Background of the Controversy
David Sacks, who served as President Donald Trump’s advisor on cryptocurrency and artificial intelligence, has found himself in a storm of criticism this week. Allegations surfaced that he could potentially profit from Trump’s recent proposal to establish a U.S. strategic cryptocurrency reserve. This announcement, made by Trump on Sunday, has raised eyebrows and sparked discussions about conflict of interest within the administration.
The Proposed U.S. Strategic Crypto Reserve
The strategic reserve aims to have the government hold a variety of digital assets, including well-known cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH), XRP, Cardano (ADA), and Solana (SOL). Critics are concerned that individuals in key government positions, particularly those with financial ties to these cryptocurrencies, stand to gain significantly from this initiative.
Sacks’ Role in the Controversy
As a venture capitalist with a history of investing in cryptocurrencies, Sacks quickly became a central figure in this ongoing debate. In response to the allegations, he took to social media platform X (formerly Twitter) over the weekend to refute claims of any financial interest in the proposed policy. He asserted that he divested his personal cryptocurrency holdings prior to his appointment in the administration, including his investment in Multicoin Capital, a prominent crypto-focused investment firm.
Questions Surrounding Craft Ventures
Despite Sacks’ declarations, questions lingered about whether his venture capital firm, Craft Ventures, still held an investment in Bitwise, a cryptocurrency index fund manager he helped finance in 2017. Bitwise offers investment products, including an ETF that encompasses all the cryptocurrencies mentioned in Trump’s strategic reserve plan. This connection raised concerns about potential benefits to Bitwise from government purchases of digital assets.
Confirmation of Investment Exit
On Tuesday, a source close to Craft Ventures confirmed to CoinDesk that the firm had exited its position in Bitwise before the beginning of Trump’s second term. Additionally, the Craft Ventures website was updated to reflect that the firm had divested from Bitwise as of January 2025.
Silence from Craft Ventures and Sacks
As of now, neither Craft Ventures, Bitwise, nor Sacks have publicly commented on this apparent exit. A source associated with Craft Ventures mentioned that the firm has chosen to remain silent to avoid any interference with Sacks’ ongoing government clearance process.
Sacks’ Defense Against Accusations
In his defense, Sacks dismissed the allegations as unfounded. He stated, “The accusation that people who are already very successful in business go into government to make more money is a lazy and stupid narrative.” He emphasized the significant disruption and divestiture of business interests that come with serving in government.
Divided Opinions in the Crypto Community
The discussion surrounding Trump’s proposed crypto reserve continues to create divisions within the cryptocurrency community. Some of Trump’s supporters advocate for a Bitcoin-only reserve, while others argue against government involvement in digital asset holdings, claiming that such intervention contradicts the decentralized principles of the cryptocurrency industry.
Broader Conflict of Interest Concerns
The issue of potential conflicts of interest extends beyond Sacks. Questions are also being raised about Trump himself, particularly in relation to World Liberty Financial, a crypto startup backed by Trump that reportedly holds around $500 million in cryptocurrency assets, including some mentioned in his recent reserve announcement. This ongoing situation underscores the complex intersection of politics and the burgeoning world of cryptocurrencies.
