Yesterday the Financial Times (FT) cited sources in reporting that Trump Media & Technology Group, the owner of the Truth Social app, plans to raise money to invest in Bitcoin. It aims to follow a similar model to Strategy (formerly MicroStrategy) involving raising $2 billion in capital and issuing $1 billion in convertible debt.

When the FT approached Trump Media its response was that “apparently the Financial Times has dumb writers listening to even dumber sources”. President Trump placed his 53% stake in Trump Media in a revocable trust controlled by Donald Trump Jr. shortly after his election as President for the second time.

Using convertible bonds as part of its financing, Strategy has bought 580,250 bitcoins valued at $63.6 billion at today’s price. It has outstanding debt of $8.2 billion and a market capitalization of $103.2 billion. That’s a very significant premium over the value of its bitcoin, compared to its market capitalization of $150 million before it started investing in bitcoin.

This gain has attracted other copycats to invest in bitcoin using a similar setup. Among them is the son of Commerce Secretary Howard Lutnick, who has secured backing from Tether and SoftBank for a Cantor special purpose acquisition company (SPAC).

A key feature is that hedge funds use the issued convertible bonds as an arbitrage trade. Some in the crypto sector worry that if Strategy’s play stops working, it could crash bitcoin and cryptocurrencies more broadly.

However, the Trump family’s crypto ventures present regulatory and ethical questions beyond the market risks facing other bitcoin investors.

Trump family crypto activities raise conflict of interest concerns

In line with these concerns, on Friday a group of Democrat Senators, including Chris Murphy and Elizabeth Warren, said they expect to see an amendment in the GENIUS Act for stablecoins that would prevent the President’s direct or indirect involvement in a stablecoin.

World Liberty Financial, in which the Trump family are majority shareholders, issued the USD1 stablecoin. It was used by a company chaired by the UAE’s national security adviser for a $2 billion transaction, creating a successful launch for the stablecoin.

Prior to his inauguration, the President issued the $TRUMP memecoin, which offered perks to large coin owners, such as attending a dinner with the President last week and a tour of the White House.

These activities have raised ethics concerns, particularly with many Democrats. Congressman French Hill, the Republican Chair of the House Financial Services Committee acknowledged that the controversy has made the crypto legislative process far more difficult on a topic that is substantially bipartisan.

Democrat Senator Gillibrand who has been a proponent of the GENIUS Act and is a lawyer, said she believes the $TRUMP memecoin is illegal. However, as far as stablecoins are concerned, the Trump family should comply with the laws like anyone else.

We conducted a vote in conjunction with two articles covering similar topics. Initially 75% of people viewed the Trump family activities as a conflict of interest, but the figure declined to 60% over time, with 33% saying it is not a conflict.