WASHINGTON, DC – In an effort to crack down on corruption and prevent the swindling of unsuspecting crypto users, U.S. Senator Jack Reed (D-RI) is sounding the alarm about corruption surrounding the Trump family’s cryptocurrency “meme coins” and stablecoins that President Donald Trump and First Lady Melania Trump launched in conjunction with taking office.  This week, Senator Reed helped introduce new legislation to prevent cryptocurrency-related corruption by elected officials at the highest levels of the federal government.

Reed is teaming up with Senator Jeff Merkley (D-OR) and several colleagues in introducing the End Crypto Corruption Act.  This legislation would ban the President, Vice President, Senior Executive Branch Officials, Members of Congress, and their immediate families from financially benefiting from issuing, endorsing, or sponsoring crypto assets, such as meme coins and stablecoins.

Just days before his second-term inauguration, President-elect Donald Trump launched the $TRUMP meme coin, which surged over 300 percent within hours of its release, reaching an alleged value of nearly $6 billion.  Two days later, first-lady-in-waiting Melania Trump launched her own coin: $MELANIA.  At least one large U.S. trading venue then began offering $TRUMP for sale to retail investors, when it was trading at $74.  This allowed insiders and early investors to cash out, dump their tokens on the unsuspecting public, cause the price to collapse, and leave retail investors holding the bag.  As a result, the Trump family and their cronies received millions of real dollars, while investors received a crypto coin in free fall.

Since the $TRUMP coin was launched earlier this year, it has generated more than $320 million in fees for its creators, according to the blockchain analysis firm Chainalysis.  And just moments before Melania Trump publicly announced her cryptocurrency, two dozen digital wallets rapidly purchased large quantities of the token, netting a collective $99.6 million windfall, an investigation by the Financial Times revealed.

So-called meme coins are a form of digital currency that tend to catch on thanks to viral trends, jokes, or celebrity endorsements. They are usually created to engage a community.  While most meme coins never take off, some do, and the most known, such as Dogecoin, which was started as a parody and touted by Elon Musk, has a supposed value of more than $25 billion.

When President Trump’s meme coin lost 88 percent of its value earlier this year, the Trump family promoted a private meeting with President Trump for some of the meme coin’s top investors at a VIP dinner on May 22 at Trump National Golf Club followed by a special White House tour. 

Chainalysis reports that 58 wallets have made over $10 million each from President Donald Trump’s meme coin, totaling $1.1 billion in profits.  Meanwhile, 764,000 wallets of mostly small holders have lost money on $TRUMP, according to the firm.

Another example of the Trump family’s crypto entanglements is the Emirati venture firm MGX announcing it will use stablecoins issued by World Liberty Financial—the Trump family’s blockchain company—to pay for its recent $2 billion investment into the crypto exchange Binance.  MGX could have made their investments with real U.S. dollars, but instead chose to do so using Trump’s crypto dollar alternative.  According to experts, this deal could net the Trump family $80 million over a year.

A stablecoin is any cryptocurrency designed to have a relatively stable price, typically through being pegged to a commodity or currency or having its supply regulated by an algorithm.

The End Crypto Corruption Act directly addresses and curbs the Trump Administration’s ethically dubious actions regarding both meme coins and stablecoins.

“Currently, people who wish to cultivate influence with the president can enrich him personally by buying cryptocurrency he owns or controls,” said Senator Merkley. “This is a profoundly corrupt scheme. It endangers our national security and erodes public trust in government. Let’s end this corruption immediately.”

“If Donald Trump wants to become a crypto trader, he can resign and go do it on his own dime.  But the president and members of Congress should not be able to misuse their position of public trust to cash in on brazen pay-to-play money grabs that smack of corruption and should be widely condemned.  Presidents should not have a giant crypto-bribery funnel just sitting out there for foreign entities and favor seekers to transfer them money and get special access or favors in return.  Americans should not grow numb to such corrosive misconduct or tolerate a Grifter-in-Chief,” said Senator Reed.  “This is not a partisan issue, it’s an anti-corruption imperative: Those who wield political power to enrich themselves must be held accountable, whether they are taking a sack full of cash or millions in crypto currency.” 

Reed has also noted that in order for cryptocurrency to be sustainable, digital asset market participants need investor protections to ensure the marketplace is not rigged and plagued with corruption.  A balanced regulatory framework for digital assets coupled with strong oversight is also essential to ensure investors and capital markets are protected.

In addition to Merkley and Reed, the End Crypto Corruption Act is cosponsored by U.S. Senators Chuck Schumer (D-NY), Elizabeth Warren (D-MA), Mazie K. Hirono (D-HI), Chris Van Hollen (D-MD), Kirsten Gillibrand (D-NY), Catherine Cortez Masto (D-NV), Bernie Sanders (I-VT), Andy Kim (D-NJ), Angela Alsobrooks (D-MD), Cory Booker (D-NJ), Edward J. Markey (D-MA), Tammy Duckworth (D-IL), Elissa Slotkin (D-MI), Mark Kelly (D-AZ), Lisa Blunt Rochester (D-DE), Ron Wyden (D-OR), and Richard Blumenthal (D-CT).

Non-profits such as Democracy Defenders Action and Public Citizen have endorsed the End Crypto Corruption Act.

“The cryptocurrency industry is desperately in need of regulation—but not at the expense of allowing it to become an effective tool for corruption,” said Virginia Canter, Anticorruption and Ethics Chief Counsel and Director at Democracy Defenders Action. “It’s critical that we prevent public officials like the President and members of Congress from offering volatile and novel assets that create an unacceptable conflict of interest risk. By prohibiting these officials from issuing digital assets —and including similar language in all cryptocurrency legislation—Congress will demonstrate that their focus, and the focus of all public servants, remains squarely on the needs and interests of the nation, not on the profits they can make from encouraging others to speculate in the highly volatile digital marketplace.”