Tag: corruption
Crypto Is A Criminal Enterprise That Now Controls Our Government

Crypto Is A Criminal Enterprise That Now Controls Our Government

I spent my very early years in Utica, New York. I was too young to know anything about the city’s reputation — I left when I was 8 — but I would later learn that it was known at the time as “Crime City,” because it was reportedly controlled by the Mob.

Stories of towns infiltrated by organized crime or ruled by blatantly corrupt politicians used to be fairly common. These days you hear tales of blatant personal corruption at the local level less often.

But who could have imagined raw corruption determining policy for the United States as a whole?

Unless there’s a sudden outbreak of conscience and rationality on Capitol Hill, Congress is about to pass, with (alas) wide bipartisan support, the GENIUS Act, which will legitimize and normalize “stablecoins” — cryptocurrency tokens that, unlike the original tokens such as Bitcoin and its imitators, are supposed to be protected against wild fluctuations in their purchasing power, because they’re backed by conventional assets like Treasury bills.

I’ll talk in a minute about why encouraging stablecoins is such a bad idea. But first let’s talk about crypto in general.

Crypto’s early enthusiasts may well have been idealists, imagining that they could create something that was better and safer than traditional money. But as the years have gone by — Bitcoin was introduced in 2009! — crypto keeps failing to find legitimate uses. There is, to a first approximation, nothing you can legally buy with crypto assets except other crypto assets.

The journalist Zeke Faux, who wrote “Number Go Up,” a portrait of the crypto industry, went around the world both studying cryptocurrencies and trying, when he could, to use them. In the end, he wrote, “Traveling around the world investigating crypto had given me a new appreciation for my Visa card.”

So why do ordinary people keep buying crypto? Part of the answer is intense marketing; as I mentioned in a recent post, my Venmo app (which is actually useful) is constantly trying to sell me crypto. But the most compelling explanation why people buy crypto is that there is a clear affinity between the psychology of buying crypto and the psychology of gambling. Retail crypto looks, in particular, a lot like the “numbers racket,” which siphoned millions of dollars from generations of working-class Americans until it was largely supplanted by state lotteries.

The numbers racket was illegal, but flourished anyway because the criminal organizations paid off police and politicians.

But they were pikers by today’s standards. According to Public Citizen, crypto companies accounted for almost half of all corporate spending during the 2024 election. Donald Trump and his family have made billions off the $Trump and $Melania “meme coins,” but I wouldn’t be surprised to learn that other politicians have also been the beneficiaries of crypto largesse.

And what the crypto industry wants out of today’s politicians, above all, is legislation that gives a veneer of legitimacy to stablecoins like Tether.

What is a stablecoin? It’s a digital token like Bitcoin — that is, an asset that “belongs” to whoever has the secret numerical key that unlocks it. But unlike Bitcoin, whose value in dollars fluctuates wildly day to day, a stablecoin is supposed to retain a fixed value in dollars. The stablecoin issuer maintains that stability by standing ready to buy its tokens back, holding reserves of conventional assets like Treasury bills for that purpose.

One way to think about this is that stablecoin issuers are like banks back in the days before the Civil War, when gold and silver coins were the only official forms of money. Many banks issued paper currency, which they promised to redeem for gold and silver coins on demand. Similarly, stablecoin firms issue tokens that they promise to redeem for dollars.

Antebellum banks that issued their own notes served a useful function, because the federal government wasn’t yet issuing its own paper currency. So bank notes played an important role in ordinary, legitimate commerce. For example, the $10 “Dixie” notes issued by the Citizens Bank of Louisiana (they were printed in French on one side) circulated widely across the lower Mississippi. Yet some of these early, unregulated banks were “wildcat banks”: banks that were specifically set up to defraud anyone foolish enough to accept their bank notes as payment.

So like antebellum bank notes, which were privately issued currencies supported by the claim that they were backed by gold and silver, stablecoins are privately issued tokens supported by the claim that they are backed by dollars. Unlike antebellum bank notes, however, stablecoins don’t serve any clearly useful function. They can’t be used to make ordinary purchases, and there’s nothing you can do with them that can’t be done more cheaply and more easily with debit cards, Venmo, Zelle, wire transfers etc. That is, why not just use dollars instead of tokens that are supposedly backed by dollars?

The answer to that question is that the ownership and disposition of stablecoins, unlike the ownership and distribution of bank deposits, is anonymous. This is a highly valuable feature for those who want to engage in money laundering, extortion, purchase of illegal drugs, and so on. In other words, the only economic reason for stablecoins is to facilitate criminal activity.

Do the politicians backing the GENIUS Act not understand this? Some of them probably do. As for the rest, well, it’s difficult to get someone to understand something when their campaign contributions and, in some cases, their personal wealth depends on their not understanding it.

But wait, there’s more. As I’ve already explained, stablecoin issuers are teched-up versions of antebellum banks, which were for the most part unregulated and, when they failed, provided no safety net for people who placed their money in their care (or accepted their notes.) As a result of this lack of regulation, the antebellum banking system repeatedly experienced “panics” — mass runs on banks perceived as risky.

Today, however, the federal government is deeply involved in banking, for very good reasons. After the devastating bank runs of the 1930s, in particular, officials realized that they needed to guarantee the value of deposits via the FDIC, while at the same time requiring banks to limit the kinds of risks they take. The goal was to limit the risk of financial crisis. While we did have a nasty crisis in 2008, that mostly involved “shadow banks” that evaded precautionary regulation. And stablecoins are, among other things, a new kind of shadow bank.

Recognizing that they could suffer the equivalent of self-fulfilling bank runs, the biggest stablecoin issuers are trying to reassure holders of their solvency by accumulating large reserves of U.S. government debt. But the flip side of this is that a run on stablecoins could turn into a run on U.S. government debt! That is, if the owners of stablecoins were to rush to convert their holdings into dollars, this would force stablecoin issuers into a fire sale of U.S. Treasury bills, driving up interest rates.

The fundamental point is that the growth and legitimation of stablecoins poses new risks to overall financial stability — all in the name of making it easier for criminals to do their business.

It's an amazing, depressing story, one that many readers may find hard to accept. But the truth is that when it comes to crypto (and other issues, but I’ll talk about them another day), Washington has become Utica on the Potomac: A town that, if not entirely controlled by the digital Mob, has at least been largely bought and paid for.

Paul Krugman is a Nobel Prize-winning economist and former professor at MIT and Princeton who now teaches at the City University of New York's Graduate Center. From 2000 to 2024, he wrote a column for The New York Times. Please consider subscribing to his Substack, where he now posts almost every day.

Reprinted with permission from Substack.

Adam Schiff

Saying Trump Issues 'An Invitation To Corruption,' Schiff Promises Hearings

Sen. Adam Schiff (D-CA.) outlined how meticulously President Donald Trump has cultivated the potential for corruption in and around the Oval Office.

“There is a culture of impunity in the White House,” Schiff told MSNBC anchor Nicolle Wallace on Thursday. “They basically have defanged the justice department of any meaningful oversight by installing (Trump’s) criminal defense lawyers to run that department. They fired the truly independent inspector generals. They've done away with all the safeguards. So, in that environment, you have these people of very dubious morals who are essentially told 'there's no one watching. You can do whatever you want. No one's going to hold you accountable.' An invitation to corruption.

Trump appointed his legal defense lawyer Todd Blanche, from his hush money criminal trial, to serve as the second-highest ranking Justice Department official. In March, he also fired at least 20 leaders of federal offices created by Congress to hold administrations accountable.

Schiff also warned that, unlike past administration, the modern Republican Party is beholden to Trump. All but five Republicans voted in favor of an effort to dismiss Donald Trump’s second impeachment trial for “incitement of insurrection” a mere 20 days after Trump led the deadly Jan. 6 Capitol siege.

“Republicans didn't want to investigate Russia’s interference in our election. They didn't want to investigate the president's effort to extort [Ukranian President Volodymyr] Zelensky into helping him in the next election.”

Instead, it fell to Democrats to conduct investigations as a minority, and Schiff said that’s how it will go again this year.

“[T] his is what we're going to have to do now,” Schiff said. “We're likewise seeing people step forward. I did a hearing a few days ago with Rep. Jamie Raskin, where we had witnesses who both quit or were fired at the Justice Department because they saw corrupt things going on that they would not participate in, and I think that hearing was powerful. We need to do a lot more of that.”

“We're not without our tools, even in the minority,” he added.

Reprinted with permission from Alternet.

Trump Family Wants A Piece Of Shady Binance Crypto Grift

Trump Family Wants A Piece Of Shady Binance Crypto Grift

Trump family representatives have been in discussions to take a financial stake in the U.S. arm of crypto exchange Binance, whose founder served four months in prison for money laundering.

Binance, along with former CEO Changpeng Zhao, pleaded guilty to charges of money laundering, unlicensed money transmitting, and sanctions violations in 2023.

A deal with the Trump family would allow the previously banned company to return to the United States.

Billionaire New York real estate developer and Trump’s Middle East envoy Steve Witkoff has reportedly been involved in the talks with Binance.

This is just the latest example of President Donald Trump’s willingness to align himself with the shady—and often illegal—crypto world. Trump’s billionaires club is filled with tech bros who have both made and been floated by considerable amounts of money in the crypto space.

Trump has seen how much more lucrative a grift of the barely policed crypto world is in comparison to previous ventures, like selling shiny gold sneakers.

Trump launched his own meme coin $TRUMP shortly after inauguration in a clear money grab, pulling in millions while exploiting hundreds of thousands of suckers. But more importantly it was a naked pay-to-play scam, allowing foreign agents and fellow grifters to curry favor with the president—like Tron founder Justin Sun, who was facing a civil fraud case started under the Biden administration.

After Sun “invested” tens of millions into Trump’s meme coin, he was rewarded by the U.S. Securities and Exchange Commission cutting a deal and dropping the case.

As the Trump family continues talks with Binance, the potential investment—and whether or not it would include one of Trump’s patented pardons—remains to be seen.

Reprinted with permission from Daily Kos

Under Trump Regime, America Is Wide Open For Corruption

Under Trump Regime, America Is Wide Open For Corruption

Is America open for corruption now? Unabashedly? Nakedly? Are we tossing aside not just our hard-won victories over infectious diseases but also the more than hundred-year battle against fraud, bribery and graft?

Honest, clean government doesn't follow automatically from democracy. Before civil service reform, the wealthy or well-connected were able to line their pockets by bribing public officials. The Credit Mobilier scandal, which featured bribes to a dozen congressmen paid in the 1860s by railroad executives, was just one example of a widespread plague.

But just as we were able to defeat smallpox, measles and diphtheria with sensible public health initiatives, Americans were able to beat back public corruption. Reformers, calling themselves Mugwumps and Progressives, animated by opposition to the spoils system, passed laws demanding transparency, requiring a nonpartisan civil service, and paying salaries to public servants so that they would no longer have to rely on a percentage of fees or taxes collected.

And what do you know, it worked! American public administration became much more efficient, the nation became a better place in which to conduct business, and — one almost blushes to extol this in our era — there was a net increase in justice and fairness.

Public corruption is never completely vanquished of course. Look no further than former Democratic Sen. Bob Menendez's gold bars and hundreds of thousands of dollars in cash in his bedroom. (He claimed not to trust banks.) Clean government requires constant vigilance from the police, prosecutors and the courts. It requires a consensus in society that this is crucial, and journalists on the lookout for tales of venality and malversation. There are also tons of civil society groups dedicated to this. They're known affectionately as "goo-goos" for "good government guys." They do more than guard against corruption; they're also committed to good policy and implementation. And all of that helps to make the United States a first world nation.

Or it did.

In his first month back in the White House, Donald Trump is yanking the rug out from under open, honest government and signaling a complete reversal to a time of rank corruption. There may be no historical analogue to the level of corruption Trump is inaugurating.

One reversal is even conveniently labeled. Trump has issued an executive order to Attorney General Pam Bondi to cease enforcing the Foreign Corrupt Practices Act, which forbids American companies from paying bribes abroad. Correspondingly, he has shut down the units in the FBI, State Department and the Department of Homeland Security that were thwarting foreign influence operations in American elections.

Trump has fired 17 inspectors general from federal agencies. Those IGs provide independent oversight and serve to unmask government abuses. If the DOGE project were even remotely sincere, Trump would be adding and empowering more IGs, not firing them. No, the presence of truly independent watchdogs is a threat to the Trumpist project, which is permitting agencies to be used to reward friends and punish foes.

That reward/punish metric was the operating principle in the case of New York City Mayor Eric Adams. Toss out the principle of blind justice (so antique) and bring on the distortion of the prosecutorial power for nakedly political ends. Pause the Adams prosecution in return for assistance in rounding up illegal immigrants, but leave the sword dangling over the mayor's head (the government asked that the criminal case be dismissed "without prejudice," meaning that it could be reopened at a later date) to compel total obedience.

The Office of Special Counsel was created in the post-Watergate era to oversee whistleblower complaints, prevent prohibited personnel practices and enforce the Hatch Act, among other duties. (Despite the similar name, it is entirely separate from special counsels, like Jack Smith, who are appointed by the Justice Department.) Trump attempted to fire the current special counsel, Hampton Dellinger, but his firing has been stayed by a court, for now. The director of the public integrity section of the Justice Department was not so fortunate. He was reassigned, and three "anti-kleptocracy" units crucial to targeting the assets of foreign corrupt actors in several countries were shut down.

It is all friends/enemies now. Trump just ended a database on police misconduct. Police misconduct, after all, may be useful in the coming months and years.

Trump extended his personal reach to Brazil, where fellow coup plotter Jair Bolsonaro is on trial for siccing a mob on his own capital. Trump's company is suing the judge in the case, accusing him of illegally censoring right-wing voices. The unmistakable signal: We like coup plotters as long as they're Trump pals. A fortiori the Jan. 6 insurrectionists Trump pardoned en masse. Not so much as a nod toward making individual evaluations.

Trump pardoned Rod Blagojevich, withdrew felony charges against Rep. Jeffrey Fortenberry (R-NE) and had the DOJ attempt to drop criminal charges against Rep. Andy Ogles (R-TN).

And it's hard to know where even to begin to describe the walking conflict of interest that is Elon Musk, who, with no transparency, is reportedly terminating all manner of government agencies and offices, including many that touch on his business interests.

Trump's America no longer fights the old foes of good government. It has hung a giant neon sign on our door proclaiming Open for Corruption.

Mona Charen is policy editor of The Bulwark and host of the "Beg to Differ" podcast. Her new book, Hard Right: The GOP's Drift Toward Extremism, is available now.

Reprinted with permission from Creators.


Shop our Store

Headlines

Editor's Blog

Corona Virus

Trending

World