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An American financier invested $100mn in the Trump family’s flagship bitcoin project just nine weeks after a probe into his crypto business was dropped by the Trump administration.
DRW Investments, a Chicago-based company founded and controlled by trader Don Wilson, bought almost 4mn shares in Trump Media & Technology Group last month, according to public filings, as part of a funding round for the purchase of more than $2bn in cryptocurrency.
The investment in TMTG, which is behind the Truth Social app and controlled by the US president’s family, makes DRW among the biggest financiers of the group’s crypto bet.
In March, Cumberland, a crypto liquidity provider also controlled by Wilson, won a reprieve from the Securities and Exchange Commission, which dismissed a civil complaint brought by the Biden administration alleging the company acted as an unregistered dealer of crypto assets sold as securities.
DRW said: “We are a major institutional player in cryptoassets and have been for over a decade. We engage in a variety of strategies in the crypto ecosystem, and we see the benefit of holding bitcoin on corporate balance sheets.”
It added: “This transaction was viewed purely through that lens.” TMTG did not respond to a request for comment.
Over the past four decades Wilson has built DRW into one of the world’s largest trading firms by headcount. Its rival Jane Street was the largest investor funding TMTG’s crypto bet, buying about $375mn in the equity fundraising, according to a regulatory filing.
Wilson, whose firm DRW is named for his initials, had previously called for a rethink of the supervision of the US securities industry, by replacing the SEC and the Commodity Futures Trading Commission with “an entirely new regulator”.
The DRW spokesperson said that Wilson “has consistently advocated for clarity in the regulatory framework” and that “the current structure of the CFTC and SEC does not reflect the innovations that have taken place in global markets and should be examined”.
Wilson’s investment in TMTG comes as groups such as Citizens for Responsibility and Ethics in Washington, and Accountable US, claim the Trump family’s continued ownership of the company creates potential conflicts of interest for the administration.
Trump, who promised last year to make the US the “crypto capital of the planet”, has engaged in cryptocurrency ventures, touting billion-dollar memecoins while supporting the establishment of a national crypto stockpile.
The top 220 holders of his $TRUMP memecoin were invited to an exclusive dinner with the president in May. Wilson did not attend the dinner.
The dismissal of the lawsuit against Wilson’s Cumberland was among several moves by Trump’s SEC that have benefited crypto-related firms, as part of the administration’s pledge to loosen regulations on the sector.
In the past few months, the agency has also dropped lawsuits against crypto exchanges Kraken and Coinbase, and blockchain company Consensys, among others.
In a short statement in March, the SEC — now run by crypto advocate Paul Atkins — said it had dismissed the case against Cumberland to “facilitate the commission’s ongoing efforts to reform and renew its regulatory approach to the crypto industry”.
Part of DRW’s business involves liquidity provision, where it executes large block trades with counterparties who want to take a market position without moving prices. But more than half of its revenues are from fundamental bets, taking positions where it thinks it has understood market mechanics and risks better than others.
Wilson has long been an advocate for digital assets, setting up the crypto-focused Cumberland more than a decade ago. He bought 70,000 bitcoin in 2015 in a US government auction of holdings seized from the illegal drug market Silk Road. Now that stash would be worth about $7.7bn.
In addition to holding crypto tokens outright, DRW held funds linked to digital assets and had made a trade tied to Strategy, a bitcoin-focused group previously called MicroStrategy, according to regulatory filing that tracked the group’s holdings as of March 31.
Wilson’s companies have won other skirmishes with US regulators, most notably beating the SEC in 2018 in a case that accused DRW of manipulating the price of a futures contract. A judge ruled DRW was “smarter than [its] counterparties”.
Additional reporting by Alex Rogers in Washington
https://www.ft.com/content/548161ee-0cfb-4f0c-90ea-b3ff3567f09d
