Hope and Danger: How Crypto Became a Financial Minefield Under Trump

The arrival of the Trump administration brought unprecedented support to the cryptocurrency sector. However, the rapid growth and innovation of the industry also opened Pandora’s box of financial risks that could harm the entire economy.

The Rapid Transformation of Corporate Strategy: “Crypto Treasury” Fever

Since the summer, a new business model has erupted on Wall Street. Experts and investors have begun to pursue a strategy that is simple yet innovative: take a small public company, shift its focus to accumulating digital assets, and boost market appeal through crypto holdings.

Known as “Crypto Treasury Companies” or DAT, this model has spread quickly. According to data from crypto consulting organizations, this trend reflects a broader movement. Nearly 250 public companies across the United States have started to pursue strategic crypto accumulation. The number continues to increase each month.

Anthony Scaramucci, a former presidential advisor, is one of the personalities who saw the potential of this model. “Initially, it was very easy,” said Scaramucci about his first involvement in the strategy. His decision to become a strategic advisor to three companies quickly led to success — but it did not last.

Last fall, as market volatility increased, the stock prices of the companies Scaramucci advised plummeted sharply. The largest decline exceeded 80%, serving as an early warning sign for this aggressive strategy.

The Leverage Trap: How Large Liquidations Began

The real danger was not just falling prices — it was the structure of new financial products. Many crypto trading platforms introduced high-leverage tools allowing traders to amplify their bets up to 10 times. Over the year, global crypto lending reached a record-breaking $74 billion, increasing by $20 billion in just one quarter.

This system worked while the market was rising. But in October, when the country’s president announced new trading restrictions, the crypto market took a deep breath and fell. In one night, $19 billion worth of leveraged positions were liquidated worldwide, affecting 1.6 million traders.

The consequences were severe. Many major trading platforms experienced technical failures as volume surged dramatically. Some users faced frozen accounts and could not close positions in time. Derek Bartron, a software developer from Tennessee, said he lost nearly $50,000 due to delayed system responses. “It felt like our money was locked in the platform, and there was nothing we could do but watch it fall,” he said.

The Real Loss: Individual Stories Behind Market Collapse

Adopting the new crypto treasury model was not all winners. Allan Teh, an asset manager from Miami, invested $2.5 million in one of the pioneering crypto treasury companies heavily invested in Solana holdings. In September, the company reached $40 per share. By December, it had fallen to $7.

Allan Teh’s loss? Nearly $1.5 million. “In the past, everyone was convinced that this strategy had no losses,” he recalled. “Now I know I should have been more careful.”

His experience is not isolated. The volatility of digital assets has become difficult to predict, even for sophisticated investors. Our data shows that the pattern of rises and falls does not follow traditional market cycles.

The Regulatory Dilemma: Innovation vs. Risk

Amid market chaos, the US Securities and Exchange Commission faces a critical decision. The agency has formed a special task force for crypto and has begun collaborating with dozens of companies seeking regulatory clarity.

The SEC chairman’s position is revealing. While recognizing the potential of asset tokenization as a “major technological breakthrough,” other regulatory leaders have deeper concerns. The Assistant Secretary for Financial Stability from the previous administration directly warned: “The line between speculation, gambling, and investment is blurred. I have serious concerns.”

The timing of regulatory openness is convenient for industry players. Crypto entrepreneurs have gathered in high-level meetings and formal events in Washington, promoting an agenda to tokenize stocks, real estate, and other assets on blockchain technology.

The World Liberty Financial Connection: Business and Government Blur

One of the most notable developments is the deep connection between crypto businesses and government circles. World Liberty Financial, a startup with board observers from the presidential family, partnered with companies aiming to raise $1.5 billion for crypto initiatives.

This partnership triggered a cascade of problems. The partner company announced an executive facing investigations in a foreign jurisdiction, and the executives involved were collectively scrutinized. The stock price dropped 85%.

The publicly disclosed revenue-sharing arrangements reveal how private profit interests and public decision-making have become intertwined. Every transaction with partners generated fees that went to related business entities.

The Bigger Picture: Systemic Risk Looms

The interconnection of the crypto market with traditional finance has become increasingly dangerous. In 2022, the crypto crisis was isolated to the sector itself. Now, $200 billion in open interest in futures contracts uses leverage, and many public companies are heavily exposed.

Economists from the Federal Reserve warn that the wave of asset tokenization could spread crypto market risks throughout the financial system. “This could weaken policymakers’ ability to maintain stability,” their assessment states.

Ironically, this innovation is operating within a regulatory environment that the industry has already experienced as highly supportive. But support without adequate safeguards could lead to consequences even greater than those of 2008.

Reflection and Collapse: Insider Perspectives

Crypto industry leaders remain optimistic. “High risk, high reward,” say executives at investment product companies. For them, market volatility is not a warning — it’s an opportunity.

However, our investigation reveals different stories. Investors who joined early expected sustainable growth. What they saw were dramatic booms and sudden collapses with no logical pattern — just gambling mechanics wrapped in financial language.

The crypto revolution in managing U.S. Treasury assets has become a focal point of policy discussion. But the speed of adoption outpaces wisdom. The regulatory framework is still catching up, and gaps between innovation and oversight continue to grow.

The real question is not if there will be a next crypto crisis — but when.