The New York Times: Trump is pushing cryptocurrency toward a capital frenzy

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

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

Translated by: Chopper, Foresight News

This summer, a group of business executives pitched a business plan to Wall Street financier and former Trump presidential adviser Anthony Scaramucci. They wanted Scaramucci to join a publicly listed company with a unique strategy: to boost the company’s appeal to investors by hoarding massive amounts of crypto assets.

“They really didn’t have to say much,” Scaramucci recalled. Not long after, he joined three little-known companies using this strategy as an advisor. “The whole negotiation process went very smoothly.”

However, the craze didn’t last long. This fall, as the crypto market crashed, the stock prices of the three companies Scaramucci was involved with plummeted, with the worst performer dropping more than 80%.

The rise and fall of these companies is a microcosm of the crypto frenzy ignited by Trump. The self-proclaimed “first crypto president” not only ended regulatory crackdowns on crypto companies, but also publicly promoted crypto investment from the White House, signed legislation supporting crypto development, and even issued a meme coin called TRUMP, catapulting this once-niche sector into the global economic spotlight.

Now, the ripple effects of Trump’s strong support for crypto are gradually emerging.

Since the start of this year, a wave of boundary-breaking crypto startups has emerged, drawing more people into this highly volatile market. More than 250 publicly listed companies have begun hoarding crypto—digital assets whose price volatility is no different from traditional investments like stocks and bonds.

In 2024, former Trump adviser Anthony Scaramucci attends the UAE Bitcoin Conference

Some companies have launched innovative products, lowering the barriers for including crypto in brokerage accounts and retirement plans. Meanwhile, industry executives are lobbying regulators to issue crypto tokens pegged to listed company stocks, aiming to create a stock trading market based on crypto technology.

This wave of radical innovation has already exposed many problems. In the past two months, mainstream crypto prices have plunged, pushing companies heavily invested in crypto assets to the brink of collapse. Other new projects have also drawn warnings from economists and regulators, as market risks continue to accumulate.

The core concern is the continued expansion of leverage. By this fall, listed companies had borrowed heavily to buy crypto; investors’ open interest in crypto futures contracts surpassed $200 billion, with most of these trades relying on leveraged funds, which can bring huge returns but also hide the risk of liquidation.

Even more alarming, a series of new moves in the crypto industry have deeply bound the crypto market to the stock market and other financial sectors. If a crisis erupts in the crypto market, the risk could spread to the entire financial system, triggering a chain reaction.

“Now, the line between speculation, gambling, and investing has become blurred,” said Timothy Massad, who served as Assistant Secretary for Financial Stability at the U.S. Treasury after the 2008 financial crisis. “This situation deeply worries me.”

White House press secretary Karoline Leavitt responded that Trump’s policies are “helping the U.S. become a global crypto hub by driving innovation and creating economic opportunities for Americans nationwide.”

Crypto industry executives argue that these new projects demonstrate the potential of crypto technology to reshape the outdated financial system. In their view, market volatility is precisely an opportunity for profit.

“High risk often comes with high reward,” said Duncan Moir, president of 21Shares, a company issuing crypto investment products. “Our mission is to bring these investment opportunities to more people.”

The rise of this innovation wave is inseparable from a comprehensive relaxation of regulations, marking the most favorable regulatory window for crypto companies. For years, the U.S. Securities and Exchange Commission (SEC) had been in court battles with the crypto industry; but in January, the agency set up a special crypto task force and has since held meetings with dozens of companies seeking new regulatory support or product listing approvals.

An SEC spokesperson said the agency is committed to “ensuring investors have sufficient information to make rational investment decisions.”

U.S. Securities and Exchange Commission headquarters in Washington

Notably, many of these emerging companies are linked to the Trump family’s expanding crypto business empire, blurring the line between business and government.

This summer, executives from Trump’s crypto startup World Liberty Financial announced they were joining the board of listed company ALT5 Sigma. Originally focused on recycling, the company now plans to raise $1.5 billion to enter the crypto market.

Capital Frenzy: A Runaway Crypto Gamble

Crypto enthusiasts have dubbed the high-risk investment boom sparked by the Trump administration the “Summer of Crypto Treasury Companies.”

Crypto treasury companies (DATs) are publicly listed firms whose core goal is to hoard crypto. According to crypto consulting firm Architect Partners, nearly half of these new companies focus on hoarding bitcoin, the most well-known crypto, while dozens more have announced plans to buy non-mainstream coins like dogecoin.

Number of crypto treasury companies founded each month in 2025. Source: Architect Partners, data as of December 16

The operating model of these companies is often simple and crude: a group of executives targets a niche company traded on the public market (such as a toy manufacturer), persuades it to pivot to crypto hoarding, then partners with it to raise hundreds of millions of dollars from high-net-worth investors, ultimately using the funds to buy crypto.

The core purpose is to issue traditional stocks pegged to crypto prices, allowing more people to participate in crypto investment. In theory, this strategy offers considerable profit potential. Many investment funds and asset managers have long been hesitant to invest directly in crypto due to complex storage processes, high costs, and hacking risks.

Investing in crypto treasury companies is equivalent to outsourcing the logistics of crypto storage. But these companies also hide huge risks: many are hastily established, with management lacking experience in running public companies. Architect Partners data shows these firms have collectively announced plans to borrow over $20 billion to buy crypto.

“Leverage is the culprit behind financial crises,” warned Corey Frayer, former crypto advisor to the SEC. “And the current market is spawning massive leverage.”

Some crypto treasury companies have already fallen into operational or management crises, causing investors to suffer huge losses.

After listed company Forward Industries pivoted to a crypto treasury company, it heavily invested in SOL. In September, the company raised over $1.6 billion from private investors, and its stock price once soared to nearly $40 per share.

Allan Teh from Miami, who manages assets for a family office, invested $2.5 million in Forward Industries this year. “At the time, everyone thought this strategy was foolproof and crypto prices would keep rising,” Allan Teh recalled.

However, as the crypto market crashed, Forward Industries’ stock price fell to $7 per share this month. The company announced plans to spend $1 billion to buy back shares over the next two years, but this failed to stop the stock’s decline.

“The music stopped and the game ended. Now I’m starting to panic—can I get out unscathed?” Allan Teh has lost about $1.5 million. “How much will this investment ultimately lose?” Forward Industries declined to comment.

The proliferation of crypto treasury companies has drawn the attention of the SEC. “Clearly, we are very concerned about this,” said agency chairman Paul Atkins in an interview at last month’s Miami crypto conference. “We are closely monitoring developments.”

And behind this new crypto sector is the strong support of the Trump family.

World Liberty Financial’s founders include Eric Trump, son of President Trump, and Zach Witkoff

In August, World Liberty Financial announced that its founders (including President Trump’s son Eric Trump) would join the board of ALT5 Sigma. This listed company plans to hoard the WLFI crypto token issued by World Liberty Financial (Eric Trump currently serves as strategic advisor and board observer).

This partnership appears poised to bring quick profits to the Trump family. According to the revenue-sharing agreement published on World Liberty Financial’s website, every time a WLFI token is traded, business entities under the Trump family receive a cut.

Afterward, ALT5 Sigma’s business took a sharp downturn. In August, the company disclosed that an executive at a subsidiary had been convicted of money laundering in Rwanda, and the board was investigating other “undisclosed matters.” Soon after, ALT5 Sigma announced the suspension of its CEO and terminated two other executives.

Since August, the company’s stock price has plunged 85%. An ALT5 Sigma spokesperson said the company “remains confident about its future development.”

Flash Crash Panic: Hundreds of Billions in Market Value Wiped Out Overnight

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

Driven by Trump’s policies, the crypto market had been rising for most of the year. But on October 10, the prices of dozens of cryptocurrencies, including bitcoin and ethereum, collectively plunged in a flash crash.

The immediate trigger for the crash was Trump’s announcement of new tariffs on China, which sent shockwaves through the global economy. The root cause of the crypto market’s heavy losses, however, was the massive leveraged funds that had fueled the rally.

On crypto trading platforms, traders can use their crypto holdings as collateral to borrow fiat currency or use leverage to increase their crypto positions. According to data from crypto analytics firm Galaxy Research, global crypto lending grew by $20 billion in the third quarter alone this year, reaching a record high of $74 billion.

Previously, the riskiest leveraged crypto trading mostly took place in overseas markets. But in July, the largest U.S. crypto exchange Coinbase launched a new investment tool allowing traders to bet on bitcoin and ethereum futures with 10x leverage. Prior to this, federal regulators had lifted restrictions on such leveraged trading, clearing the way for Coinbase’s new product.

In July, Coinbase launched a 10x leveraged crypto trading tool

The October flash crash, while not causing the kind of industry-wide bankruptcies seen in 2022, served as a warning, signaling the systemic risks lurking in the crypto sector.

The essence of leveraged trading is that losses are magnified when the market falls. Trading platforms forcibly liquidate positions, selling off customers’ collateral, a process that often further accelerates price declines.

According to CoinGlass, a crypto data provider, at least $19 billion in leveraged crypto trades were forcibly liquidated on October 10, affecting 1.6 million traders. The liquidation wave was concentrated on platforms such as Binance, Okx, and Bybit.

The crash triggered a surge in trading volume, causing technical failures at several major exchanges and preventing traders from moving funds in time. Coinbase said it was aware that some users “experienced delays or degraded system performance during trading.”

Derek Bartron, a software developer from Tennessee and a crypto investor, said his Coinbase account was frozen during the flash crash. “I wanted to close my position and exit, but there was no way to operate,” Bartron said. “Coinbase effectively locked users’ funds, and we could only watch our asset values plummet, powerless.”

Bartron said he lost about $50,000 in crypto assets in the days after the crash, partly because he couldn’t close his positions in time.

A Coinbase spokesperson responded that the company provides automated risk management tools, “which operated normally during this market volatility, and our trading platform remained stable throughout the event.”

A Binance spokesperson admitted that the platform “experienced technical issues due to a surge in trading volume” and said measures had been taken to compensate affected users.

Wild Experiment: The Regulatory Dilemma of the Tokenization Wave

One night this summer, crypto entrepreneurs Chris Yin and Teddy Pornprinya, dressed in formal attire, attended a grand black-tie gala at the Kennedy Center in Washington.

The event was star-studded. Chris Yin, wearing a tuxedo he bought the night before, met U.S. Vice President JD Vance, who had previously worked in Silicon Valley venture capital; he and Teddy Pornprinya also spoke with former hedge fund manager and current U.S. Treasury Secretary Scott Besant; the two even took a photo with Trump, who gave a thumbs-up to the camera.

Chris Yin and Teddy Pornprinya were there to pave the way for their startup, Plume. The company is advancing a disruptive innovation plan, aiming to extend crypto’s underlying technology to broader financial fields.

For months, Plume has been seeking U.S. regulatory approval to build an online trading platform that issues crypto tokens pegged to real-world assets, including listed company stocks, farms, oil wells, and more.

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

Currently, Plume has launched such tokenized products in overseas markets, allowing customers to trade these asset tokens like crypto. But this business, known as asset tokenization, exists in a legal gray area in the U.S., where decades-old securities laws impose strict rules on equity offerings of various assets, requiring issuers to disclose detailed information to protect investors.

This year, asset tokenization has become the hottest concept in the crypto industry. Industry executives claim that tokenized stocks can make stock trading more efficient and create a 24/7 global trading market. Major U.S. crypto exchange Kraken has already launched crypto-based stock trading services for clients in overseas markets.

Crypto industry executives say crypto trading is based on public ledgers, making it more transparent than traditional finance. “All transactions are traceable and auditable,” said Kraken CEO Arjun Sethi. “It’s virtually risk-free.”

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

But this race to launch tokenized products has raised concerns among current and former regulators, as well as executives at traditional financial giants.

In September, Federal Reserve economists warned that asset tokenization could transmit crypto market risks to the entire financial system, “undermining policymakers’ ability to maintain payment system stability under market stress.”

SEC Chairman Paul Atkins, however, is positive about tokenized stocks, calling them a “major technological breakthrough.” “Under securities law, the Commission has broad discretion to provide regulatory support to the crypto industry. I am determined to push this work forward,” Atkins said at an asset tokenization industry roundtable in May.

To promote compliance, Chris Yin and Teddy Pornprinya have taken a series of steps. In May, they met with the SEC’s crypto task force; they also provided chart support for the White House’s crypto industry report; and set up Plume’s U.S. headquarters on the 77th floor of the Empire State Building.

At the Washington black-tie gala this summer, Trump’s staff showed strong interest in the two founders. “They knew about Plume,” Teddy Pornprinya recalled. “Everyone was aware of our business.”

A few weeks later, Plume announced a key partnership with the Trump family’s World Liberty Financial.