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

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

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

Original Translation: Chopper, Foresight News

This summer, a group of corporate executives pitched a business plan to Wall Street financier Anthony Scaramucci, who had served as an advisor to President Trump. They hoped Scaramucci would join a uniquely positioned public company: by hoarding vast amounts of cryptocurrency assets, they aimed to enhance the company's appeal to investors.

"They really didn't need to say much." Scaramucci recalled. Soon after, he joined three little-known companies adopting this strategy as an advisor, "the entire negotiation process went very smoothly."

However, this wave of enthusiasm did not last long. This fall, the cryptocurrency market plummeted, and the stock prices of the three companies Scaramucci was involved with fell sharply, with the worst performer dropping over 80%.

The rise and fall of these companies is a microcosm of the cryptocurrency craze ignited by Trump. The self-proclaimed "first cryptocurrency president" not only ended regulatory crackdowns on cryptocurrency firms but also publicly promoted cryptocurrency investments from the White House, signed bills supporting the development of cryptocurrencies, and even issued a meme coin named TRUMP, thrusting this once-niche field into the spotlight of the global economy.

Now, the ripple effects of Trump's support for cryptocurrencies are gradually becoming apparent.

This year, a large number of new cryptocurrency companies that break industry boundaries have emerged, drawing more people into this volatile market. Currently, over 250 public companies have begun hoarding cryptocurrencies—these digital assets exhibit price volatility characteristics similar to traditional investment products like stocks and bonds.

In 2024, Trump's former advisor Anthony Scaramucci attended the Bitcoin Conference in the UAE.

A wave of companies is launching innovative products to lower the barriers for incorporating cryptocurrencies into brokerage accounts and retirement financial plans. Meanwhile, industry executives are lobbying regulators to issue crypto tokens that mirror the stocks of public companies, aiming to create a stock trading market based on cryptocurrency technology.

This radical wave of innovation has already exposed numerous problems. Over the past two months, mainstream cryptocurrency prices have plummeted, leading companies heavily invested in crypto assets into a crisis. Other emerging projects have also raised alarms among economists and regulators, as market risks continue to accumulate.

The core issue causing widespread concern lies in the ongoing expansion of lending scales. As of this fall, public companies have been borrowing heavily to purchase cryptocurrencies; the scale of futures contracts held by investors targeting cryptocurrencies has surpassed $200 billion, with most of these trades relying on leveraged funds, which can yield massive profits but also hide the risk of liquidation.

Even more concerning is that a series of new initiatives in the cryptocurrency industry have deeply bound the crypto market to the stock market and other financial sectors. If a crisis erupts in the cryptocurrency market, the risks may transmit to the entire financial system, triggering a chain reaction.

"Today, the lines between speculation, gambling, and investment have become blurred." Timothy Massad, who served as the Assistant Secretary for Financial Stability at the U.S. Treasury after the 2008 financial crisis, stated, "This situation deeply worries me."

White House Press Secretary Karoline Leavitt responded that Trump's policies are "helping to make America the global center for cryptocurrency by promoting innovation and creating economic opportunities for all Americans."

Cryptocurrency industry executives argue that these emerging 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 that issues cryptocurrency investment products. "Our mission is to bring these investment opportunities to more people."

The rise of this wave of innovation is inseparable from the comprehensive loosening of the regulatory environment, marking the friendliest regulatory window for cryptocurrency companies. For many years, the U.S. Securities and Exchange Commission (SEC) has been at odds with the cryptocurrency industry; however, this January, the agency established a special task force for cryptocurrencies and has held talks with dozens of companies seeking regulatory support or product listing approvals.

An SEC spokesperson stated that the agency is committed to "ensuring that investors have sufficient information to make informed investment decisions."

SEC headquarters building in Washington, D.C.

It is noteworthy that many of these emerging companies are linked to the expanding cryptocurrency business empire of the Trump family, blurring the lines between business and government.

This summer, executives from World Liberty Financial, a cryptocurrency startup under Trump, announced their joining of the board of directors of the public company ALT5 Sigma. This company, originally focused on recycling, now plans to raise $1.5 billion to enter the cryptocurrency market.

Capital Frenzy: An Out-of-Control Crypto Gamble

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

Crypto Treasury Companies (DAT) refer to public companies whose core goal is to hoard cryptocurrencies. Data from cryptocurrency consulting firm Architect Partners shows that nearly half of these emerging companies focus on hoarding Bitcoin, the most well-known cryptocurrency, while dozens of others have announced plans to purchase non-mainstream coins like Dogecoin.

Number of crypto treasury companies established each month in 2025. Data source: Architect Partners, statistics as of December 16.

The operational model of these companies is often simple and crude: a group of executives identifies a niche company trading in the public market (such as a toy manufacturer), persuades it to pivot to a cryptocurrency hoarding business; then they reach an agreement with the company to raise hundreds of millions of dollars from high-net-worth investors, ultimately using the funds to purchase cryptocurrencies.

The core purpose is to allow more people to participate in cryptocurrency investments by issuing traditional stocks that mirror cryptocurrency prices. This strategy theoretically has considerable profit potential. Many investment funds and asset management firms have been hesitant to invest directly in cryptocurrencies due to the complex storage processes, high costs, and vulnerability to hacking.

Investing in crypto treasury companies is akin to outsourcing the logistics of storing cryptocurrencies. However, these companies also harbor significant risks: many were hastily established, and their management lacks experience in operating public companies. Data from Architect Partners indicates that these companies have collectively announced plans to borrow over $20 billion to purchase cryptocurrencies.

"Leverage is the culprit behind financial crises," warned Corey Frayer, a former cryptocurrency advisor at the SEC. "And the current market is generating massive leverage."

Some crypto treasury companies have fallen into operational difficulties or management crises, resulting in substantial losses for investors.

Public company Forward Industries transformed into a crypto treasury company and heavily invested in SOL. In September of this year, the company raised over $1.6 billion from private investors, with its stock price briefly soaring to nearly $40 per share.

Allan Teh, a Miami-based asset manager for a family office, invested $2.5 million in Forward Industries this year. "At the time, everyone thought this strategy was foolproof, and that cryptocurrency prices would continue to rise," Allan Teh recalled.

However, as the cryptocurrency market crashed, Forward Industries' stock price fell to $7 per share this month. The company announced plans to spend $1 billion on stock buybacks over the next two years, but this move failed to halt the stock's downward trend.

"The music has stopped, and the game is over. Now I'm starting to panic; can I get out unscathed?" Allan Teh has lost about $1.5 million, "How much will the losses from this investment ultimately reach?" Forward Industries declined to comment.

The proliferation of crypto treasury companies has raised alarms at the SEC. "Clearly, we are very concerned about this," SEC Chairman Paul Atkins stated in an interview at a cryptocurrency conference in Miami last month. "We are closely monitoring developments."

Behind this new cryptocurrency track is the strong support of the Trump family.

Founders of World Liberty Financial include Trump's son Eric Trump and Zach Witkoff.

In August of this year, World Liberty Financial announced that its founders (including President Trump's son Eric Trump) would join the board of ALT5 Sigma. This public company plans to hoard the WLFI cryptocurrency token issued by World Liberty Financial (Eric Trump currently holds the title of strategic advisor and board observer).

This collaboration seems to allow the Trump family to profit quickly. According to the revenue-sharing agreement published on the World Liberty Financial website, every time a WLFI token transaction occurs, the Trump family's business entities can take a cut.

Subsequently, ALT5 Sigma's business situation took a turn for the worse. The company disclosed in August that an executive from one of its subsidiaries had been convicted of money laundering in Rwanda, and the board is investigating other "undisclosed matters." Soon after, ALT5 Sigma announced the suspension of its CEO and terminated contracts with two other executives.

Since August, the company's stock price has plummeted by 85%. An ALT5 Sigma spokesperson stated that the company "remains confident about its future development."

Flash Crash Panic: A Trillion-Dollar Market Value Vanished Overnight

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

Under the influence of Trump's policies, the cryptocurrency market had been rising for most of this year. However, on October 10, the prices of Bitcoin, Ethereum, and dozens of other cryptocurrencies collectively crashed, resulting in a flash crash.

The immediate trigger for this crash was Trump's announcement of new tariffs on China, which caused severe shocks to the global economy. The root cause of the cryptocurrency market's heavy blow lies in the massive leverage 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 leveraged funds. Data from cryptocurrency data firm Galaxy Research shows that in the third quarter of this year, the global cryptocurrency lending scale grew by $20 billion in a single quarter, reaching a historic peak of $74 billion.

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

In July of this year, Coinbase launched a 10x leveraged cryptocurrency trading tool.

The flash crash in October, while not causing the same level of industry devastation as the bankruptcies of several large cryptocurrency companies in 2022, served as a wake-up call for the market, signaling the systemic risks lurking in the cryptocurrency sector.

The essence of leveraged trading is that when the market declines, losses can be magnified exponentially. Trading platforms will forcibly liquidate positions, selling off clients' collateral assets, a process that often exacerbates price declines.

Data from cryptocurrency data firm CoinGlass shows that on October 10, at least $19 billion worth of cryptocurrency leveraged trades were forcibly liquidated globally, affecting 1.6 million traders. This liquidation wave was primarily concentrated on trading platforms such as Binance, OKEx, and Bybit.

The crash triggered a surge in trading volume, causing technical failures on several major trading platforms, preventing traders from timely transferring funds. Coinbase stated it was aware that some users "experienced delays or system performance issues while trading."

Derek Bartron, a software developer from Tennessee and also a cryptocurrency investor, revealed that his Coinbase account was frozen during the flash crash. "I wanted to close my position and exit, but I had no way to do so," Derek Bartron said. "Coinbase effectively locked users' funds, and we could only watch helplessly as the value of our assets plummeted."

Derek Bartron stated that in the days following the flash crash, he lost about $50,000 in cryptocurrency assets, partly due to the inability to close positions in time to stop losses.

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 acknowledged that the trading platform "experienced technical failures due to a 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 night this summer, cryptocurrency entrepreneurs Chris Yin and Teddy Pornprinya, dressed in formal attire, appeared at the Kennedy Center in Washington for a grand black-tie dinner.

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

Chris Yin and Teddy Pornprinya's trip was to pave the way for their startup, Plume. This company is advancing a disruptive innovation plan, attempting to extend the underlying technology of cryptocurrencies to a broader financial field.

For months, Plume has been seeking permission from U.S. regulators to create an online trading platform that issues crypto tokens mirroring real-world assets, covering various entities such as public company stocks, farms, and oil wells.

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