The Breakdown - Is the Trump Solana Memecoin Real?

Episode Date: June 19, 2024

Another day, another Trump-crypto plotline. Some folks are reporting that former President Trump's son Barron is running an official Trump memecoin on Solana called $DJT. Is it real, fake, or even an elaborate ruse by the Feds? Plus, the SEC's chief crypto enforcer has left the agency. Enjoying this content? SUBSCRIBE to the Podcast: https://pod.link/1438693620 Watch on YouTube: https://www.youtube.com/nathanielwhittemorecrypto Subscribe to the newsletter: https://breakdown.beehiiv.com/ Join the discussion: https://discord.gg/VrKRrfKCz8 Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownNLW

Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. What's going on, guys? It is Tuesday, June 18th, and today we are talking about the SEC head of crypto leaving, as well as a Donald Trump meme coin. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to Baylor. at.ly slash breakdown pod. All right, friends, well, you may have seen a funny tweet yesterday where the head of the SEC's crypto enforcement team left the agency to join a crypto project called pump. fun.

Turns out the story was only half true. The head of the SEC's crypto enforcement team has left the agency. David Hirsch was the chief of the crypto asset and cyber unit within the division of enforcement and had been with the agency for nine years. In a post on LinkedIn, Hirsch said, this past Friday was my last day with the SEC, after almost nine years. During that time, I had the opportunity to work on more complex, challenging investigations and issues than I ever imagined when I joined the agency as a staff attorney in the Fort Worth Regional Office. I'm particularly proud of the historic work done

by the crypto assets and cyber unit team I had the privilege to lead. This is the second departure among the SEC's senior crypto staff so far this year. In February, Ladin-Stewart resigned as head of the SEC's Crypto and Cyber Litigation Unit after eight years with the agency. She immediately joined whiten case as a partner with a view to working with the industry to defend against SEC enforcement. Hirsch had only been in charge of the crypto unit for around two years. His predecessor, Christina Littman, stepped down in mid-20202 to join Wilkie Far. At the time, the crypto unit was massively expanding, adding 20 new roles to bring the total above 50. Hersh wasn't candid about where he would be going next, simply stating that he was excited for a break and to travel with family.

Memecoin launchpad pump. Fun filled in the blanks, claiming to have hired Hirsch. They posted, David came to the realization that his work as a regulator was no longer fulfilling. He had to start a new chapter, and what's better than doing the very thing you love? Believe it or not, but David has launched over 100 coins himself. A meme lord at heart, David will be in charge of Pump. Fund's new internal trading desk, which will be in charge of launching over a thousand coins per day. We are incredibly excited to kick off this journey and wish David the very best of luck in his new role. Obviously a joke, however, some news sources got caught up and ran with the story causing widespread confusion. So much so that Hirsch provided the comment, the claim is false. I have not announced my

next role, but it is not with a meme coin platform. In more serious commentary, the SEC's bench is starting to look a little depleted after major departures. Crypto lawyer Gabriel Shapiro tweeted David Hirsch, the only SEC staff member who actually understands crypto and defy is leaving the SEC. He was also one of the most effective crypto enforcers in recent years. Seems to me he was mainly focused on the Terra case and likely thinks leaving now is good timing as it just wrapped up. will be very interesting to see what he does next. Victor Bunnan, a protocol specialist at Coinbase, renewed the call to blackball former SEC staff, commenting,

his name is David Hirsch and I hope none of you hire him. The SEC's leadership and crypto enforcement team has shown a total lack of integrity, a disregard for due process in the law, and a commitment to do the wrong thing at every turn. We must not reward this behavior. So what does this all mean? It's honestly hard to know, and dangerous probably to read too much into it.

On the one hand, the SEC has had an alarmingly high attrition rate among staff during the Gensler era. This is the second time that leadership of the crypto unit has rotated during his tenure, and under Hirsch, crypto enforcement escalated dramatically with investigations into firms including Coinbase, Cracken, Consensus, and Uniswop Labs. There is nothing to suggest that enforcement will be meaningfully reduced under new leadership. This could also be a sign that senior regulators are jumping ship ahead of a potential Trump presidency. The last time Trump was sent to the White House, there was a massive exodus from the administrative state. Hersh's departure could be a sign that he thinks he has done all he can as the leading crypto enforcer, and it's

time to move on before things get weird at the SEC. Then again, after nine years, the man just might be looking for something new. That's why I said it's dangerous to read too much into it. Speaking, however, of meme coins and presidential nominee, Donald Trump, rumors of a Donald Trump-backed meme coin sent crypto-twitter into overdrive on Monday. The rumor came from Mike Salana's media imprint pirate wires, which tweeted, per conversation, Trump is launching an official token, DJT on Solana, Barron spearheading. Mike also tweeted the contract address for the token, which had already been trading since Saturday. He elaborated on the sourcing, saying, getting a lot of inbound here. No, I didn't speak with Trump directly, assume this was clear.

Text me, though, Mr. President. Also assume he could rugpole or pivot, say it's not true. Just reporting what I know via sources. Mike seemed to immediately regret getting involved in this story, adding, never touching crypto news again, all of you people are insane. Aha. The coin immediately sparked debate around whether it was legit or a scam. Tommy Shaughnessy of Delphi Ventures presented a summary tweeting, So the new DJT coin. LP is not locked, funded from Kucoin, not a standard contract, single source pirate wires, top owner concentration 67%, built the wall to prevent selling.

Trump doesn't want to be the first to take credit or tweet about it, et cetera, no shot. I lean scam. Psycho calls represented the duality of the meta, commenting, DJT is one Zach XPT post away from death and one Trump post away from Valhalla. Notorious white-collar criminal and now Twitterati Martin Shrelli seems to be collating a string of posts from Trump world influencers all claiming the token is real. During a Twitter spaces called DJT as real, he said, I can confirm that this is an authentic Trump token. I'm familiar with the situation, but it's not my token, it's Trump's. It's up to you to

decide what you believe, but I'm 100% certain it's an official Trump token. Joe McCann, CEO of Hedge Fund Asymmetric, is also vouching for the token tweeting, no, my account hasn't been hacked. This morning I heard from three sources about Barron's involvement in a Trump token on Solana. Pirate wires broke the news. So for now, it's probably fairly pointless to add more they said they said around whether or not the token really was real and actually launched by the 18-year-old Trump Air, it would certainly be on brand for how insane this meme coin cycle has been, but as of the time of recording, we just don't have solid confirmation either way. Hello, friends, before we get back to the rest of the show, I want you to join me at

Permissionless. Permissionless is a conference for CryptoNatives by CryptoNatives. And the reason it's so important this year is that despite regulators' best attempts to push industry founders, devs, and executives out of the U.S., the U.S. remains the beating heart of crypto. Today, the tide is turning. Policymakers have pivoted from fighting crypto to embracing it, which will lead to the creation of new financial products, new applications, and ultimately new adoption. Permissionless is a conference for those using and building on-chain products. It's home to the power users, the devs, and the builders. And what's more, I'm going to be there. The location is Salt Lake City. The dates are October 9th to the 11th, and right now tickets are just

$199. Towards the end of the month, they're going up to $499, and if you want 10% off, use code breakdown 10 when you check out. If you go to the Blockworks website, blockworks.co, there will be lots of information about how to register, and again, use code breakdown 10 to get 10% off. Perhaps more interesting is the meta-discussion happening around the edges around what might be going on if this isn't legitimate. The DJT token seems to have sucked liquidity out of all the rival Trump coins. Tickers Trump and Trump were both down 35% on the day. Stephen Steele, marketing director for the Trump token, said, They're targeting us, pulling us in the red, literally seems like a greedy siop.

Those leading the Trump charge in the crypto industry seem very skeptical about the coin. Bitcoin Magazine CEO David Bailey tweeted, If the DJT Solana meme coin is fake, whoever propagated that needs to be tarded feathered and chased out of our industry for good. This is how you make the whole industry look back and signal to the president and his team that were a liability and not an asset. Masari's Ryan Selkis seems to think he knows what's going on here, replying, I know who's involved and I'll only share that with the president and team in his inner circle.

50-50, it's a Fed op, and I've saved all receipts. I offered to help the people that reached out with legal and business intros, but told them I wouldn't take anything in return because I got the vibes that the guy who approached me as a Fed. Some got philosophical asking what even is a scam. Nick Carter wrote, the synthesis here is that it doesn't matter if the Trump meme coin is a scam or not. Ultimately, it's a scam whether or not it's real. Break the cycle. Rise above. Focus on science. I don't know, man. I'm kind of with Chumbawamba who writes,

saw just another day in cryptocurrency. Moving over to things that are real, Goliath crypto market maker Cumberland DRW has secured a New York bit license. That makes them the 33rd crypto company who is licensed to operate in New York state. The firm said in a Twitter post, we are pleased that the New York Department of Financial Services has granted Cumberland, New York, a bit license. We are deeply committed to working with regulators to obtain proper necessary licensing and ensure our business is compliant and aligned with regulatory requirements. As one of the only principal trading firms to hold a bit license, we look forward to strong trading relationships with institutional New York

counterparties. Cumberland was spun off from Chicago-based commodities trading firm DRW in 2014, and has been one of the most important liquidity providers in the crypto industry ever since. It's unclear why Cumberland needed to obtain a bit license now after almost a decade in operation. That could signal that New York regulators are looking a little more closely at the trading firms and insisting they come in and register, could also mean that Cumberland is looking to play a more active role on U.S.-based exchanges rather than focusing on offshore markets. The BIT license has, of course, been controversial since it began in 2015, with firms often struggling to make their way through the registration process. Earlier this year, the BIT license drew

scrutiny from the New York State Comptroller, who said that regulators had relied on spotty, outdated and sometimes missing data on licensed firms. The very public collapse of Genesis was another black eye for the regulator, which was supposed to be overseeing the now bankrupt crypto lender. Over in the world of markets, J.P. Morgan analysts are noting a surge in U.S. listed Bitcoin mining companies. The 14 mining stocks tracked by the analysts hit a record high of 22. billion in aggregate market cap in June. The group of miners have gained 24% since the end of May. The report pointed out a positive reaction to news of CoreScientific signing a deal with Corweave to provide 200 megawatts of capacity for AI compute. Corweave had also put an acquisition offer

on the table at 55% above market price. The deal was rejected, but it alerted the market to how deeply undervalue the company was. Core scientific stock has increased by 117% so far in June, on the back of that news. The firm emerged from bankruptcy in January, making this a very strong return for the company. Hutt 8 and Iris Energy have also pursued diversification into AI compute this year. The other big news in the mining space is the ongoing hostile takeover launch by riot platforms against BitFarmes. We're still awaiting a resolution to that story, but the takeover bid has helped push BitFarm's stock up 35% this month. Terrow Wolf and Iran have also put on strong performances in June, gaining 80% and 70% respectively. J.P. Morgan pointed out that almost every

mining stock had outperformed Bitcoin in June. Bitcoin is down 3% for the month, and Argo blockchain was the only publicly listed U.S. miners seeing a drawdown losing 7%. Although Bitcoin hash rate is down since the halving, U.S. listed miners have been growing their share of the network. Overall, hash rate is down 1% since May, but the large U.S.-based firms have added hash rate for two months in a row. Publicly listed U.S. miners now represent almost 24% of global hash rate, according to the report. Despite a fall in hash rate, analysts still view the economics of mining as being at unsustainable levels. Generally, this is measured in hash price, a calculation of the value of Bitcoin that can be mined using a given hash rate over a certain period.

of time. This measure is still 15% below bare market lows of December 2022 and 45% below pre-having levels. Analysts say they expect miners to continue powering down on profitable machinery as revenues are squeezed, adding, all else equal, we expect hash price to increase in the coming weeks as the network hash rate declines. Finally, today, we talked a lot about the presidential side of crypto politics, but a lot of the real moves are going to be an individual campaign races in the House and the Senate as well. Two large crypto PACs are stepping up operations as the election approaches. Stand With Crypto has released a new round of endorsements naming 18 preferred candidates across the House and Senate. The list includes 15 incumbents and is evenly split between parties.

Among the newly endorsed candidates are Kirsten Gillibrand and Dan Goldman of New York, as well as Rick Scott in Florida. Pack has also endorsed challengers, Blake Masters in Arizona and Sarah McBride in Delaware. Stand With Crypto said the candidates have, quote, demonstrated an impressive knowledge of and commitment to crypto and blockchain innovation in America. Fairshake, the industry super PAC, meanwhile, has put their thumb on the scale in the New York Democratic primaries. They have spent 2 million to oppose the re-election campaign of Jamal Bowman. The Fairshake advertisement doesn't mention crypto or blockchain at all, instead claiming that

Bowman has spent his career, quote, pushing dangerous conspiracy theories. The aggressive spending against Bowman raised the ire of squad member AOC who tweeted, People everywhere need to understand how disgusting and abnormal it is for special interest to dump nearly 15 million to unseat a member of Congress in a primary. This is corruption. It is a core threat to American democracy. it also fuels Trump, support Jamal Bowman. That $15 million figure includes $7 million spent by the United Democracy Project to oppose Bowman, which is an Israeli special interest super PAC, as well as $5 million contributed to Bowman's opponent in the primary George Latimer.

Katie Bieber, the chief legal officer at Paradigm chimed in to defend the crypto industry's election spend, tweeting, the one-fifth of Americans who have bought a known crypto are per aOC special interests and apparently also disgusting and abnormal. Progressives seem to be on a mission to take down Biden. I think we are going to see a lot more of this type of smaller race type of spending, and this is in many ways where the biggest impact of crypto dollars might come. Once again, Mike Solana from Pirate Wires tweeted, replying to AOC, I'm sorry, the correct answer was don't F with Bitcoin. That's going to do it for today's breakdown. Appreciate you listening as always, and until next time, be safe and take care of each other. Peace.