Trump's Kleptocracy

A crypto scheme is lining the president's pockets while Americans feel anxious about the economy

Photo by Kanchanara on Unsplash

On April 23, an online announcement proclaimed: "The most EXCLUSIVE INVITATION in the World." The top 220 holders of the $TRUMP cryptocurrency, launched by the president on the eve of his second inauguration, would have a chance to "HAVE DINNER WITH PRESIDENT TRUMP."

In profiting from the presidency, Trump is adopting a form of government which autocrats pioneered in the 20th and 21st centuries: kleptocracy. Kleptocracy can take many forms, but most broadly it means a ruler who seeks personal gain at the expense of the governed. While the U.S. has lax money-in-politics regulations compared to other developed democracies, this is something entirely different: money going literally into the ruler's pockets. Kleptocracies are almost always in autocracies, as the checks and balances and rule of law in liberal democracies stymie corruption. However, Trump's party controls the legislative branch and he has moved to undermine cryptocurrency regulation at the Securities and Exchange Commission.

Trump's self-enrichment has come at the same time as the once-envied U.S. economy looks vulnerable because of Trump's trade war. These are different phenomena with the same root: a personalist style of rule coupled with a sense of impunity after two failed impeachments. 

In his first term, Trump was skeptical of crypto, now he is all for it. In a 2021 interview he said that it "seems like a scam." However, individuals with crypto interests poured millions into his campaign and crypto firms donated millions to his inauguration. On March 23, he posted, “I LOVE $TRUMP — SO COOL!!! The Greatest of them all!!!!!!!!!!!!!!!!” His endorsement instantly triggered a 10% rise in the price, but the dinner announcement a month later caused the value to rise by more than 50%. Judd Legum from the newsletter Popular Information explained how it enriches him:

An entity owned by Trump, Fight Fight Fight LLC, owns 80% of $TRUMP — about 800 million coins. Right now, those coins are "locked" and cannot be sold by Trump. But, beginning in mid-April, the coins will be unlocked in tranches, which would allow him to sell the coins for cash. Over the course of Trump's presidency, all 800 million coins will be unlocked. Even at $10 per coin, that is an $8 billion windfall.

Despite the fact that the value of $TRUMP has risen and fallen, NBC News reported that the president and his allies earned over $900,000 in two days in trading fees after the dinner was announced. Some enrichment appears to be coming from abroad: a $2 billion deal in a Trump-affiliated stablecoin by an investment fund backed by the United Arab Emirates raises a potential violation of the Constitution's Emoluments Clause, which states that federal officials may not accept gifts or compensation from foreign officials. 

Meanwhile, Trump's trade war has injected incredible uncertainty into the American economy, which on the eve of his inauguration was the strongest in the world. While the White House instituted a 90-day pause on the haphazard "liberation day" tariffs, he still has a 145 percent tariff on China. In the first quarter of 2025, U.S. GDP fell by 0.3 percent; this was the first registered drop since 2022, down from the 2.4 percent gain of the last quarter of 2024. (This data has a fair amount of noise as companies were stockpiling imports ahead of the April 2 tariff announcement.) The stock market recorded the worst beginning first 100 days of any presidential term since 1974; while it has rallied in recent days, it is down about 5 percent from Trump's inauguration. (A crypto crash could imperil the American economy too, as Annie Lowrey of the Atlantic has reported.) 

These huge tariffs, which Trump was restrained from implementing in his first term, will likely lead to increased economic precarity for Americans. Retail shortages for the back-to-school and Christmas shopping seasons are expected; in April, the U.S. Consumer Confidence Survey recorded its lowest figure since 2011. On April 30, Trump dismissed potential hardships from these tariffs by saying that children might "have two dolls instead of 30 dolls" for Christmas.

Despite brushing off consumer concerns, Trump remains sensitive about public opinion towards his handling of the economy. In a stunning turnabout from what voters saw as his greatest strength, a recent New York Times/Siena College survey showed that voters disapprove of his handling of the economy by a 55-43 margin. Earlier this week, when Punchbowl News reported that an Amazon subsidiary was considering showing the tariff price for consumers, Trump called Amazon CEO Jeff Bezos to complain. Amazon then ruled out the plan.

The Amazon incident coupled with the reversal of fortune for the economy shows that the business community's bet on Trump is failing. Even Elon Musk has seen his wealth drop by about a quarter. The people making money in this equation are Trump and his family.

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