监管失守：CFTC与特朗普家族的加密生意

Original authors: Sharon LaFraniere, David Yaffe-Bellany, The New York Times

Translation: Saoirse, Foresight News

Last fall, a battle of interests quietly unfolded within an obscure federal agency. Three companies with ties to the Trump family's business empire sought approval from the U.S. Commodity Futures Trading Commission (CFTC) to expand their operations in the booming prediction market sector.

Prediction markets now represent a growing portion of the agency's regulatory portfolio. Americans can bet on a wide array of events here, from the color of President Trump's tie next time to whether the U.S. will take over Cuba. The market holds immense business potential, but the practices of several companies have also sparked considerable controversy.

Agency career officials had concerns: they worried that Crypto.com was not treating small-stakes users fairly; they found loopholes in Polymarket's anti-fraud protections; and a third company, a subsidiary of the cryptocurrency firm Gemini, had not even passed the compliance review required to start operations.

Multiple insiders, speaking on condition of anonymity for fear of retaliation, said that despite these internal objections, the then-acting Chair Caroline D. Pham and her chief legal counsel intervened to help these companies achieve their goals.

By Christmas Eve, the agency suspended two senior managers who had raised objections about these companies, barred them from the office, and initiated internal investigations against them. Three other senior officials involved in cryptocurrency enforcement work received similar treatment, an industry also closely linked to the Trump family.

These officials were never told what fault they had committed. However, interviews with current and former employees indicate that the incident sent a clear message to the entire agency: do not create problems for these industries.

An investigation by The New York Times shows that the suspension of these officials is just one example of how this core agency, responsible for regulating a specific financial sector, has repeatedly been checked by the major interest groups it is supposed to oversee.

The investigation found that over the past 16 months of the Trump administration, the Commission has continuously reduced staffing, purged career officials, sharply curtailed enforcement actions against the cryptocurrency industry, and facilitated prediction market companies in every possible way.

The deep involvement of the Trump family in the cryptocurrency and prediction market industries is a key reason for the significant weakening of this regulatory agency's functions. The Trump family has amassed immense wealth by issuing its own digital currency and has also entered into business partnerships with several prediction market operators.

Several senior figures driving the agency's transformation themselves have financial interests in these industries. After leaving, Caroline D. Pham joined a cryptocurrency firm that has a partnership with Polymarket; her chief legal counsel, Brigitte Weyls, was hired by a prediction market company whose previous operating application she had helped advance smoothly.

The current Chair, Michael S. Selig, 36, previously served as a corporate lawyer for multiple cryptocurrency companies and was deeply involved in prediction market-related business. Appointed by Trump and affiliated with the Republican Party, he is currently the sole commissioner on the agency, as the president has left the other seats vacant.

This highly unusual personnel arrangement gives Michael S. Selig unilateral power to initiate lawsuits, formulate new rules, and fully oversee these two industries at the core of the Trump business empire.

"Every decision President Trump makes is in the best interest of the American people, and there is no conflict of interest here," said White House spokesperson Davis Ingle.

The shift in the agency's stance also illustrates how the Trump administration has forced previously independent regulatory bodies to bend to its will, a transformation also seen at the U.S. Securities and Exchange Commission. Now, both agencies agree with the president's view that past regulators were too harsh in punishing various industries.

"I've served under multiple Republican and Democratic administrations," said Gretchen Lowe, who worked at the agency for three decades and retired last year from a senior enforcement role. "In the past, everyone believed enforcement had to be strict. This is the first time political factors have affected the CFTC so intensely."

Caroline D. Pham and Brigitte Weyls did not respond to requests for comment. However, Caroline D. Pham publicly spoke out last year, accusing the agency's enforcement division of abusing prosecutorial power.

Polymarket stated it has established robust risk protection mechanisms; Crypto.com said the company strictly complies with all federal regulations; Gemini did not respond. A CFTC spokesperson declined to comment on the treatment of the implicated employees or the specifics of the agency's handling of individual cases.

With regulatory power weakened, millions of people involved in cryptocurrency trading and betting on prediction markets, along with the increasingly interconnected financial system, are exposed to risks. These two industries have long struggled to overcome fraud and misconduct: scams are rampant in the crypto space, and insider trading has become a persistent problem in prediction markets.

In an interview, Michael S. Selig said that during the Biden administration, the Commission's enforcement was overly aggressive, taking even minor violations to court. He emphasized that the agency will now focus on major illegal activities and will not favor any party.

"Whether in crypto or any other field, once fraud, market manipulation, illegal operations, or insider trading occur, our enforcement division will be vigilant and do its duty," he stated.

However, this tough talk starkly contrasts with the agency's actual enforcement record during Trump's second term. So far, the Commission has filed only two digital currency-related cases, both targeting individual operators, without touching any major cryptocurrency firms.

In contrast, during the Biden administration, there were over 80 related cases, pursued through civil courts or administrative channels. Even during Trump's first term, before his family had deeply entered the crypto industry, the Commission handled more than twenty related cases.

In the prediction market regulatory sphere, the Commission has transformed from a regulator to an industry ally, particularly regarding legal disputes over industry compliance. Since the start of Trump's second term, the agency has filed only one case, against an individual accused of insider trading.

The CFTC was originally established primarily to oversee misconduct in agricultural commodity markets like pork bellies. Now, as its regulatory responsibilities expand, its enforcement efforts have consistently receded.

Prediction markets, now growing rapidly, fall under speculative financial transactions within the agency's jurisdiction. The total trading volume of the two major platforms for the whole of 2025 was $50 billion; this year, the trading volume for March and April alone reached that amount.

The White House is currently pushing legislation to further expand the Commission's regulatory authority, granting it more oversight responsibilities in the cryptocurrency field.

Concurrently, the Trump administration is continuously reducing agency staff. The department was already lean, peaking at around 760 employees in 2015. By March of this year, only about 550 people remained, the lowest level since the 2009 financial crisis low point.

Crypto Field: A Full Retreat in Enforcement

In February 2025, a month after Trump's inauguration, several CFTC lawyers were enjoying the Presidents' Day long weekend. Some were relaxing in a white ski chalet in a Vermont ski town, while others went to see a classical concert in New York.

Suddenly, a frantic phone call interrupted their break. The caller was Brian Young, head of the agency's enforcement division, conveying an order from Caroline D. Pham.

Caroline D. Pham, 45, had interned at the agency early in her career, possessed a broad network, and had long moved between government and the financial industry. In 2022, she was appointed commissioner by President Biden to fill a Republican vacancy on the bipartisan committee.

After Trump promoted her to Acting Chair, she acted boldly and was often photographed interacting with executives from the industries she regulated. The order she issued during this holiday was unexpected and difficult to execute: instruct the legal team to drop the agency's lawsuit against the cryptocurrency exchange KuCoin.

For the already small Commission, this was a significant case.

During the Biden administration, the SEC oversaw the vast majority of cryptocurrencies, treating them like stocks and bonds traded on Wall Street. However, the technical nature of cryptocurrencies gave the CFTC jurisdiction over some speculative trading, including trading in Bitcoin, the world's largest digital currency.

Previously, the Commission had fined Binance, the world's largest crypto exchange, $1.35 billion, a landmark case. The lawsuit against KuCoin was also intended to be a major step in signaling the agency's strict regulatory stance on cryptocurrencies.

KuCoin, headquartered in the Seychelles, had just pleaded guilty in a U.S. Department of Justice lawsuit, agreeing to pay nearly $300 million in fines. The DOJ accused the platform of ignoring laws aimed at combating crime and preventing illegal transactions. Simultaneously, KuCoin had also reached a preliminary settlement to resolve the CFTC's lawsuit accusing it of operating without a license.

Caroline D. Pham lacked the authority to drop the case unilaterally; it required a majority vote from the commissioners. However, with two Democratic commissioners still in office, her chances of success were slim.

Ultimately, the legal team chose a compromise: they renegotiated the settlement agreement and, during court proceedings, invoked Trump's executive order calling for a more lenient approach towards the cryptocurrency industry.

During the negotiations, KuCoin announced the listing of two new digital currencies issued by World Liberty Financial, the Trump family's crypto startup. The listing of these new coins greatly enhanced the family business's industry profile and helped expand its user base.

The case dragged on until March of this year, when the CFTC finally reached a settlement with KuCoin. The parent company of KuCoin was ultimately fined only $500,000, far less than the multi-million dollar penalty the legal team had initially estimated.

KuCoin issued a statement saying that listing World Liberty Financial's tokens was just a normal business move and unrelated to the lawsuit it was facing. A spokesperson for World Liberty Financial stated that its digital currency is listed on multiple exchanges.

According to official documents and former employees, the Commission also dropped investigations into at least five other cryptocurrency firms, including a late-stage review of a major exchange.

In the spring of 2025, Caroline D. Pham's team launched investigations into three senior enforcement officials handling cryptocurrency cases, causing anxiety throughout the department. The three individuals were Gretchen Lowe, Chief Legal Counsel and First Deputy of Enforcement; Manal Sultan, Deputy Director of Enforcement; and K. Brent Tomer, Principal Trial Counsel.

The stated reason for the investigation was vague, simply citing "improper handling of certain enforcement matters."

Subsequently, the government dismissed Manal Sultan and K. Brent Tomer, citing restructuring; two trial attorneys handling crypto cases were demoted, and Gretchen Lowe resigned.

Multiple former agency officials stated in interviews that Caroline D. Pham's actions were deliberately targeting legal staff handling cryptocurrency cases. "Someone was deliberately marginalizing the enforcement personnel handling major cryptocurrency cases," said Andrew Rodgers, a former trial attorney who left last year.

Joe Konizeski, a former attorney in the Chicago office, said that before being laid off last summer, he was instructed twice to terminate investigations into cryptocurrency operators.

"The CFTC's attitude essentially tells wrongdoers in the crypto space that regulators will no longer hold them accountable," he commented.

The President Gets Involved Personally

For Gemini, the timing of the enforcement retreat came too late. In January 2025, just before the scheduled trial, Gemini reached a settlement, paying a $5 million fine. The agency had previously accused the company of misleading Commission staff regarding a Bitcoin auction.

However, Gemini avoided other potential liabilities that could have arisen from this case.

Gemini's founders, Cameron Winklevoss and Tyler Winklevoss, are highly regarded by Trump. They are political donors, sponsors of White House events, investors in a private club owned by Donald Trump Jr., and financial backers of a crypto venture co-founded by another Trump son, Eric Trump.

In the settlement agreement, Gemini did not admit to any wrongdoing and promised not to publicly claim the allegations were baseless. Yet, just five months later, the company filed a complaint with the agency's Inspector General, attacking the case and the legal personnel involved.

Tyler Winklevoss posted the complaint on X, accusing the officials: "These public servants abused their power, wasting millions in taxpayer funds to file a frivolous lawsuit against Gemini solely for career advancement."

Sources say the Winklevoss brothers did not stop there and tried to use this complaint to influence the appointment of the agency's top leader.

While Caroline D. Pham was Acting Chair, Trump nominated Brian Quintenz to lead the agency in February 2025. Quintenz, a former commissioner and board member of a prediction market firm, stated on social media in September that his nomination ultimately failed because he refused to commit to supporting Gemini's complaint against the Commission.

Brian Quintenz published private chat records showing Tyler Winklevoss asking him to make the Gemini complaint the highest priority, saying they would be "happy to personally raise this with the President."

Quintenz wrote that after he refused to cooperate, the Winklevoss brothers complained to Trump. At the end of September, Trump formally withdrew his nomination.

At the time, a Gemini spokesperson declined to comment on the chat records. The White House spokesperson stated that the president only nominates individuals whose philosophy aligns with his administration's "America First" agenda. Michael S. Selig did not comment on the Gemini complaint.

Multiple Interferences in Regulatory Approvals

Gemini had more demands to fulfill.

Its subsidiary, Gemini Titan, had been trying to enter the prediction market since 2020 but had never received Commission approval. Last year, Gemini submitted another application for operations.

In December last year, while staff were reviewing the application, they suddenly received a special memo signed by Brigitte Weyls directly recommending approval.

Under normal procedures, such recommendations are drafted by front-line staff and escalated to the commissioners, and the review was still ongoing. Despite this, Gemini Titan's application was quickly approved.

According to insiders, this was just the third instance of Caroline D. Pham and Brigitte Weyls repeatedly intervening, favoring prediction market firms with ties to the Trump family.

At the start of Trump's second term, Crypto.com already had a license to operate prediction markets. However, a brief note in a public filing by the company raised red flags for some staff members. They suspected Crypto.com was secretly granting privileges to large institutional traders, giving them an edge over regular sports bettors, without properly disclosing this.

Insiders say Caroline D. Pham and Brigitte Weyls not only discouraged staff from pursuing the matter further but also excluded relevant personnel from communication meetings with Crypto.com.

Crypto.com's management declined to comment on the details of communications with the Commission, stating that the company's operational rules are transparent, all users have a fair environment, and its information disclosure is fully compliant.

Crypto.com is a close business partner of Trump Media & Technology Group, of which Trump himself is the largest shareholder. The two parties reached an exclusive partnership in October last year to jointly develop the prediction market business. Trump Media & Technology Group did not respond to requests for comment.

The most far-reaching events revolved around Polymarket. Over the years, this company had been repeatedly questioned by regulators for compliance issues. In 2022, Polymarket paid a $1.4 million fine to the Commission for allowing U.S. users to place bets without authorization.

In November 2024, after the U.S. election betting surge, these old issues were raised again. The FBI raided the New York home of the company's founder, Shayne Coplan, and the CFTC simultaneously launched an investigation.

The Trump administration dropped both investigations in July of the following year. The same month, Polymarket acquired a compliant entity and launched a new platform for U.S. users.

The following month, Polymarket filed a new application seeking approval to accept bets through intermediary channels. While this model helps companies expand their customer base, it can also allow wrongdoers using inside information to hide their tracks and evade regulatory detection.

Less than two weeks after submitting the application, Polymarket announced an investment from firm 1789, partially owned by Donald Trump Jr. The company also hired Donald Trump Jr. as an unpaid advisor. A spokesperson for Donald Trump Jr. stated that he is not involved in Polymarket's affairs with federal regulators.

Last fall, even during a government shutdown lasting about six weeks, the Commission still convened staff to process Polymarket's application.

During a communication meeting in November, Rahul Varma, the interim head of the Market Oversight division, and Rachel Berdansky, the Deputy Director of Compliance, questioned Polymarket's anti-f fraud capabilities. Brigitte Weyls attended this review meeting as an exception.

The week Polymarket's application was approved, Rachel Berdansky was placed on administrative suspension and investigated; she has since retired. By the end of last year, Rahul Varma was also purged.

Vince McGonagle, the former head of the division who had previously been reassigned for delaying Gemini's application, also left the agency after being suspended.

Last year, a wave of departures reduced the agency's total workforce by about a quarter, the largest annual staff turnover in nearly two decades. Despite this reduction, a Commission spokesperson stated that the remaining staff is sufficient to fulfill regulatory duties.

Caroline D. Pham and Brigitte Weyls subsequently also left public service to join companies regulated by the agency. A senior Commission official stated that both individuals' job transitions complied with federal ethics rules.

In March this year, Brigitte Weyls officially became General Counsel of Gemini Titan, the very company she had previously helped push through approval. Caroline D. Pham stepped down as Acting Chair in December last year and joined the cryptocurrency firm MoonPay, which also plans to enter the prediction market and has already announced an exclusive partnership with Polymarket.

A New Regulatory Landscape

Michael S. Selig, who took office in December last year, became the sole top leader of the Commission.

After other commissioners left, Trump appointed only him to replace them, leaving all other seats vacant. This practice broke the Commission's existing system of checks and balances and gave the new Chair absolute power to reshape the entire agency.

Soon after taking office, Michael S. Selig frequently appeared at industry conferences and on tech podcasts. He criticized false narratives and called prediction markets "truth machines" capable of generating accurate information. On several