Hello! Ed here!

We’re only two weeks into Donald Trump’s second term but it feels like everything has changed. 

In no time at all, Trump has built a burgeoning crypto empire that encompasses memecoins, a DeFi business, and an investment platform. While he’s been going hard on tariffs, a bombshell development at the SEC has gone under the radar.

On the crypto front: Trump Media and Technology Group now features a partnership with asset management giant Charles Schwab and is staked with $250 million, reported Liam Kelly.

Critical of Trump’s “cash grab,” even many crypto supporters are alarmed at the optics of the president’s move.

One sign that things may get more political at the SEC: Reuters reported that Securities and Exchange Commission lawyers have been told they need permission from politically appointed leaders before formally launching investigations.

How the new regulatory regime will tackle Trump’s financial endeavours is unclear.

What is clear is that the Commissioners — Republican Hester Peirce, Democrat Caroline Crenshaw, and incoming Chair Paul Atkins — will take more control over enforcement earlier in the probe process.

Wall Street, meanwhile, has worries beyond crypto.

Trump slapped 25% tariffs on Canada and Mexico over the weekend, sending global markets tumbling.

Traders liquidated a whopping $2.3 billion in crypto, and Ethereum was hit hardest.

Some comments now look prescient.

On Friday, The Financial Times reported that Elliott Management, the hedge fund with $70 billion assets, warned clients that Trump was inflating a crypto bubble destined for an “inevitable collapse.”

Tether and Lutnick

Last Wednesday, senators questioned Howard Lutnick, Trump’s pick as US Commerce Secretary, on his ties to Tether. 

Lutnick is the CEO of Cantor Fitzgerald, a New York-based financial services firm that is one of 24 broker-dealers authorised to trade US government bonds directly with the Federal Reserve.

In that capacity, Cantor has helped Tether amass and manage billions in US Treasuries in its reserve backing USDT, the world’s most-widely used stablecoin. Lutnick testified that Cantor holds a convertible bond that could provide it with an equity stake in Tether, Aleks Gilbert reported.

Senators quizzed Lutnick on the wisdom of doing business with a crypto firm whose product is linked to extensive levels of money laundering. Lutnick countered by saying no one blames Apple for crimes used with iPhones.

Should Lutnick be confirmed by the Senate — and that looks likely — Trump will have a cabinet officer who is a true believer in the utility of cryptocurrencies. This is no small thing.

In the Biden Administration, the default was set on scepticism. It’s safe to say that Trump has turned the dial to full steam ahead.

But more questions about the propriety of Trump’s crypto enterprises are bound to come as he ratchets up his game.

ICYMI

• Experts question whether $20m crypto project has code to back up quantum computing claims

  Quantum computing experts are raising the alarm after a crypto project drew in millions from investors by claiming to have made key breakthroughs in the buzzy field.

• UK rule change boosts crypto staking following series of setbacks

  British regulators just changed the way they categorise crypto staking.

  On Friday, the act of locking up tokens to earn rewards will no longer be deemed a collective investment scheme in the UK thanks to a regulatory amendment by the UK Treasury.

• Crypto foe and former SEC Chair Gary Gensler returns to MIT

  One of crypto’s top adversaries is returning to academia. Former SEC Chair Gary Gensler will return to MIT after a four-year stint at the helm of the regulator.

Story of the Week

How a North Korean dev tricked a Solana trading bot team and stole $1.4m

Prosecutors claim the Solareum team unwittingly hired a North Korean developer. The dev helped steal 6,045 Solana from the trading bot’s users, worth about $1.4 million, said prosecutors in a January 21 court filing.

The case offers a rare glimpse into how North Korean IT workers are worming their way into crypto companies, ripping off their users, and shutting them down.

Post of the Week

Donald Trump’s release of his own memecoin triggered a wave of criticism from longtime sceptics such as Senator Elizabeth Warren but also a host of DeFi influencers, including Vitalik Buterin.

Comment of the Week

Howard Lutnick, the Wall Street billionaire Trump nominated as Commerce secretary, had a ready answer for senators quizzing him on how bad actors use USDT to launder dirty money.

DL News is an independent news organisation that provides original, in-depth reporting on the largely misunderstood world of cryptocurrency and decentralised finance. From original stories to investigations, our journalism is accurate, honest and responsible.

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