No bailout for crypto billionaires

Sen. Elizabeth Warren on Wednesday asked the Treasury Department and Federal Reserve to confirm that they “will not use taxpayer dollars to bail out cryptocurrency billionaires and other highly leveraged cryptocurrency investors.”

The Massachusetts Democrat’s request to Treasury Secretary Scott Bessent and Fed Chairman Jerome Powell was as follows: bitcoin It has continued a decline, with the popular cryptocurrency down nearly 50% since reaching its peak in October.

In her letter to Bessent and Powell about a potential bailout, Warren warned that “the transfer of wealth from American taxpayers to cryptocurrency billionaires would be deeply unpopular and could directly enrich the President.” [Donald] Trump and his family’s cryptocurrency company, World Liberty Financial.”

He noted that both the Treasury Department and the Fed have powers that authorize them to provide financial support to banks and other institutions during the financial crisis.

“At a recent hearing, in an exchange regarding his authority to bail out the cryptocurrency industry, Secretary Bessent was asked whether ‘our taxpayer money… would be diverted into crypto assets,'” Warren said, referring to the secretary’s testimony to the House Financial Services Committee on February 6. he wrote.

“Instead of saying a simple ‘no,’ he changed the subject and said:[w]“We are holding the seized Bitcoin,” Warren wrote.

“Ultimately, any government intervention to stabilize Bitcoin will disproportionately benefit crypto billionaires,” wrote Warren, a ranking Democrat. Senate Banking Committee.

“Your agencies should avoid supporting Bitcoin and transferring wealth from taxpayers to crypto billionaires through direct purchases, guarantees or liquidity facilities.”

The Treasury Department and the Fed did not immediately respond to a request for comment on Warren’s letter.

The letter came the same day World Liberty Financial hosted the first World Liberty Forum for business leaders at Trump’s Mar-a-Lago club in Palm Beach, Florida.

In the letter, Warren said the sell-off in Bitcoin was “increased by gradual liquidations of leveraged positions.”

He wrote that Trump’s crypto company, World Liberty Financial, “sold approximately 173 wrapped Bitcoins.”

“This transaction was made to repay $11.75 million of USDC stablecoin debt, thus preventing liquidation when the price of Bitcoin falls below $63,000,” he wrote.

“During this selloff, crypto billionaires took major hits as Bitcoin’s value continued to decline. Shares of crypto billionaire Michael Saylor’s Strategy Inc., one of Bitcoin’s largest institutional holders, have reportedly fallen nearly 20% since the beginning of the year,” Warren said.

“Other major Bitcoin investors also saw losses, including Binance founder Changpeng Zhao, who reportedly lost nearly $30 billion, and Coinbase’s Brian Armstrong, who reportedly lost $7 billion.”

Elsewhere in the letter, Warren said federal financial agencies “should strengthen protections for retail crypto investors.”

He stated that a record $17 billion will be lost or stolen in crypto fraud by 2025.

Correction: This story has been revised to reflect that Bitcoin has lost about half of its value since its October high. The previous version incorrectly described the extent of the decline in value.