It remains to be seen whether the House will take up the Genius Act or continue to push its own version. Trump has urged the House to opt for the Genius Act, describing it on social media as a, quote, incredible bill. Quote, the House will hopefully move lightning fast and pass a clean genius act. Get it to my desk ASAP, no delays, no add-ons, he wrote, presumably concerned about add-ons like the various proposed amendments to stop him from personally profiting from his stable coin business, as he pushes for and ratifies favorable rules for his own companies. Meanwhile, the concerns about massive companies issuing their own tokens are proving justified,

with reports that companies including Walmart, Amazon, and Expedia are considering launching their own stablecoins. Who knew when they said make America great again, they were really. yearning for 1800s wildcat banking and scrip. Over in the House, the cryptocurrency market structure bill, now known as the Clarity Act, has advanced out of the House Agriculture Committee in a 47-6 vote and the House Financial Services Committee in a 32-19 vote. Representative David Scott, a Democrat from Georgia, who serves on both committees, described the bill as, quote, a gift to the worst actors in this industry. The inimitable Tonnizine Carmona, recently published an excellent article on the Brookings Institute website,

outlining some of the principles that most need to be considered when writing crypto legislation, and which, naturally, are completely absent in recent proposed bills. In the White House, Trump held his $40 million birthday boy military parade on June 14, and apparently offset the cost at least somewhat with contributions from the likes of Coinbase. This didn't exactly sit well with some of the increasingly rare breed of crypto believers who still champion the technology's early anti-establishment values. What Coinbase did by sponsoring this army parade feels like an insult to everything our industry stands for. Crypto emerged from ideals of decentralization, individual sovereignty, and freedom from oppressive state control,

not to funnel resources into institutions whose core purpose involves violence and ending lives. wrote one crypto enthusiast. Another wrote, quote, I entered the crypto world in 2017 to stand against late-stage capitalism, not to help crypto bros fund it. Megan Nab, CEO of a crypto payroll company, responded to the sponsorship by eulogizing the industry's cypherpunk roots in a coin desk op-ed, where she wrote, quote, the ethos of crypto, the cypherpunk values that got us here, is being diluted, co-opted, and in some cases directly betrayed. This is only the most recent and a rapidly growing list of examples of crypto companies and their executives aligning with state power.

Earlier this month, Ripple made a contribution worth $9.4 million to the San Francisco Police Department to establish a new surveillance center that will operate a fleet of drones, surveillance cameras, and license plate readers. Quote, we are proud to help usher in a new era of accountability, said Ripple CEO Chris Larson in a statement about the contribution. Quote, we're going to be covering the entire city with drones, enthused SFPD Captain Thomas Maguire. Justin Sun Shady crypto billionaire Justin Sun continues warming his way into the Trump family's many crypto ventures and using cryptocurrency to funnel money to Trump that, as a foreign national,

he is barred from contributing to officials or their campaigns. He had already made a $75 million investment into the Trump family's World Liberty financial project in exchange for an advisory position, about $56 million of which went directly into Trump's pocket. Sun's H-TX cryptocurrency exchange was the first to list World Liberty's USD1 stablecoin, and USD1 is now being minted on the Tron blockchain, which was founded by Sun. Last month, Sun topped the leaderboard to attend the Trump meme coin dinner with his nearly $38 million in Trump meme coin holdings, which earned him a private tour, and a VIP reception with the president.

And now, Tron has just announced it will be going public via reverse merger with a public company called SRM Entertainment, which previously sold theme park merchandise, but will now rebrand to Tron, Inc. Sun can thank a small investment bank called Domini Securities for that deal, and perhaps its new board members, Eric and Donald Trump Jr. Domini brokered the $100 million dollar investment into S&Mur, Routed via Justin Sons' father, who now chairs the board of the new company.

Despite serving on the board of Domini, Eric Trump has claimed not to, quote, have public involvement in the deal, oddly using a qualifier, leading many to question what private involvement he has. The new Tron Inc. will be a public treasury company along the lines of micro-strategy and its many imitators, and will likely abandon its theme park-related business. As I mentioned in a recent issue, there's been a massive surge in crypto treasury companies that go public via merger with an existing public company, and Sun is only the latest to jump on board. Some of these, particularly those that rely on leveraged funding, are beginning to make even the most crypto-faithful a little wary. Coinbase's most recent monthly outlook report warned of, quote, systemic risks from such entities,

though they seem to be more or less okay with the whole thing because they see them as, quote, an important source of demand. Sun's newest financial support for Trump comes after the SEC paused an ongoing enforcement case against him and his companies. The billionaire, who is also once so afraid he'd be arrested on criminal charges if he stepped foot in the United States

that he forfeited his $28 million seat on Jeff Bezos' rocket, is now making himself quite at home here, whether it's cozying up to Trump at his Virginia golf course or taking a company public on the NASDAQ. He's far from the only one to pay Trump for favorable outcomes. In March, I noted that the SEC would be dropping its case against Cumberland DRW, a subsidiary of trader Don Wilson's DRW investments.

Now Wilson has invested $100 million into Trump Media and Technology Group, which he said is intended to support its crypto ventures. The president holds a majority stake in TMTG via his not-at-all-blind trust controlled by his son, Don Jr., In Regulators, the Winklevoss twin-owned Gemini cryptocurrency exchange has sent an angry letter to the CFTC's Inspector General Christopher Skinner, only five months after settling with the agency. It seems to me that perhaps Gemini regrets agreeing to the $5 million settlement only weeks before Trump's inauguration, and has since realized that with a bit more stalling, they might have been able to convince Trump appointed CFTC leadership to kill the case, as SEC leadership is in the process of doing with separate enforcement actions against Gemini involving unrelated allegations. According to Gemini, they, quote, had no other choice but to settle the case,

which they characterize as based on a false whistleblower report by a revenge-seeking ex-C-O-O. It's not clear to me why exactly they say they felt they had no choice but to settle when they've otherwise been quite willing to engage in protracted litigation. The SEC has withdrawn 14 proposed rules started under the previous agency leadership, some of which would have imposed stricter regulations on crypto activities. Coinbase chief legal officer Paul Greywall was quick to celebrate, writing on Twitter that it, quote, feels really good. In the courts, Gottbit founder Alexei Andrianin has been sentenced to eight months in prison

for his company's wash trading schemes that manipulated cryptocurrency trading volume for his clients. Indriyanin pleaded guilty in March and agreed to forfeit almost $23 million. Gottbit will also shut down as a result of the plea. Haru Invest CEO Li Yang Su has been acquitted on fraud charges in South Korea. after he suddenly closed customer withdrawals and shut down the company in June 2023 in the wake of the FTX bankruptcy. While the judge presiding over the case stated that Lee had clearly been negligent in his management of the company, Lee's actions did not rise to the level of criminal fraud. Other executives were also acquitted of fraud charges,

although the company's chief operating officer was found guilty of embezzlement and sentenced to two years in prison. Haru and its executives will still have to face civil complaints from, creditors, one of whom was so upset about his claimed loss of 100 Bitcoin, price at around $10 million at today's prices, that he came to the courtroom in August 24 and stabbed Lee in the neck multiple times. Bit Global has dropped its antitrust lawsuit against Coinbase, which they filed in December after Coinbase delisted wrapped Bitcoin when it was announced that BitGlobal, and by extension Justin Sun, would become involved in its management. As I wrote then, quote, Trump's new business advisor, Justin Sun, is so shady that even the broader crypto world wants

nothing to do with him. After the announcement, both Coinbase and Cracken race to create their own versions of wrapped Bitcoin so they wouldn't be exposed to a Sun-tainted version. A few weeks ago, Justin Sun posted a photo of himself standing alongside Coinbase Chief Legal Officer Paul Greywall at the annual Bitcoin conference in Las Vegas and captioned it, quote, so glad to meet in person, Paul Graywall. Thank you for keeping you for keeping you. keeping the fight up for our industry, and let's do more great things together to grow crypto in the United States. Though Greywall is smiling in the photo with Sun, his Twitter reply was far from friendly. Quote, drop your ridiculous, unfounded lawsuit and we can actually have a conversation.

Graywall only had to wait a week to get his wish. He then wrote a victorious tweet thread, concluding, quote, we will not be bullied into continuing to list an asset that puts our customers at risk. Perhaps he ought to share his concerns with the President of the United States. Shack will pay $1.8 million in his settlement with FTX creditors, according to CNBC. This is the same settlement I wrote about a few weeks ago, but the settlement amount had not yet become public. The $1.8 million is about $1 million more than Shaq was paid to appear in the FTC commercial that drew the lawsuit, from creditors who argued he had misled them into believing the exchange was trustworthy. The Wed 3 is going just great recap.

There were three entries between June 6 and 18, averaging 0.2 entries per day. 98.33 million dollars was added to the grift counter. Israeli-linked hackers stole and destroyed $90 million from the Iranian Nobatex exchange. Metapool was exploited, and Alex Lab was exploited, again. Worth the read. Rebecca Crosby and Jedlegum at Popular Influid. published a rundown on the Trump administration's attacks on free speech, and it's not great. The administration likes to hold itself up as a champion for free speech, and pieces like this are

so important to illustrating that it is anything but. That's titled, The State of Free Speech in Trump's America, and it's in the popular information newsletter. Let's mix in some happier news. Despite a book banning crusade by a city council made up of seven Republicans who call themselves the Maganificent 7, voters in Huntington Beach, California have rebuked them on two ballot measures. One dissolves the city council appointed community review board tasked with restricting access to books they deem inappropriate and returns that responsibility to librarians. The other restricts the city from privatizing and selling its library. This MAGA-led California City Council just lost its fight on banned books. Also, if you're interested in conversations about media,

literacy, or how newspaper headlines can be deeply misleading, I made a quick video about a real stinker of a Wall Street Journal headline I saw last week that claimed that, quote, Democrats are wary of playing into Trump's hands by supporting the No Kings and L.A. protests. That's on both TikTok and YouTube. In the news, Forbes quoted me in an article about the Trump family's decision to increase their ties to Justin's son by minting the USD1 stable coin on the Tron blockchain. That story is titled President Trump's crypto firm expands relationship with embattled blockchain billionaire. The Hollywood Reporter evidently thinks I am one of 11 influencers you need to know.

Although their article is framed around an influencer convention called VidCon, I will not be there. The article is titled The View from VidCon, 11 influencers you need to know. That's all for now, folks. Until next time, this is Ben, 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

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