Quick Take

A U.S. investigative panel is preparing to scrutinize potential conflicts of interest related to President Trump's recent crypto activities, according to Senate Democrat Richard Blumenthal's letters to Trump-associated crypto companies.

Blumenthal, who is the ranking member of the Senate Permanent Subcommittee on Investigations, sent letters on Tuesday to Bill Zanker of Fight Fight Fight LLC, the company behind the Official Trump memecoin, and Zach Witkoff of World Liberty Financial. The Subcommittee is housed within the Committee on Homeland Security and Government Affairs.

"The [Subcommittee] is conducting a preliminary inquiry into potential conflicts of interest and violations of the law from President Trump's cryptocurrency ventures," Blumenthal's letters said, with one referring to the TRUMP token and the other to World Liberty Financial. 

Blumenthal further stated that the actions of these companies could facilitate breaches of government ethics and aid transactions with foreign nationals that face federal prosecution, raising the possibility that the companies themselves may be violating federal law.

The Senate Democrat requested information and records related to the ownership and financial structure of the Trump-associated companies, as well as any efforts they have made to address potential conflicts of interest.

Conflict of interest

In his letter to Zanker, Blumenthal said TRUMP memecoin exhibited "pump and dump" price volatility and speculation that a small group of insiders profited significantly from its launch.

The senator also took issue with the "Dinner with Trump" promotion, which promised top token holders an evening with the president and was allegedly launched to boost token sales as interest began to wane.

"President Trump's financial entanglements to the TRUMP coin, as well as the attempted use of the White House to host competitions to prop up the value of TRUMP, represents an unprecedented, pay-to-play scheme to provide access to the Presidency to the highest bidder," Blumenthal wrote. 

The letter to Witkoff also claimed that the Trump family "reaped substantial financial benefits" from WLFI. It further stated that Trump's ties to WLFI created threats to national security, as the project invites foreign governments and "unscrupulous" individuals to join as investors.

Boycott

House and Senate Democrats have recently voiced concern about Trump's connections to crypto amid his strong push for pro-crypto legislation.

On Tuesday, House Democrats boycotted a planned hearing on the crypto industry following tensions over Trump's potential conflicts of interest. Democrats ended up holding a separate meeting on the topic later in the day.

Seemingly affected by the same issue, a group of nine Senate Democrats said last week that they could not support the stablecoin regulation bill, known as the Genius Act, unless stronger provisions on anti-money laundering and foreign issuers were added.

"I'm deeply concerned that the President launched his own stablecoin," top House Democrat Maxine Waters previously said. "I negotiated with my colleagues across the aisle for the past three years to create a safe regulatory framework for stablecoins. Now, we are pushing legislation through as quickly as possible without considering some of the key issues that will impact American investors and consumers."

Waters' comment refers to WLFI's USD1 stablecoin, which was unveiled in March.