A common narrative if that Trump’s newly-launched memecoin, $TRUMP, is a conduit for bribery. Although I’m not a fan of crypto, this argument has never made much sense or has obvious flaws.
Noah Smith, in a viral article “Your memecoin is your slush fund”, writes:
Suppose you wanted to buy a favor from Donald Trump, and he wanted to let you buy a favor from him. How could you do it? You can’t just pay him a giant bribe — that’s illegal. Maybe you could pledge him a bunch of cash for his presidential campaign. But there are campaign finance laws that will get in your way, and even if you succeed, he can only use the money for his campaign, not to buy yachts or whatever else he might like to use the money for.
Instead, what you can do is to buy a bunch of TRUMP or MELANIA. When you buy one of those memecoins, you increase the demand for the memecoin. Its price then goes up. This makes Donald Trump richer, without any money actually having to change hands.
But this overlooks the major downsides or risks of using crypto for bribes:
1. Crypto transactions can be tracked on the blockchain. This includes Trump’s $TRUMP coin wallets, as well as transfers of $TRUMP between exchanges and to and from wallets. A huge purchase would be obvious to blockchain analysis firms, and would make the news. Said exchange could be reported to the authorities to have the identity of mystery the donor revealed and even prosecuted. This is the last thing you want when trying to break the law. Why would you want your illegal or quasi-illegal activity broadcast to the public, which is what a blockchain does.
Yes, a crypto exchange between two wallets is anonymous, but crypto does not just appear in wallets. It has to come from somewhere, like a centralized exchange, which can be subpoenaed.
For example, a whale who bet $25 million on Polymarket on Trump winning in 2024, was unmasked through blockchain transactions linking his multiple aliases on the site– Fredi9999, Theo4, PrincessCaro and Michie–to a Frenchman who called himself Théo. As he was not actually breaking the law, he faced no repercussions, nor was his real name uncovered. Had he been, this would have been a major lead that could have led to his arrest. It just goes to show how none of this is private. If Trump’s opposition wants to unmask his donors or follow the money trail, blockchain makes this considerably easier.
Noah continues:
Let’s think of a little example to see how this works. Suppose the price of TRUMP is $50. Then you buy $1M of it, driving the price up to $55 — a 10% increase. Through the magic of mark-to-market accounting, this means that Trump’s entire stake in TRUMP goes up by 10%. And since Trump himself owns almost all of TRUMP, this means he suddenly gets hundreds of millions or even billions of dollars richer on paper
But Trump cannot actually cash out without it being obvious on the blockchain, so what good does it do him? In trying to sell, this would be public and draw unwanted attention, and also cause the price of $TRUMP to plunge, as investors see Trump selling and lose confidence. This would negate the buying earlier by the donor. Trump is in bind where he has to hold his tokens to project the confidence that $TRUMP is a good investment.
Second, let’s suppose someone buys $1 million of $TRUMP and drives the price up 5%, but then someone else instantly comes along and sells $1 million of $TRUMP–maybe another whale who is looking for an opportunity to sell. Now the price is back to where it started. The donor has $1 million of $TRUMP tokens and nothing to show for it.
There are a better, more covert ways of sending money directly to Trump if one was so inclined, such as overbooking one of his hotels or resorts, bulk-buying Trump real estate courses or books that are intentionally undelivered, purchasing large quantities of casino chips at one of his many casinos but not actually playing them, and so on. Such transactions, being that they are private and not on a public ledger, cannot be audited by blockchain firms, nor the SEC.
Look how long it took despite the dogged determination by the media for a decade to uncover Trump’s finances. It finally took the guy who leaked Trump’s IRS records, who went to jail, for headway to be made, or other anonymous leakers.