Oh, Great: Trump Memecoin Risk

Another sign of our ethically challenged times in the Trump 2.0 era: a freight logistics company in Texas is planning to buy as much as $20 million’ worth of President Trump’s personal cryptocurrency, so the company can “advocate for fair, balanced, and free trade between Mexico and the U.S.”

Translation: the company, Freight Technologies Inc., is putting money into Trump’s pocket so it can try to twist the president’s trade policies to its favor.

Don’t take my word for it; read the press release and SEC filing that Freight Technologies — “Fr8Tech” is its preferred name — issued last week. Fr8Tech signed an agreement on April 29 to issue convertible notes to raise as much as $20 million in cash. That money will go exclusively to the purchase of Official Trump tokens, which are the crypto coins that Trump established in January just before he took office. The higher their price goes, the richer Trump and his family gets.

And why would a freight logistics company want to invest in crypto at all? As Fr8Tech put it:

“We believe that the addition of the Official Trump tokens are an excellent way to diversify our crypto treasury, and also an effective way to advocate for fair, balanced, and free trade between Mexico and the U.S.”

Oh for pete’s sake. Fr8Tech is a tiny operation (82 employees according to its 2024 annual report; 74 of them based in Mexico) that hasn’t turned a profit in years. Annual revenue tumbled from $25.8 million in 2022 to $13.7 million in 2024, a drop of 47 percent. Available cash plummeted even more, from $1.01 million to $204,000.

Now, amid that grim financial picture, the company decides its wisest course forward is to issue debt and use the proceeds to buy a cryptocurrency personally owned by the president? If my eyes rolled any harder I’d need to visit the optometrist.

Let’s call this arrangement for what it is: a quid pro quo, or at least an attempt at one. Fr8Tech is sending money to Trump in exchange for better access to him (remember, Trump is hosting a private dinner on May 22 for the biggest buyers of Trump memecoins) and a chance to argue for trade policies that might improve the company’s struggling business model.

Memecoin of the Realm

I am not naive. I understand that corporations have put money into politicians’ pockets in exchange for favorable treatment for generations, catering to Democratic and Republican administrations alike. 

So why does this newfangled vehicle for favoritism seem so much worse? Several reasons.

First is the sheer transparency of the corrupt vehicle here. In years past (and even today still), companies would donate money to a political action committee, and that money would be used to support the politician’s campaign and all the other efforts to enhance his or her power. 

The expectation of a quid pro quo existed, sure; but it was oblique and diffused across multiple layers and legal entities. Donors could always hide behind the plausible fiction that “I support what the politician stands for,” rather than “I’m giving the politician money now in exchange for favors later.” Hence so many big corporations kicked in $1 million each to Trump’s inauguration fund.

Cryptocurrency is a more naked corruption that cuts out all those layers. Trump’s memecoins enrich him personally. When you buy them, you are making him more rich, rather than “the campaign” more powerful. The quid pro quo (or more accurately, the hoped for quid pro quo) is there in plain view.

Second is the manner in which Fr8Tech is making this memecoin bet. The company is issuing debt — and a potentially huge amount of debt for a company of its size — for the express purpose of enriching a government official in the hope of influencing that government official’s policy decisions. 

If Fr8Tech were doing this for any other government official in the world, that would be a red flag for Foreign Corrupt Practices Act risk visible from the moon. Corporate compliance and legal officials everywhere would counsel against it as both unethical and a violation of the law.

Thanks to weak anti-corruption law here in the United States, a company’s purchase of Trump memecoins as a vehicle to influence Trump’s thinking probably isn’t a violation of law, and a Trump-led Justice Department would never enforce it anyway — but the arrangement still stinks. It’s an attempt to buy an outcome, rather than win a policy debate or succeed in business on the merits. 

Broader Compliance Issues

Let’s move away from Fr8Tech in particular, whose executives haven’t publicly commented on their memecoin purchases anyway. And hey, at least Fr8Tech is being honest about its intentions; no investors in the business can claim they weren’t informed.

The deeper issue to ponder here is Trump and the path to corruption that his memecoins have created. 

For example, rather than a company issuing new debt to buy a U.S. president’s memecoins and declaring all that in a public filing, what if one of your employees used smaller amounts of corporate cash to buy some other government official’s memecoin? How would you know that had happened? What policies do you want in place to prevent it from happening? What other legal violations might arise from such a transaction, beyond the FCPA? (This seems especially important for overseas companies, whose employees might be breaking overseas anti-corruption laws by offering a thing of value to Trump.)

Corporate compliance teams now need to think about questions like those, if you haven’t already started. Cryptocurrency exists to avoid government scrutiny; that was the whole point when crypto first came along in the 2010s. You should update your policies, disclosure requirements, and employee training as necessary to be sure that they appropriately address all the heightened corruption risks that crypto brings.

Of course, none of that addresses the most fundamental issue of all: Trump himself. Others before him were corrupt too; but at least they understood that corruption was bad, and tried to hide it, or insisted that what they were doing actually wasn’t corruption if you look at it from the right angle. Now along comes Trump, who discards all those ethical standards and embraces corruption out in public, with both hands. 

I have no easy advice for how to confront ethical corrosion like that, but it stinks to high heaven, and the stench will last for a long time. The rest of us need to hold our noses, stay true to our ethical values, and carry on.