Fools and Their Money

Nearly a million investors lost a combined $3.8 billion on a cryptocurrency token created by a sitting president of the United States.

Read that sentence again. Take whatever time you need.

The president in question hosted a private dinner at his golf club for the coin’s top holders — the ones who got in early, before the retail flood, and were positioned to profit from the presidential promotion. The people who lost the $3.8 billion were not at the dinner.

There are two distinct failures here and they belong to entirely different parties. It is important not to let them blur together, because they’re funny for different reasons.

The President Shouldn’t Have Done This

The United States has a blind trust requirement for a reason.

When a person becomes president, they are legally and ethically required to place their financial interests in a blind trust — a structure managed by an independent party, with the president having no knowledge of its contents. The reason is not complicated: a president who knows what they own will make decisions, consciously or not, that benefit what they own. The office is too powerful, and the temptation too predictable, for the arrangement to work any other way.

This requirement has been understood and observed, imperfectly but consistently, for decades. The principle behind it predates the formal requirement. You cannot hold the most powerful executive office in the world and simultaneously run a personal investment portfolio. The two roles are incompatible. The power of the presidency will always contaminate the investments, or the investments will always contaminate the exercise of the power, and usually both.

A cryptocurrency token is an investment. Creating one while holding the presidency is precisely what the blind trust requirement is designed to prevent, applied to a newer asset class. The fact that crypto falls outside SEC jurisdiction does not create an ethical exemption. Regulatory gaps are not moral permissions. “The SEC doesn’t regulate this” is not the same as “the president is allowed to do this.” The ethical problem — using the office to generate personal financial gain — is identical regardless of whether the instrument is a stock, a bond, a real estate deal, or a coin with your name on it.

The private dinner for top holders is the tell. That is not a currency. A currency does not come with a golf club dinner for its best customers. That is a loyalty program with a pump mechanism — the presidential brand creating demand, insiders positioned before the demand arrives, retail investors absorbing the exit.

This was always going to end this way. The structure guaranteed it.

The Buyers Shouldn’t Have Done This Either

And yet.

Nearly a million people looked at a cryptocurrency token created by a sitting president, decided it was a sound financial decision, and invested meaningful money. Not a speculative flyer — meaningful money, enough that the collective loss comes to $3.8 billion.

A speculative flyer on a famous name is one thing. Throw fifty dollars at the TRUMP coin the way you’d throw fifty dollars at a lottery ticket — for the story, for the long shot, because you have fifty dollars you’d spend on something dumber anyway. That’s a rational use of money you can afford to lose on something you know is probably worthless.

Meaningful investment is different. Meaningful investment is a decision you make with money that matters, based on some analysis of what it’s worth and what it might return. Applying that framework to a meme coin created by a sitting president requires a suspension of judgment that is genuinely difficult to explain charitably.

The information asymmetry was not hidden. The insiders got a golf club dinner. The mechanism — presidential promotion, retail flood, insider exit — is the oldest structure in financial fraud. It did not require sophisticated analysis to identify. It required only the willingness to ask who was positioned before the announcement and what they were going to do after it.

A fool and his money are soon parted. The proverb is old because the situation is old. The specific fool here handed it to a president, which adds a dimension of civic absurdity that history will find instructive.

What This Actually Is

The regulatory gap is real. Crypto’s status outside SEC jurisdiction is a genuine policy problem that Congress has repeatedly failed to resolve. The absence of a clear framework creates exactly this kind of situation: conduct that would be obviously illegal in regulated markets proceeds in the gap, and the people who get hurt have no recourse because the rules that would have protected them don’t technically apply.

Closing the gap matters. The president’s conduct warrants the conversation about whether the blind trust requirement needs explicit statutory extension to digital assets. These are legitimate policy responses to a legitimate problem.

But the policy conversation should not obscure the simpler point: a sitting president used the office to promote a personal financial instrument, structured it so insiders profited before the retail flood arrived, hosted a dinner for the insiders at his own property, and nearly a million people handed him their money anyway.

The presidency is not a brand licensing operation. Crypto’s regulatory status is not an ethical permission slip. And the people who lost the $3.8 billion were warned — not by the SEC, not by a regulator, not by a prospectus — but by the structure of the thing itself, which was visible to anyone willing to look at it.

— J.P. Howlett

Related: Tehran Takes Flight — what it looks like when the people most affected by power are the last ones consulted about how it’s used.

Related: Two Chinas, Two Americas — the same bilateral condition: the people who make the decision and the people who pay for it are rarely the same people.