The US President raised his brows once again after he announced that his Trump Memecoin top holder would have an opportunity to have an exclusive dinner with him and a VIP tour of the White House. The decision to use public office for private interest was scrutinized to see whether the president was committing a constitutional violation.
In a conversation with Beincrypto, former George W. Bush ethics lawyer Richard painter explained that Trump did not violate the US Constitution but could be sued for fraud if he fails to fulfill his promise by the May deadline.
First announcement and public reaction
If President Trump’s involvement in a crypto venture has raised ethical concerns earlier, they are now legal after his recent announcement regarding his memecoin trading.
Last week, Trump announced a contest in which Trump’s top 220 owners will be invited to an exclusive gala dinner to meet the president, but the top 25 owners will also win the White House VIP tour.
Until May 12th, tokens will need to be accumulated above the 220 threshold, but dinner is scheduled to take place on May 22nd. The announcement promptly raised criticism of corruption and market manipulation.
A recent report co-authored by the painter shows that as of mid-March, President Trump’s cryptocurrency holdings, including President Trump and WLFI, were valued at $2.9 billion, accounting for around 37% of his total wealth. The launch of USD1 Stablecoin by World Liberty Financial will drive further growth in the value of these assets.
Although visibly unethical, Trump’s actions are not legally liable.
Avoid constitutional emoliment clauses
Despite public and legislative criticism and scrutiny from agencies like the Senate Banking Committee, President Trump has so far shunned legal challenges. Though full of ethical questions, his crypto venture has successfully violated legal and constitutional trust.
Under the US Constitution, foreign and domestic elimination clauses are anti-corruption provisions designed to ensure the integrity and independence of individuals who hold a position of trust within the government.
They aim to prevent external and internal influences by potentially compromising the judgment and loyalty of government officials. However, these provisions primarily address gifts or benefits from foreign governments or the US government itself.
“Use the presidency to make money from meme coins, auction off a White House tour and have dinner with the president in official capacity. If foreign governments were involved, it would violate the constitution’s emoluments clause.
In other words, the perks offered by the Private Meme Coin Project are closely related to the President, but do not fall under the strict definition of “emolument.”
Trump’s recent announcement raises questions about other laws, but his presidential position provides him with some degree of legal insulation.
Conflict of Interest Act and Presidential Immunity
Certain sections of the US Code explicitly address conflicts of interest involving the federal government. Known as “acts that affect personal financial interests,” this section is designed to allow government officials to be freed from the influence of their financial position and act in the greatest interests of the public.
The law generally prohibits federal employees from participating “personally and effectively” in “specific issues” that have “direct and predictable effects” on financial interests.
If a person violates this law, they face criminal and civil penalties ranging from substantial fines to time they have served in prison. However, there are exceptions to this law.
“The Financial Conflict of Interest Act does not apply to the President, Vice President or Congress members. It’s a crime for everyone else in the government. That’s why members of Congress trade stocks and President Trump can do this. This is a big issue and I think we need to amend the criminal law,” Painter explained.
This law has been like this since the establishment of the Republic. The exception to the statute has never been fixed despite repeated doubts over the years.
Currently, Trump’s plans for a private dinner with top meme coin holders are not covered by federal prosecutors. However, failing to fulfill these promises could lead to legal action either at the state level or through private litigation.
Meme Coins and Securities Regulations
A month after Trump launched Meme Coin, the SEC declared that the meme coins were not classified as securities.
As a result, neither Memecoin buyers nor owners are offered protections under federal securities laws. This situation is not a harbinger of Trump who has lost money from the depreciation price of meme coins. As a result, they cannot sue securities fraud.
But they can make their claims by sue fraud based on five common law principles, especially if the gala dinner and White House tour that President Trump promised collapses.
Common law fraud and potential litigation
Unlike securities fraud that complies with certain laws, common law fraud is a broader legal principle that addresses deceptive behavior in a variety of contexts. Its enforcement in the United States usually occurs at the state level through judicial arbitration, rather than through federal laws targeting securities.
There are five important parts to this type of scam. First, someone makes a false statement about an important fact, and they know that it is not true.
Second, they intend for others to believe and act on this false statement. Third, others actually and reasonably believe in false statements. Fourth, they act on that belief. Finally, this action causes harm or loss to them.
The civilians could sue President Trump if he didn’t fulfill his promise. If the damages are particularly broad, the state’s lawyer general can also take action in his own hands.
“If anyone lies or lies in the sale of meme coins, there may be a private right to act for fraud, and the state attorney general can move to it and file enforcement action. I don’t know there is enough evidence to bring about a claim of fraud, but this is starting to move in that direction.”
Ultimately, legal action on dinner will depend on whether President Trump is fulfilling his promise. Meanwhile, the painter expressed serious concern that such market manipulation could lead to a larger financial crisis.
Market manipulation and the risks of financial crisis
The chronology of Trump’s dinner announcement raised deep concerns about unmistakable market manipulation.
A week before the announcement, the team behind Trump unlocked a new token worth $300 million. Prices have fallen naturally given the bearish conditions of Crypto Market, the expansion of distribution supply and the lack of demand for meme coins.
Naturally, this situation led many to shorten meme coins and expected prices to fall. However, the announcement caused a surge in purchases. Prices immediately rose 50%, and traders who shortened Trump lost their money.
To the naked eye, this was a clear example of artificial price inflation.
The painter saw it as another indication that pointed to the urgent need for cryptography regulation before unleashing the chain reaction.
The need for cryptographic regulations
The legal classification of the coins in meme, coupled with non-securities and exemptions from the profit dispute law, urges painters to warn that this lack of surveillance could lead to financial disasters.
“Cryptocurrency is unregulated. It’s speculative. Assets are very unstable and if we can’t handle this, we could potentially have a financial crisis from crypto.
Potential fallout is important. Beyond the losses already affecting Trump’s owners, this political engagement in crypto could undermine the future of the industry, create a bubble of confidence and lead to wider financial instability.
“For five or six years, I’ve urged Congress to act and add cryptography to the definition of security. I think it really destroys the credibility of government and undermines public opinion. This won’t end well. How dangerous this is to the economy if we don’t regulate this.
Trump’s promotion of memecoin is not currently facing federal prosecution, but the possibility of ethical violations and market manipulation is substantial. Ultimately, the legal action will depend on whether Trump will follow his original promises.
However, in a larger scheme of things, if regulations are not implemented, this unidentified political engagement in this crypto could lead to wider fiscal instability and reduced public trust.
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