WSJ: Democrats Set Sights on Trump's Crypto Empire

Original Article Title: Trump crypto deals provoke Senate backlash and calls for investigation
Original Article Authors: Eric Lipton, David Yaffe-Bellany, The New York Times
Original Article Translation: zhouzhou, BlockBeats

Editor's Note: The Trump family's involvement in issuing stablecoins and partnering with the Abu Dhabi fund, allegedly leveraging the President's influence to profit from cryptocurrency, has triggered strong opposition from Senate Democrats. The passage of the "GENIUS Act," which was originally expected to go through, has been blocked as a result. Multiple Democrats are calling for amendments to the bill or a thorough investigation into potential corrupt behavior, citing concerns about national security and money laundering issues.

Below is the original content (slightly reorganized for better comprehension):

Trump's cryptocurrency transactions have sparked a strong backlash in the Senate and calls for an investigation.

Senate Democrats are now seeking to amend pending congressional cryptocurrency legislation, in part due to mounting evidence that the Trump family is leveraging its network and Donald Trump's power to profit from cryptocurrency transactions.

Following a closed-door meeting of Senate Democrats late last week, this opposition intensified. Senate Democratic leader Chuck Schumer told colleagues during the meeting that they should not commit to supporting the so-called "GENIUS Act," a bill supported by the cryptocurrency industry.

For months, the bill was expected to smoothly pass with bipartisan support and was scheduled for a procedural vote this week. However, at the meeting, Democratic senators expressed concerns, pointing out that the legislation would directly benefit the Trump family's cryptocurrency business, based on relevant reports from The New York Times.

According to lawmakers, one of the concerns they raised is that a Trump-affiliated cryptocurrency company, "World Liberty Financial," had recently just struck a deal with the Abu Dhabi government-backed UAE Sovereign Fund to receive a $2 billion deposit—a piece of news revealed by The New York Times last week.

"This is a quid pro quo transaction, it is a conflict of interest, it is large-scale corrupt behavior we have never seen before," said Senator Jeff Merkley of Oregon in an interview, reiterating his remarks from the meeting, "This behavior must stop."

Massachusetts Democratic Senator Elizabeth Warren also urged other Democrats to take a stand on the matter.

Senator Elizabeth Warren said in a statement, "This Senate legislation will make it easier for the President and his family to line their pockets. This is naked corruption, and no Senator should support it."

These ethical concerns have heightened Democratic worries about the bill more broadly, with some Senators also pointing out other issues, citing a lack of sufficient anti-money laundering protections in the legislation.

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The "World Liberty" company did not immediately respond to a request for comment.

White House spokesperson Anna Kelly said Trump does not have conflicts of interest because his assets are held in a trust managed by his children. (Nevertheless, Trump will still benefit financially from these investments.) Kelly said in a statement, "Stablecoin legislation should be driven through bipartisan efforts. President Trump is committed to making the U.S. a global crypto hub and transforming our digital financial technology."

Cryptocurrency industry executives have been lobbying for months to push through the "GENIUS Act." The legislation aims to make it easier for U.S. companies to use stablecoins (cryptocurrencies pegged to around $1).

This would be the first time U.S. lawmakers formally establish a regulatory framework for the industry, aiding its growth in the U.S. Given that stablecoins do not fluctuate as wildly as other cryptocurrencies, many traders prefer to use them for various business transactions.

However, this industry-friendly policy will also directly benefit the World Liberty company, expanding the market for its recently launched stablecoin. The Trump family and its associates are positioned to benefit from tens of millions or more in annual income from these stablecoins.

This prospect has sparked strong backlash from Democratic lawmakers.

At last Thursday's meeting, Democrats raised a series of objections to the bill, including both Trump's conflicts of interest and the concern that certain wording in the bill might allow overseas stablecoin companies to circumvent some of the new regulations.

On Saturday, nine Democrats, including four who had previously voted in favor of the bill in the Senate Banking Committee, issued a joint statement stating that they would no longer support the bill without significant modifications. They noted that the bill lacked robust provisions to prevent money laundering and lacked regulatory mechanisms for foreign cryptocurrency companies, but did not mention Trump's cryptocurrency business.

Senate Republicans would need at least seven Democratic votes to overcome procedural hurdles for the bill. Therefore, this emerging opposition may lead to the bill's demise, dealing a significant blow to efforts to advance policy for the cryptocurrency industry in Washington.

During the 2024 election cycle, cryptocurrency firms poured over $130 million into supporting congressional candidates, including key Democrats running in competitive districts, such as Senator Elissa Slotkin of Michigan and Senator Ruben Gallego of Arizona. Gallego had previously voted in support of the GENIUS Act in the Banking Committee but also signed onto the statement expressing concerns about the bill over the weekend.

On Monday, Merkley and Warren separately submitted a request for the U.S. Office of Government Ethics to investigate the Trump family's expanding cryptocurrency transactions, citing their "astonishing foreign influence and potential risks of quid pro quo and national security threats."

A version of the stablecoin bill is currently under consideration in the House of Representatives as well. Democratic leaders plan to collectively boycott an industry-related hearing on Tuesday to protest Trump's role in the industry.

Sam Liccardo, a California Democratic congressman who supports the stablecoin legislation, stated that recent actions by the Trump family have left cryptocurrency executives who have been advocating for Congress to pass the bill feeling frustrated.

"I'm increasingly hearing concerns from industry leaders in Silicon Valley—they're deeply troubled by Trump dragging this sector into what they see as a 'lootocracy' scheme controlled by his sons," Liccardo said.

Even some Senate Republicans and long-time cryptocurrency proponents have expressed concerns about Trump and his family's attempts to benefit from the industry. "We're talking about my president, but I have to admit that this does give me pause," said Republican Senator Cynthia Lummis of Wyoming in an interview with NBC News last week.

Formerly skeptical of cryptocurrency, Trump publicly changed his attitude during last year's election campaign, promising to make the U.S. the "global capital of crypto." In September of last year, he announced the establishment of World Liberty with his two sons, a company that would issue its own digital currency.

After taking office, Trump appointed a group of cryptocurrency-friendly federal agency heads and quickly halted the regulatory crackdown pursued by the Biden administration. The core goal of the cryptocurrency industry in Washington is to push for legislation to secure its legal status within the U.S. financial system.

The "GENIUS Act" became the first bill to gain momentum. In March of this year, the Senate Banking Committee voted 18-6 to advance the bill, with five Democratic members, including Gallego, voting in favor. However, it was soon discovered that the bill's provisions on stablecoins would directly tie into Trump's business interests. Just two weeks after the committee vote, World Liberty announced the launch of a stablecoin called "USD1"—potentially bringing substantial profits to the Trump family.

Stablecoin issuance companies operate like banks: they take in deposits from users, issue tokens, and then invest these funds to earn returns, with the profits belonging to the company.

Just last week, a co-founder of World Liberty announced at a cryptocurrency conference that a venture capital fund supported by the Abu Dhabi government would use $2 billion worth of USD1 tokens for a major industry transaction—effectively injecting a massive amount of funds into an enterprise led by the U.S. president's family.

A recent New York Times report on the Abu Dhabi deal and other conflict of interest issues of World Liberty quickly spread on Capitol Hill. According to documents obtained by the New York Times, Senate Democrats distributed a research memo last week citing these investigative findings, fiercely criticizing the legislation as a tool for the Trump family "to profit corruptly through a cryptocurrency scheme." California Representative Maxine Waters even read aloud a relevant article from the newspaper during a committee hearing.

At a Senate Democratic meeting, Majority Leader Chuck Schumer expressed concerns about certain language in the bill. According to congressional aides, he was particularly focused on the possibility of the foreign company Tether using this legislation to issue stablecoins in the U.S. without having to comply with many regulatory terms. He called on Democratic lawmakers to carefully review the confidential briefing materials provided by the Banking Committee regarding Tether.

A spokesperson for Tether did not respond to a request for comment. Axios had previously partially reported on the contents of this meeting.

A Senate aide said Monday that lawmakers from both parties are continuing to negotiate in response to some concerns raised by Democrats. Several lawmakers, including the co-sponsor of the bill, Democratic Senator from New York Kirsten Gillibrand, are working to find a viable path to move the bill forward.

However, there is no sign of Trump backing down. On Monday, he posted a fist-pumping portrait on his own social media platform, Truth Social, calling on supporters to buy a cryptocurrency named $Trump. This is one of his latest business ventures, which has already brought in over $100 million in profit for his family and partners.

Furthermore, on Monday evening, a fundraising dinner hosted by cryptocurrency executives supporting Trump's Super PAC will take place at the Trump National Golf Club in Virginia, with attendees required to donate $1.5 million each.

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