Original Title: What Trump's Embrace of Crypto Has Unleashed

Original Authors: David Yaffe-Bellany, Eric Lipton, The New York Times

Translation: Chopper, Foresight News

This summer, a group of executives pitched a business plan to Wall Street financier and former Trump administration advisor Anthony Scaramucci. They wanted Scaramucci to join a publicly listed company with a unique strategy: by hoarding a significant amount of cryptocurrency assets, enhancing the company's appeal to investors.

"They didn't really need to sell me on it," Scaramucci recalled. Shortly after, he joined three unknown companies employing this strategy as an advisor, and the "entire partnership process went very smoothly."

However, this wave of enthusiasm did not last long. With the cryptocurrency market plummeting this fall, the stock prices of the three companies Scaramucci was involved with plunged, with the worst-performing one dropping over 80%.

The rise and fall of these companies epitomize the cryptocurrency craze ignited by Trump. This self-proclaimed "first cryptocurrency president," not only ended regulatory crackdowns on cryptocurrency companies but also openly promoted cryptocurrency investment in the White House, signed bills supporting cryptocurrency development, and even issued a meme coin named TRUMP, propelling this once-niche sector into the forefront of the global economy.

Today, the ripple effects of Trump's cryptocurrency endorsement are gradually becoming apparent.

This year, a large number of boundary-breaking cryptocurrency startups have emerged, drawing more people into this volatile market. Over 250 publicly listed companies have started hoarding cryptocurrency—these digital assets exhibit price volatility similar to traditional investments such as stocks and bonds.

In 2024, former Trump advisor Anthony Scaramucci attends a Bitcoin conference in the UAE

A wave of companies are launching innovative products, lowering the barriers to including cryptocurrency in brokerage accounts and retirement plans. Simultaneously, industry executives are lobbying regulatory bodies, planning to issue cryptocurrency tokens pegged to publicly listed company stocks, creating a cryptocurrency-based stock trading market.

This wave of radical innovation has exposed many issues. Over the past two months, mainstream cryptocurrency prices have experienced a significant plunge, leading to a crisis for enterprises heavily invested in crypto assets. Other emerging projects have also raised concerns from economists and regulatory bodies, as market risks continue to accumulate.

The core concern that has raised alarms from various parties lies in the ongoing expansion of leverage. By the fall of this year, publicly listed companies had heavily borrowed to purchase cryptocurrency; investors' positions in cryptocurrency futures contracts exceeded $200 billion, with many of these trades relying on leveraged funds, potentially bringing in huge profits while also carrying the risk of liquidation.

Of even greater concern is that a series of new initiatives in the cryptocurrency industry have tightly linked the crypto market with the stock market and other financial sectors. Should a crisis erupt in the cryptocurrency market, the risk may spread to the entire financial system, triggering a chain reaction.

"Today, the boundary between speculation, gambling, and investment has become increasingly blurred," said Timothy Massad, who served as Assistant Secretary of the Treasury for Financial Stability after the 2008 financial crisis. "This situation deeply worries me."

White House Press Secretary Karoline Leavitt responded by stating that Trump's policies are "driving innovation, creating economic opportunities for all Americans, and helping the U.S. become a global cryptocurrency hub."

Cryptocurrency industry executives argue that these emerging projects demonstrate the potential of blockchain technology to reshape the outdated financial system. In their view, market volatility presents a profitable opportunity.

"High risk often comes with high returns," said Duncan Moir, CEO of 21Shares, a company issuing cryptocurrency investment products. "Our mission is to bring these investment opportunities to more people."

The rise of this wave of innovation is inseparable from a comprehensive relaxation of the regulatory environment, marking the most favorable regulatory window for cryptocurrency companies. For many years prior, the U.S. Securities and Exchange Commission (SEC) has been at odds with the cryptocurrency industry; however, in January of this year, the agency established a cryptocurrency special task force and has held meetings with dozens of companies seeking new rule support or product listing approval.

A spokesperson for the U.S. Securities and Exchange Commission stated that the agency is committed to "ensuring that investors have access to full information to make informed investment decisions."

U.S. Securities and Exchange Commission headquarters in Washington, D.C.

It is worth noting that many of these emerging companies are associated with the continuously expanding cryptocurrency business empire of the Trump family, a connection that has blurred the line between business and government.

This summer, executives from Trump's cryptocurrency startup World Liberty Financial announced joining the board of publicly traded company ALT5 Sigma. The company, originally focused on recycling operations, is now planning to raise $1.5 billion to enter the cryptocurrency market.

Capital Frenzy: An Unbridled Crypto Gamble

Crypto enthusiasts have dubbed this high-risk investment frenzy fostered by the Trump administration as the "Summer of Crypto Treasury Companies."

Crypto Treasury Companies (CTCs) refer to publicly traded companies with hoarding cryptocurrencies as their core objective. Data from crypto advisory firm Architect Partners shows that nearly half of these emerging companies focus on hoarding Bitcoin, the most well-known cryptocurrency, while dozens of other companies have announced plans to acquire meme coins like Dogecoin.

2025 Monthly Crypto Treasury Company Establishment Count. Data Source: Architect Partners, as of December 16.

Data Source: Architect Partners, as of December 16, 2025 Monthly Crypto Treasury Company Establishment Count.

The modus operandi of these companies is often straightforward: a group of executives target a niche publicly traded company (such as a toy manufacturer) in the open market, persuade it to transition to a cryptocurrency hoarding business, collaborate with the company to raise hundreds of millions from high-net-worth investors, and ultimately use the funds to buy cryptocurrencies.

The core purpose is to involve more people in cryptocurrency investment by issuing traditional stock pegged to cryptocurrency prices. This strategy theoretically offers significant profit potential. Many investment funds and asset management firms have been cautious about direct cryptocurrency investments due to the complex and costly nature of cryptocurrency custody and the high risk of hacking.

Investing in Crypto Treasury Companies is akin to outsourcing the logistics of cryptocurrency storage and other operational tasks. However, these companies also carry significant risks: many companies were hastily established, and their management lacks experience in operating a publicly traded company. According to data from Architect Partners, these companies have collectively announced plans to borrow over $20 billion to purchase cryptocurrencies.

"Leverage is the main culprit of financial crises," warned Corey Frayer, a former cryptocurrency advisor at the U.S. Securities and Exchange Commission. "And the current market is fueling massive leverage."

Some cryptocurrency treasury companies have run into operational difficulties or management crises, leading to significant losses for investors.

Publicly listed company Forward Industries transformed into a cryptocurrency treasury company, heavily holding SOL. In September of this year, the company raised over $1.6 billion from private investors, and its stock price soared to nearly $40 per share.

Allan Teh from Miami manages assets for a family office and this year invested $2.5 million in Forward Industries. "Everyone at that time thought this strategy was foolproof, believing that cryptocurrency asset prices would continue to rise," recalled Allan Teh.

However, as the cryptocurrency market experienced a sharp decline, Forward Industries' stock price plummeted to as low as $7 per share this month. The company announced plans to buy back $1 billion worth of stock over the next two years, but this measure did not halt the stock's downturn.

"The music stopped, and the game ended. Now I'm starting to panic. Can I exit this unscathed?" Allan Teh has already lost around $1.5 million. "How much will the eventual loss be for this investment?" Forward Industries declined to comment on this.

The proliferation of cryptocurrency treasury companies has raised alarms at the U.S. Securities and Exchange Commission. "Clearly, we are very concerned about this," said agency Chairman Paul Atkins in an interview at a cryptocurrency conference in Miami last month. "We are closely monitoring the situation."

Behind this new track in cryptocurrency, there is strong support from the Trump family.

The founders of World Liberty Financial include Eric Trump, son of Trump, and Zach Witkoff

In August of this year, World Liberty Financial announced that the company's founders (including the president's son Eric Trump) would join the board of ALT5 Sigma. This publicly listed company plans to stockpile the cryptocurrency token WLFI issued by World Liberty Financial (Eric Trump's current title is Strategic Advisor and Board Observer).

This partnership seems to enable the Trump family to quickly profit. According to the revenue-sharing agreement published on the World Liberty Financial website, whenever WLFI token transactions occur, commercial entities under the Trump family umbrella can take a cut.

Subsequently, ALT5 Sigma's business situation took a sharp turn for the worse. In August, the company revealed that a senior executive of one of its subsidiaries was convicted of money laundering in Rwanda, and the board of directors is investigating other "undisclosed matters." Shortly after, ALT5 Sigma announced the suspension of the CEO's duties and the termination of contracts with two other executives.

Since August, the company's stock price has plummeted by 85%. A spokesperson for ALT5 Sigma stated that the company is "confident in the future development."

Flash Crash Nightmare: A Trillion-Dollar Market Cap Evaporation Overnight

The recent turmoil in the cryptocurrency market can be traced back to one night in October.

Driven by Trump's policies, the cryptocurrency market had been on a steady rise for most of the year. However, on October 10, Bitcoin, Ethereum, and dozens of other cryptocurrencies collectively experienced a sharp price drop, unleashing a flash crash.

The direct trigger for this crash was Trump's announcement of new tariffs on China, which caused severe global economic upheaval. The cryptocurrency market suffered a heavy blow due to the massive leverage funds that had been driving the market's rise.

On cryptocurrency trading platforms, traders can use their held crypto assets as collateral to borrow fiat currency or increase their cryptocurrency investment positions through leverage funds. Data from cryptocurrency research firm Galaxy Research shows that in the third quarter of this year, the global cryptocurrency lending volume grew by $200 billion in a single quarter, reaching a historical peak of $740 billion.

Previously, the riskiest cryptocurrency leverage trading mostly occurred in overseas markets. However, in July of this year, the largest cryptocurrency exchange platform in the U.S., Coinbase, announced the launch of a new investment tool that allows traders to leverage up to 10 times on Bitcoin and Ethereum futures prices. Prior to this, U.S. federal regulators had lifted restrictions on guidance related to such leverage trading, clearing the way for Coinbase's new product.

In July of this year, Coinbase exchange platform introduced a 10x leverage cryptocurrency trading tool

The flash crash in October, while not causing an industry catastrophe like the bankruptcies of numerous major cryptocurrency companies in 2022, sounded an alarm for the market, indicating the systemic crisis lurking in the cryptocurrency field.

The essence of leverage trading is that losses are multiplied when the market goes down. Trading platforms will force liquidation, selling off customers' collateral assets, a process that often further intensifies price declines.

The data from cryptocurrency data firm CoinGlass shows that on October 10, at least $19 billion worth of cryptocurrency leveraged trades were liquidated globally, affecting 1.6 million traders. The liquidation event primarily occurred on exchanges such as Binance, OKEx, and Bybit.

The sharp market downturn led to a surge in trading volume, causing several major exchanges to experience technical issues, preventing traders from transferring their funds promptly. Coinbase stated that some users experienced "delays or degraded performance during trading."

Tennessee-based software developer and cryptocurrency investor Derek Bartron revealed that his Coinbase account was frozen during the flash crash period. "I wanted to exit my positions, but I couldn't make any transactions," Derek Bartron said. "Coinbase effectively locked up users' funds, and we could only watch helplessly as the asset value plummeted."

Derek Bartron mentioned that in the days following the flash crash, his cryptocurrency portfolio lost around $50,000, partly due to the inability to exit his positions in time.

A Coinbase spokesperson responded by stating that the company provides automated risk management tools, "which functioned as intended during this market turbulence, and our trading platform remained stable throughout the event."

A Binance spokesperson acknowledged that the exchange "experienced technical issues due to the surge in trading volume" and stated that measures have been taken to compensate affected users.

Crazy Experiment: The Regulatory Dilemma of the Tokenization Wave

One summer night this year, cryptocurrency entrepreneur Chris Yin and Teddy Pornprinya donned formal attire and made an appearance at the Kennedy Center in Washington, D.C., attending a grand black-tie gala.

The gala was a star-studded event. Chris Yin, in a tuxedo he had bought just the night before, met with former Silicon Valley venture capitalist and Vice President of the United States, JD Vance; he and Teddy Pornprinya even had conversations with former hedge fund manager and current U.S. Treasury Secretary Scott Besent. The two even had a photo op with Trump, who gave a thumbs-up to the camera.

Chris Yin and Teddy Pornprinya's visit was to pave the way for their startup, Plume. This company is advancing an industry-disrupting innovation, attempting to extend cryptocurrency's underlying technology into a broader financial realm.

For months, Plume has been seeking approval from U.S. regulatory agencies, planning to build an online trading platform to issue crypto tokens pegged to real-world assets to customers, with assets ranging from listed company stocks to farms, oil wells, and various other entities.

Plume Founder Chris Yin and Teddy Pornprinya at the Empire State Building

Currently, Plume has launched such tokenized products in overseas markets, where customers can trade these asset tokens just like cryptocurrencies. However, this business, known as asset tokenization, is in a legal gray area in the U.S. The securities laws enacted decades ago have strict regulatory rules for the issuance of equity in various assets, requiring issuers to disclose detailed information to protect investor rights.

This year, asset tokenization has become the hottest concept in the cryptocurrency industry. Industry executives claim that tokenized stocks can make stock trading more efficient and create a round-the-clock global trading market. The U.S.-based cryptocurrency exchange Kraken has already launched encrypted technology-based stock trading services for customers in overseas markets.

Cryptocurrency industry executives state that cryptocurrency trading, based on public ledger records, is more transparent compared to the traditional financial system. "All transactions are traceable and auditable," said Arjun Sethi, CEO of Kraken. "There is almost no risk."

Representatives from Kraken and Coinbase have met with the U.S. Securities and Exchange Commission to discuss regulatory rules for tokenized assets; meanwhile, Plume is also seeking a legal pathway to expand its business in the U.S.

However, this race for tokenized products has raised concerns among current and former regulatory officials and executives of traditional financial giants.

In September of this year, a Federal Reserve economist warned that asset tokenization could lead to the transmission of cryptocurrency market risks to the entire financial system, "weakening policymakers' ability to maintain payment system stability under stress."

SEC Chairman Paul Atkins, on the other hand, has a positive view of tokenized stocks, calling it a "major technological breakthrough." "According to securities laws, the Commission has broad discretionary power to provide regulatory support for the cryptocurrency industry. I am determined to push this work forward," Atkins said at an asset tokenization industry roundtable in May of this year.

In order to drive the company's business compliance efforts, Chris Yin and Teddy Pornprinya took a series of actions. In May of this year, the two met with the U.S. Securities and Exchange Commission's cryptocurrency special task force; they also provided chart support for the White House cryptocurrency industry report; and established the Plume U.S. headquarters on the 77th floor of the Empire State Building.

At a black tie dinner in Washington this summer, Trump's staff showed a keen interest in the two founders. "They knew about Plume the company," Teddy Pornprinya recalled, "Everyone was familiar with our business."

Several weeks later, Plume announced a key partnership, establishing a business relationship with World Liberty Financial, a company under the Trump family.

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