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David Sacks Responds to U.S. Crypto Reserve Conflict of Interest Allegations

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President Trump’s announcement on Sunday that he plans to establish a federal cryptocurrency reserve sent digital asset markets soaring. However, it also reignited concerns over potential conflicts of interest, this time involving David Sacks, the venture capitalist who serves as Trump’s crypto and artificial intelligence czar.

The president said on Sunday that a future U.S. crypto reserve will hold tokens including XRP, SOL, ADA, ETH and BTC. ADA soared by 60% within minutes of the announcement, and all of the other listed tokens experienced double-digit price bumps.

The market response immediately drew attention to the range of ways in which Trump and his inner circle could stand to benefit from his crypto policies.

Among the most obvious potential beneficiaries was Sacks, whose venture firm, Craft Ventures, is invested in Bitwise—a crypto index fund manager with holdings in all the digital tokens named in Trump’s statement—and other crypto startups. In the past, Sacks also disclosed personal investments in some of the tokens listed by the president.

Following Sunday’s announcement, Sacks stated on X, “I sold all my cryptocurrency (including BTC, ETH, and SOL) prior to the start of the administration.» In response to a community note on X about Craft Ventures’ investment in Bitwise, Sacks added, «I had a $74k position in the Bitwise ETF, which I sold on January 22. I do not have ‘large indirect holdings.'»

It is unclear if Sacks retains a direct stake in Bitwise through Craft Ventures, where he remains a partner. Sacks led Craft Ventures’ 2017 seed investment into Bitwise, and the venture firm still lists Bitwise in its portfolio.

A representative for Craft Ventures declined to share anything beyond Sacks’ X posts. The firm told the Financial Times on Sunday that it still has stakes in some cryptocurrency companies.

Bitwise operates a series of exchange-traded funds (ETFs), including a «10 Crypto Index Fund,» which contains all of the tokens slated for Trump’s reserve. The firm has also submitted applications to operate ETFs for XRP and SOL, among other tokens. If these applications are approved, Bitwise would benefit from heightened interest in the assets if they’re included in a U.S. crypto reserve.

Bitwise did not respond to a request for comment.

Courting crypto

Sacks will host a first-of-its-kind White House cryptocurrency summit on Friday, during which more details about the administration’s plans for the industry are expected to emerge.

Trump has worked hard over the past year to court supporters in the cryptocurrency industry — one of the largest corporate donor groups to the 2024 election. While the president’s anti-regulatory posture has been welcomed by some in the industry, even some of his pro-crypto supporters have begun to fear that highlighting particularly volatile assets like cardano (ADA) and XRP (XRP) risks delegitimizing the sector.

The president’s own cryptocurrency businesses have added to concerns around potential conflicts of interest.

In January, Trump launched a meme coin, TRUMP, on the Solana blockchain — the network behind the SOL token. Meanwhile, World Liberty Financial (WLFI) — a decentralized finance venture backed by the president and his sons — has built its own treasury of crypto assets. The treasury includes some of the same tokens listed for inclusion in the federal crypto reserve, meaning any boost in price could ostensibly benefit Trump directly.

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Bitcoin Plunges Below $84K after $115B Sell-Off Wipes Out Weekly Gains

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Hopes for the crypto recovery to continue vanished on Friday, as a market-wide rout erased virtually all gains from earlier this week.

Bitcoin (BTC), hovering just below $88,000 a day ago, tumbled to $83,800 recently and is down 3.8% over the past 24 hours. The broad-market benchmark CoinDesk 20 Index declined 5.7%, with native cryptos Avalanche (AVAX), Polygon (POL), Near (NEAR), and Uniswap (UNI) all nursing almost 10% losses during the same period. Today’s sell-off wiped out $115 billion of the total market value of cryptocurrencies, TradingView data shows.

Ethereum’s ether (ETH) declined over 6% to extend its downtrend against BTC, falling to its weakest relative price to the largest cryptocurrency since May 2020. Underscoring the bearish trend, spot ETH exchange-traded funds failed to attract any net inflows since early March, while their BTC counterparts saw over $1 billion of inflows in the past two weeks, according to Farside Investors data.

The ugly crypto price action coincided with U.S. stocks selling off during the day on poor economic data, with the S&P 500 and the tech-heavy Nasdaq index down 2% and 2.8%, respectively. Crypto-focused stocks also suffered heavy losses: Strategy (MSTR), the largest corporate BTC holder, closed the day 10% lower, while crypto exchange Coinbase (COIN) dropped 7.7%.

The February PCE inflation report, released this morning, showed a 2.5% year-over-year increase in the price index, with core inflation at 2.8%, slightly above expectations. Consumer spending showed a modest 0.4% rise, though inflation-adjusted figures indicate minimal growth, suggesting potential headwinds for economic growth. The Federal Reserve of Atlanta’s GDPNow model now projects the U.S. economy to contract 2.8% in the first quarter, 0.5% adjusted for gold imports and exports, spurring stagflationary fears.

The implementation of broad-scale U.S. tariffs next week—the so-called «Liberation Day’ on April 2, as the Trump administration refers to—also compounded investor concerns across markets.

CME gapfill or another leg lower?

Bitcoin has closely correlated with the Nasdaq lately, so U.S. equities rolling over for another leg down could weigh on the broader crypto market. However, on a more optimistic note, today’s decline could be BTC filling the price gap at around $84,000-$85,000 between Monday’s open and the previous week’s close on the Chicago Mercantile Exchange futures market. Historically, BTC usually revisited similar CME gaps and a drop to $84,000 was in the cards, CoinDesk senior analyst James Van Straten noted earlier this week.

Read more: Bitcoin’s Weekend Surge Forms Another CME Gap, Signaling Possible Drop Back

«At this stage it’s difficult to determine if we have already seen a bottom in 2025,» Joel Kruger, market strategist at LMAX Group, said in a market note. Despite the on-going correction, he noted several positive trends such as crypto-friendly policies in the U.S. and more traditional financial firms entering the industry or expanding crypto offerings, which could bode well for digital assets later in the year.

«Any additional setbacks that we might see should be exceptionally well supported into the $70-75k area,» he added.

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President Trump Pardons Arthur Hayes, 2 Other BitMEX Co-Founders

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Arthur Hayes, the former CEO of crypto exchange BitMEX, has been granted a pardon by U.S. President Donald Trump, a White House official confirmed Friday.

Trump also pardoned Hayes’ co-founders at BitMEX, Samuel Reed and Benjamin Delo. CNBC first reported the pardons.

In 2020, the U.S. Department of Justice (DOJ) brought charges against BitMEX, its three co-founders, and its first employee, Gregory Dwyer, accusing them of violating the Bank Secrecy Act (BSA). Prosecutors alleged BitMEX advertised itself as a place where customers could use its platform virtually anonymously, without providing basic know-your-customer (KYC) information. All four individuals eventually pleaded guilty and were sentenced to fines and probationary sentences. The exchange itself pleaded guilty to violating the BSA last year.

Hayes faced two years of probation; Delo spent 30 months and Reed 18 months. Dwyer got 12 months of probation.

In a statement, Delo said he and his colleagues had been «wrongfully targeted.»

«This full and unconditional pardon by President Trump is a vindication of the position we have always held — that BitMEX, my co-founders and I should never have been charged with a criminal offense through an obscure, antiquated law,» he said. «As the most successful crypto exchange of its kind, we were wrongfully made to serve as an example, sacrificed for political reasons and used to send inconsistent regulatory signals. I’m sincerely grateful to the President for granting this pardon to me and my co-founders.»

The Commodity Futures Trading Commission ordered BitMEX to pay $100 million for violating the Commodity Exchange Act and other CFTC regulations in 2021, separately from its DOJ settlements.

Attorneys representing Hayes, Delo and Reed did not immediately return requests for comment.

The reported pardons come just a day after Trump granted a pardon to Trevor Milton, the former CEO of Nikola Motors who was previously convicted of fraud in 2022. In January, Trump made good on long-standing promises to pardon Silk Road creator Ross Ulbricht, who was 11 years into a draconian sentence of double life in prison plus 40 years, with no possibility of parole. Since Ulbricht’s pardon, former FTX CEO and convicted fraudster Sam Bankman-Fried has been angling for his own pardon, attempting to curry favor with the Trump administration and appearing on Tucker Carlson in an unauthorized jailhouse interview that landed him in solitary confinement.

Former Binance CEO Changpeng «CZ» Zhao, who pleaded guilty to the same charge as Hayes and served four months in prison last year — making him not only the richest person to ever go to prison in the U.S., but also the only person to ever serve jail time for violating the BSA — has denied reports that he, too, is seeking a pardon from President Trump.

But, Zhao admitted in a recent X post that “no felon would mind a pardon, especially being the only one in US history who was ever sentenced to prison for a single BSA charge.”

UPDATE (March 28, 2025, 20:30 UTC): Adds Delo statement and White House official.

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FDIC Reverses U.S. Crypto Banking Policy That Demanded Prior Approvals

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The Federal Deposit Insurance Corp. will no longer instruct banks to get prior sign-off before they engage in crypto activities — a standard that was set in 2022 and that effectively severed institutions from the digital assets sector as they waited for approvals that never came.

The FDIC, which is the chief federal supervisor of thousands of typically smaller banks and runs the banking industry’s government backstop, had occupied a significant role in the crypto debanking saga. A courtroom fight with crypto exchange Coinbase had recently unveiled dozens of letters between the regulator and banks it supervised. In that 2022 correspondence, the FDIC had instructed them to steer clear of new crypto matters while it hashed out policies, though the agency never developed any and left bankers hanging.

The new industry guidance issued on Friday comes after President Donald Trump elevated a crypto-friendly leadership at the FDIC and other financial regulators and has directed his administration to open doors for the industry.

“With today’s action, the FDIC is turning the page on the flawed approach of the past three years,” said FDIC Acting Chairman Travis Hill, in a statement. “I expect this to be one of several steps the FDIC will take to lay out a new approach for how banks can engage in crypto- and blockchain-related activities in accordance with safety and soundness standards.”

Read More: Trump’s FDIC Chief Rethinks Crypto Guidance as U.S. Senators Probe Debanking

Banks that were once expected to get pre-approvals on crypto matters can now forge ahead, as long as they’re appropriately considering the risks.

The guidance to seek pre-approvals was a common stance across all three U.S. banking agencies, including the Federal Reserve and the Office of the Comptroller of the Currency. The OCC also acted recently to rescind its similar 2022 guidance, which had emerged as the digital assets sector was beset by failure and high-profile fraud, and global exchange FTX was steering toward disaster.

Read More: OCC Says Banks Can Engage in Crypto Custody and Certain Stablecoin Activities

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