As the crypto industry continues to jockey for mass adoption and prominence in the second Trump administration, this FAQ memo articulates: crypto’s role in facilitating illicit activity; the industry’s false promise of financial inclusion; the dire environmental impacts of crypto mining; crypto proponents’ ongoing disregard for the rule of law; and the industry’s agenda to buy influence and power in Washington.
How has cryptocurrency facilitated illicit activity?
Cryptocurrencies are often used for illicit financial activity, including scams, fraud, drug-trafficking and ransomware attacks. In 2023, $5.6 billion was directly lost to crypto scams, accounting for nearly half of all financial fraud losses recorded by the FBI that year. Crypto’s role in ransomware is significant because Bitcoin is the go-to for extortion payments in cyberattacks. Crucial public infrastructure, like local schools and hospital systems, have become frequent victims of ransomware attacks. In response, schools and hospitals devote larger portions of their budgets toward expensive cybersecurity defense systems that offer minimal return on investment.
Does cryptocurrency truly provide financial inclusion?
No. Despite crypto’s claims of being more inclusive than traditional finance, it fails to address the real needs of financially overlooked communities. Instead, crypto companies deploy many of the same predatory tactics seen in traditional finance, like charging excessive and often undisclosed junk fees.
And that’s to say nothing of crypto’s “ponzinomics,” a reality industry executives like Sam Bankman-Fried (SBF) have openly acknowledged. Insider trading, wash trading, and other forms of market manipulation prop up a fundamentally unstable asset class and lure vulnerable investors into the con game. When markets crash, as they often do, the already vulnerable communities crypto claims to empower end up holding the bag.
What are the environmental impacts of cryptocurrency?
Crypto mining, the process of verifying transactions within certain blockchain networks, is highly energy-intensive. In 2023, U.S. crypto mining consumed between 0.6% and 2.3% of the nation’s total electricity—equivalent to powering the entire states like Utah and Texas. Such high energy demands are linked to damaged electric grids, increased carbon emissions, and environmental degradation from the mining industry’s over reliance on fossil fuels and massive water and land usage.
What is the crypto industry’s political agenda?
To guarantee ongoing returns and an exit runway for early adopters by incorporating itself into traditional financial markets. In doing so, crypto platforms could secure “too big to fail” protection from federal regulators fearful that a cryptocurrency collapse leading to broader financial devastation.
How much money does the cryptocurrency industry spend on political influence?
Hundreds of millions of dollars. In 2024, the cryptocurrency industry SuperPAC Fairshake raised over $227 million and spent over $172 million; a massive increase from the $93 million spent by FTX and SBF in 2022 and nearly half of all industry spending on the 2024 election cycle. This spending has helped the crypto industry secure favorable regulatory decisions and strong political allies in Congress and the executive branch, especially under Trump.
Are cryptocurrency firms breaking the law?
More often than not, yes and knowingly doing so. Yet, real-time admissions of guilt haven’t stopped crypto companies from playing victim and turning to the courts to circumvent financial regulations, particularly existing securities law. This non-compliance-through-litigation approach however, hasn’t been all that successful. The SEC either won or successfully settled 95 of the 116 crypto lawsuits it filed since 2019. When examining the agency’s performance against the more than 260 crypto companies and promoters named in these suits, the SEC boasts a win rate upwards of 95 percent.
Unfortunately, the current Republican-led SEC has decided to reverse course, dropping the agency’s case against Coinbase and pausing the cases against Ripple and Binance. It is definitely concerning that expenditures on elections might insulate the industry from legal accountability for law breaking.