Trump begins selling new crypto token, raising ethical concerns

Washington: President-elect Donald Trump and his family on Friday started selling a cryptocurrency token featuring an image of Trump drawn from the July assassination attempt, a potentially lucrative new business that ethics experts assailed as a blatant effort to cash in on the office he is about to occupy again.

Disclosed just days before his second inauguration, the venture is the latest in a series of moves by Trump that blur the line between his government role and the continued effort by his family to profit from his power and global fame. It is yet another sign that the Trump family will be much less hesitant in this second term to bend or breach traditional ethical boundaries.

Trump announced the launch of his new business Friday night on his social media platform, in between announcements about filling key federal government posts. He is calling the token $Trump, selling it with the slogan "Join the Trump Community. This is History in the Making!"

The venture was organized by CIC Digital LLC, an affiliate of the Trump Organization, which already has been selling an array of other kinds of merchandise such as Trump-branded sneakers, fragrances and even digital trading cards.

But this newest venture brings Trump and his family directly into the world of selling cryptocurrency, which is regulated by the Securities and Exchange Commission. Trump recently disclosed he intended to name a cryptocurrency advocate as SEC chair.

A disclosure on the website selling the tokens says that CIC Digital and its affiliates own 80 per cent of the supply of the new Trump tokens that will be released gradually over the coming three years and that they will be paid "trading revenue" as the tokens are sold.

The move by Trump and his family was immediately condemned by ethics lawyers who said they could not recall a more explicit profiteering effort by an incoming president.

"It is literally cashing in on the presidency -- creating a financial instrument so people can transfer money to the president's family in connection with his office" said Adav Noti, executive director of Campaign Legal Center, a nonprofit ethics group. "It is beyond unprecedented."

Eric Trump, who helps run Trump Organization business operations, said Saturday that this offering was part of a new and growing business sector that the Trump family has entered.

"I am extremely proud of what we continue to accomplish in crypto," Eric Trump said in a statement to The New York Times. "$Trump is currently the hottest digital meme on earth." He added: "This is just the beginning."

But even some in the cryptocurrency industry were quick to criticize the new token.

"Trump owning 80 per cent and timing launch hours before inauguration is predatory and many will likely get hurt by it," Nick Tomaino, a crypto venture capitalist and former executive at Coinbase, one of the largest crypto trading platforms, wrote in a social media post Saturday.

The president-elect and his three sons had, as of late last year, already lent their name to another cryptocurrency startup called World Liberty Financial, an arrangement that included a cut of token sales for the Trump family in exchange for helping promote the new brand.

But the members of the Trump family, with World Liberty Financial, were not actually owners of the platform or officers in the company.

There are other cryptocurrency coins in the marketplace based on Trump that are not directly affiliated with his family like the new Trump meme. Typically, these so-called meme coins -- which were born when coins were created as a joke inspired by an internet meme or cartoonish animal faces -- are largely worthless and traded more like a hobby.

With this new venture, companies associated with Trump's family have a direct financial stake in the value of the new tokens and in the volume of their sales, which quickly surged after going on the market.

"GetTrumpMemes.com is not political and has nothing to do with any political campaign or any political office or governmental agency," the venture's website says, adding, "Trump Memes are intended to function as an expression of support for, and engagement with, the ideals and beliefs embodied by the symbol '$TRUMP.'"

The legal disclosures say the tokens are not intended to be seen as "an investment opportunity, investment contract or security of any type." But trading of them on cryptocurrency markets began immediately, driving up the value of each token from $7 to nearly $30 as of noon Saturday.

This suggested that the so-called fully diluted value of all the tokens as of noon Saturday was $30 billion, a number achieved less than a day after the token went on the market, according to CoinMarketCap, a site that tracks cryptocurrency trading.

A log of transactions related to the new token suggests that 80 per cent of the $Trump tokens remain controlled by the Trump-related entities, implying that the Trump assets still have not been sold. It also shows that one unidentified crypto wallet has accumulated more than 2 per cent of the meme coin. Many attempts to buy or transfer the new token were failing as of early evening Saturday, perhaps because of an insufficient supply of available tokens given the sudden demand.

Trump and his family are clear in the marketing of the new token that the image picked for the coin had been inspired by the July assassination attempt in Butler, Pennsylvania.

"President Trump faced death and came up fighting!" the website promoting the tokens says.

Cryptocurrency markets tend to be highly volatile, in part because tokens are not backed by any tangible assets. The website for Trump's new venture includes an extensive collection of disclaimers limiting the ability of anyone buying the token to file a class-action lawsuit related to it and warning buyers that "Trump Memes may be extremely volatile, and price fluctuations in cryptocurrencies could impact the price."

Trump has already made clear that he will be working to promote the cryptocurrency industry.

He has announced his intention to appoint regulators who will lift restrictions on the sale of new tokens and ties among cryptocurrency companies and other more traditional financial enterprises.

This stands in contrast to efforts by President Joe Biden-era regulators to tightly regulate the industry, out of a concern that a sudden crash in the value of cryptocurrency could potentially lead to a future financial crash.