A series of cryptocurrency companies that have broken through industry boundaries have entered the stock market, attracting investors while also contributing to the continued high level of market risk.
Written by David Yaffe-Bellany and Eric Lipton, The New York Times
Compiled by: Chopper, Foresight News
This summer, a group of corporate executives pitched a business plan to Wall Street financier Anthony Scaramucci, a former advisor to President Trump. They wanted Scaramucci to join a publicly traded company with a unique strategy: to enhance the company's appeal to investors by accumulating massive amounts of cryptocurrency assets.
"They didn't really need to say much," Scaramucci recalled. Soon after, he joined three unknown companies that were using this strategy as a consultant, and "the entire negotiation process went very smoothly."
However, this craze didn't last long. The cryptocurrency market crashed this fall, and the stock prices of the three companies Scaramucci was involved with plummeted, with the worst-performing one falling by more than 80%.
The rise and fall of these companies is a microcosm of the cryptocurrency craze sparked by Trump. This self-proclaimed "first cryptocurrency president" not only ended the regulatory crackdown on cryptocurrency companies, but also publicly promoted cryptocurrency investment in the White House, signed bills supporting cryptocurrency development, and even issued a meme coin called Trump, propelling this once niche field to the forefront of the global economy.
The ripple effects of Trump's strong support for cryptocurrencies are now gradually becoming apparent.
This year has seen a surge of new cryptocurrency companies breaking industry boundaries, drawing more people into this volatile market. Currently, over 250 publicly listed companies have begun accumulating cryptocurrencies—the price volatility of these digital assets is no different from traditional investments such as stocks and bonds.
In 2024, former Trump advisor Anthony Scaramucci attended the UAE Bitcoin Conference.
A wave of companies are launching innovative products to lower the barriers to including cryptocurrencies in brokerage accounts and retirement planning. Meanwhile, industry executives are lobbying regulators to issue crypto tokens that are pegged to publicly traded stocks, aiming to create a cryptocurrency-based stock trading market.
This radical wave of innovation has already exposed numerous problems. In the past two months, the prices of mainstream cryptocurrencies have plummeted, plunging companies heavily invested in crypto assets into financial crisis. Other emerging projects have also drawn warnings from economists and regulators, indicating that market risks are steadily accumulating.
The core issue causing widespread concern lies in the continued expansion of lending. By this fall, listed companies had borrowed heavily to purchase cryptocurrencies; investors' open interest in cryptocurrency futures contracts exceeded $200 billion. These transactions largely rely on leveraged funds, which can bring huge profits but also carries the risk of liquidation.
More alarmingly, a series of new initiatives in the cryptocurrency industry have deeply intertwined the crypto market with the stock market and other financial sectors. If a crisis erupts in the cryptocurrency market, the risks could spread throughout the entire financial system, triggering a chain reaction.
"Today, the lines between speculation, gambling, and investment have become blurred," said Timothy Massad, who served as Assistant Secretary for Financial Stability at the U.S. Treasury Department after the 2008 financial crisis. "This situation deeply worries me."
White House Press Secretary Karoline Leavitt responded that Trump's policies are "helping the United States become a global cryptocurrency hub by driving innovation and creating economic opportunities for people across the country."
Cryptocurrency industry executives argue that these emerging projects demonstrate the potential of crypto technology to reshape the outdated financial system. In their view, market volatility presents a significant opportunity for profit.
"High risk often comes with high return," said Duncan Moir, president of 21Shares, a company that issues cryptocurrency investment products. "Our mission is to bring these investment opportunities to more people."
The rise of this innovation boom is inseparable from the comprehensive relaxation of the regulatory environment, which presents the most favorable regulatory window for cryptocurrency companies. For many years prior, the U.S. Securities and Exchange Commission (SEC) had been engaged in legal battles with the cryptocurrency industry; however, in January of this year, the agency established a dedicated cryptocurrency task force and has already held talks with dozens of companies seeking support under the new regulations or product listing approvals.
A spokesperson for the U.S. Securities and Exchange Commission stated that the agency is committed to "ensuring investors have sufficient information to make informed investment decisions."
U.S. Securities and Exchange Commission headquarters building in Washington, D.C.
It is worth noting that many of these emerging companies are linked to the Trump family’s ever-expanding cryptocurrency business empire, a connection that has blurred the lines between business and government.
This summer, executives from World Liberty Financial, a cryptocurrency startup backed by Trump, announced they were joining the board of directors of publicly traded company ALT5 Sigma. The company, originally focused on recycling, now plans to raise $1.5 billion to enter the cryptocurrency market.
Capital Frenzy: A Crypto Gambling Game Out of Control
Cryptocurrency enthusiasts have dubbed this high-risk investment boom fueled by the Trump administration "the summer of crypto treasury companies."
Crypto treasury companies (DATs) are publicly traded companies whose core objective is to accumulate cryptocurrencies. Data from cryptocurrency consultancy Architect Partners shows that nearly half of these emerging companies focus on accumulating Bitcoin, the most well-known cryptocurrency, while dozens more have announced plans to acquire less mainstream cryptocurrencies such as Dogecoin.
Number of crypto treasury companies established each month in 2025. Data source: Architect Partners, statistics as of December 16.
These companies often operate in a simple and crude manner: a group of executives find a niche company (such as a toy manufacturer) that is traded on the public market, persuade it to transform into a cryptocurrency hoarding business; then they partner with the company to raise hundreds of millions of dollars from high-net-worth investors, and ultimately use the funds to buy cryptocurrencies.
Its core objective is to encourage more people to participate in cryptocurrency investment by issuing traditional stocks pegged to cryptocurrency prices. This strategy theoretically offers considerable profit potential. However, many investment funds and asset management institutions have remained hesitant to directly invest in cryptocurrencies due to the complexity and high cost of cryptocurrency storage processes and their vulnerability to hacking.
Investing in crypto treasury companies is essentially outsourcing the logistical aspects of cryptocurrency storage. However, these companies also carry significant risks: many are hastily established, and their management teams lack experience in running publicly traded companies. Data from Architect Partners shows that these companies have collectively announced plans to borrow over $20 billion to purchase cryptocurrencies.
"Leverage is the culprit behind the financial crisis," warns Corey Frayer, a former cryptocurrency advisor to the U.S. Securities and Exchange Commission. "And the current market is fueling massive amounts of leverage."
Some crypto treasury companies have fallen into operational difficulties or management crises, resulting in huge losses for investors.
After transforming into a crypto treasury company, publicly traded Forward Industries has heavily invested in SOL. In September of this year, the company raised over $1.6 billion from private investors, and its stock price once soared to nearly $40 per share.
Allan Teh, from Miami, manages assets for a family office. This year, he invested $2.5 million in Forward Industries. "At the time, everyone thought the strategy was foolproof and that crypto asset prices would continue to rise," Allan Teh recalled.
However, with the cryptocurrency market crash, Forward Industries' stock price once fell to $7 per share this month. The company announced plans to spend $1 billion on share buybacks over the next two years, but this move failed to stop the stock price decline.
"The music suddenly stopped, the game ended. Now I'm starting to panic. Can I get out unscathed?" Allan Teh has already lost about $1.5 million. "How much will this investment ultimately lose?" Forward Industries declined to comment.
The proliferation of crypto treasury companies has raised concerns within the U.S. Securities and Exchange Commission (SEC). "Clearly, we are very concerned about this," said SEC Chairman Paul Atkins in an interview last month at the Miami Crypto Conference. "We are closely monitoring developments."
Behind this new cryptocurrency sector is the strong support of the Trump family.
The founders of World Liberty Financial include Eric Trump, son of Donald Trump, and Zach Witkoff.
In August of this year, World Liberty Financial announced that its founders (including Eric Trump, son of the president) would join the board of directors of ALT5 Sigma. This publicly traded company plans to accumulate World Liberty Financial's cryptocurrency token, WLFI (Eric Trump's current titles are strategic advisor and board observer).
This partnership appears to allow the Trump family to profit quickly. According to the revenue-sharing agreement published on the World Liberty Financial website, Trump family-owned businesses will receive a cut whenever WLFI tokens are traded.
Subsequently, ALT5 Sigma's business situation deteriorated rapidly. In August, the company disclosed that an executive of one of its subsidiaries had been convicted of money laundering in Rwanda, and the board of directors was investigating other "undisclosed matters." Shortly afterward, ALT5 Sigma announced the suspension of its CEO and the termination of contracts with two other executives.
Since August, the company's stock price has plummeted by 85%. An ALT5 Sigma spokesperson said the company "remains confident about its future prospects."
Flash crash: Hundreds of billions in market value evaporated overnight
The recent turmoil in the cryptocurrency market can be traced back to a night in October.
Driven by Trump's policies, the cryptocurrency market had been on a steady upward trend for most of the year. However, on October 10th, the prices of dozens of cryptocurrencies, including Bitcoin and Ethereum, plummeted, resulting in a flash crash.
The immediate trigger for this crash was Trump's announcement of new tariffs on China, a move that caused severe turmoil in the global economy. The root cause of the cryptocurrency market's devastation lies in the massive amounts of leveraged capital that fueled its rise.
On cryptocurrency trading platforms, traders can use their crypto assets as collateral to borrow fiat currency or leverage their cryptocurrency investments. Data from cryptocurrency data firm Galaxy Research shows that global cryptocurrency lending grew by $20 billion in the third quarter of this year, reaching a record high of $74 billion.
Previously, the riskiest cryptocurrency leveraged trading mostly occurred in overseas markets. However, in July of this year, Coinbase, the largest cryptocurrency exchange in the United States, announced the launch of a new investment tool that allows traders to bet on Bitcoin and Ethereum futures prices with 10x leverage. Prior to this, US federal regulators had withdrawn guidelines restricting such leveraged trading, thus clearing the way for Coinbase's new product.
In July of this year, Coinbase launched a cryptocurrency trading tool with 10x leverage.
While the flash crash in October did not lead to an industry catastrophe like the one in 2022 that resulted in the bankruptcy of multiple large cryptocurrency companies, it served as a wake-up call for the market, foreshadowing a potential systemic crisis in the cryptocurrency sector.
The essence of leveraged trading is that losses are magnified many times over when the market declines. Trading platforms will force liquidation, selling off clients' collateralized assets, a process that often further exacerbates the price drop.
Data from cryptocurrency data firm CoinGlass shows that on October 10th, at least $19 billion worth of leveraged cryptocurrency trades were forcibly liquidated globally, affecting 1.6 million traders. This wave of liquidations primarily occurred on trading platforms such as Binance, Easy, and Bybit.
The sharp drop triggered a surge in trading volume, causing technical glitches at several major exchanges and preventing traders from transferring funds in a timely manner. Coinbase stated that it is aware of some users experiencing "delays or system performance degradation during trading."
Derek Bartron, a software developer from Tennessee and a cryptocurrency investor, revealed that his Coinbase account was frozen during the flash crash. "I wanted to close my positions and get out, but I couldn't," Bartron said. "Coinbase effectively locked up users' funds, and we could only watch helplessly as the value of our assets plummeted."
Derek Bartron stated that he lost approximately $50,000 in cryptocurrency assets in the days following the flash crash, partly due to his inability to close out his positions and cut his losses in time.
A Coinbase spokesperson responded that the company provides automated risk management tools, "which functioned normally during this market volatility, and our exchange remained stable throughout the event."
A Binance spokesperson acknowledged that the exchange experienced a "technical glitch due to a surge in trading volume" and stated that measures have been taken to compensate affected users.
Crazy Experiments: The Regulatory Dilemma of the Tokenization Wave
One summer evening this year, cryptocurrency entrepreneur Chris Yin and Teddy Pornprinya, dressed in formal attire, appeared at the Kennedy Center in Washington, D.C., to attend a grand black bow tie dinner.
The dinner was a star-studded affair. Chris Yin, wearing a tuxedo he had just bought the night before, met with former US Vice President JD Vance, who had worked in Silicon Valley's venture capital scene; he and Teddy Pornprinya also chatted with former hedge fund manager and current US Treasury Secretary Scott Bessant; the two even posed for a photo with Trump, who gave a thumbs-up to the camera.
Chris Yin and Teddy Pornprinya's trip was to pave the way for their startup, Plume, which is advancing a disruptive innovation plan to extend the underlying technology of cryptocurrency to the broader financial sector.
For months, Plume has been seeking permission from U.S. regulators to create an online trading platform that will issue crypto tokens to customers that are backed by real-world assets, including listed companies, farms, oil wells, and other entities.
Plume founder Chris Yin and Teddy Pornprinya pose for a photo at the Empire State Building.
Currently, Plume has launched such tokenized products in overseas markets, allowing customers to buy and sell these asset tokens just like trading cryptocurrencies. However, this business, known as asset tokenization, exists in a legal gray area in the United States. Securities laws enacted decades ago have established strict regulatory rules for the sale of equity in various assets, requiring issuers to disclose detailed information to protect investors' rights.
This year, asset tokenization has become the hottest concept in the cryptocurrency industry. Industry executives claim that tokenized stocks can make stock trading more efficient and faster, creating a 24/7 global trading market. Kraken, a major US cryptocurrency exchange, has already launched cryptocurrency-based stock trading services for its clients in overseas markets.
Cryptocurrency industry executives say that cryptocurrency transactions are based on public ledger records, making them more transparent than the traditional financial system. "All transactions are traceable and auditable," said Arjun Sethi, CEO of Kraken. "It's virtually risk-free."
Representatives from Kraken and Coinbase have met with the U.S. Securities and Exchange Commission to discuss regulatory rules for tokenized assets; meanwhile, Plume is also seeking a legal path to expand its business in the United States.
But this race to create tokenized products has raised concerns among current and former regulatory officials, as well as executives of traditional financial giants.
In September of this year, Federal Reserve economists warned that asset tokenization could lead to the transmission of cryptocurrency market risks to the entire financial system, "undermining policymakers' ability to maintain the stability of the payment system when markets are under pressure."
U.S. Securities and Exchange Commission Chairman Paul Atkins has taken a positive view of tokenized stocks, calling it a "major technological breakthrough." "Under securities laws, the Commission has broad discretion to provide regulatory support to the cryptocurrency industry. I am determined to push this forward," Atkins said at an asset tokenization industry roundtable in May.
To push the company toward compliance, Chris Yin and Teddy Pornprinya have taken a series of steps. In May of this year, the two met with the U.S. Securities and Exchange Commission's cryptocurrency task force; they also provided chart support for the White House's cryptocurrency industry report; and they established Plume's U.S. headquarters on the 77th floor of the Empire State Building.
At a black tie dinner in Washington this summer, Trump's staff showed great interest in the two founders. "They knew about Plume," Teddy Pornprinya recalled. "Everyone knew something about our business."
A few weeks later, Plume announced a key collaboration, establishing a business partnership with World Liberty Financial, owned by the Trump family.
