Crypto & Fintech

By Patrick Woodall, Managing Director, Americans for Financial Reform Education Fund and John Foti, Deputy Executive Director and Legislative Director, Americans for Tax Fairness 

President Trump is attempting to give himself a get out of tax jail free card: the Trump Justice Department recently settled an IRS case brought by Trump that gives him, his businesses, and his family (and their businesses) tax amnesty. His family’s crypto businesses—fueled by self-dealing, unethical conduct, and conflicts of interest—have generated billions of dollars since the inauguration. If the settlement stands, his family’s crypto business empire could be shielded from paying taxes. 

The Trump crypto grift makes the Teapot Dome scandal look like, well, a teapot. Trump hosted galas for people who bought his worthless memecoins. He pardoned crypto criminals and halted prosecution of those accused of money laundering and market manipulation. His family’s World Liberty Financial crypto company secretly took a $500 million investment from the United Arab Emirates—from a fund directed by the spy sheikh who runs the UAE’s intelligence service. The UAE then used the Trump-branded crypto stablecoin to take a $2 billion stake in the crypto platform Binance (itself banned in the U.S. because of persistent money laundering).  

The President and these allies are also aggressively pushing industry-crafted legislation (the CLARITY Act) that would give a federal seal of approval for the industry’s endemic ripoffs and put people and our whole economy at risk. The legislation locks in the crypto Wild West and waives the basic protections and responsibilities that other financial companies must follow. This will be immensely profitable for the crypto billionaires—including Trump. Simultaneously, the crypto industry is pressing for special crypto tax breaks. These emerging crypto tax frameworks give lavish tax giveaways to industry at significant costs to taxpayers. 

Trump’s suit against the IRS was for leaking his tax records. The suit itself—where Trump was both the plaintiff and the defendant—highlights the profound conflicts when a president’s business interests crash into the public interest. The IRS’s own analysis suggested that the case should be dismissed. Last week, the Trump administration unsurprisingly settled the Trump lawsuit in Trump’s favor. (It appears that the proposed $1.8 billion slush fund fund for Trump supporters—including the January 6 insurrectionists—has been at least temporarily derailed, but the president has not given up). 

The settlement also delivered an unprecedented promise to protect the president, his family, and his businesses from IRS review and audit of tax filings. The settlement addendum states that the IRS is “forever barred and precluded” from bringing any tax case against the Trump family or its businesses over any current or potentially pending claims or those that “arise out of lawfare and/or weaponization.” The language suggests permanent tax immunity but the Justice Department reportedly promised it only applies through the date of the settlement. 

The legality of these tax immunity provisions is highly dubious. But legal challenges may not prevail—certainly not  swiftly. The current terms grant the Trump family crypto ventures some shelter from IRS oversight, potentially enabling them to obscure their earnings, including crypto-generated profit. 

While gaming the tax code for personal gain is not new—the ultra wealthy already use loopholes to evade paying their fair share—securing tax amnesty is a brazen new layer of grift. Trump paid zero taxes in 10 of the 15 years prior to his first election and his tax rate during his first term amounted to about 10 percent of his net income—a far lower rate than firefighters and teachers pay. Trump’s One Big Brutal Bill gave massive tax breaks to the wealthy and the administration’s severe cuts to IRS enforcement already gives a green light to tax evasion by the super rich, according to the NYU Tax Center. And there has been a rollback of crypto tax oversight, encouraging crypto tax scofflaws.

The Trump tax settlement is just the latest eye-popping crypto conflict of interest. Federal financial regulators are unlikely to enforce investor protection, market manipulation, insider trading, or money laundering laws against the Trump crypto business empire—or any other firm that trades Trump-branded crypto tokens. The immunity deal could undermine the IRS’ ability or willingness to audit or enforce the tax code against Trump family crypto ventures. This could leave these companies free to pay no taxes whatsoever—on their own profits or the profits of their customers. 

The administration’s sprawling crypto ethical lapses fundamentally degrade U.S. democracy. Trump behaves as if the entire architecture of the federal government should be twisted to enrich the First Family. But the president is not above the law. He must serve the nation and the Constitution before his own crypto profiteering.