07-31-2025 
The U.S. Senate keeps putting the digital asset market structure cart before the horse, the Trump family’s crypto ties get deeper, and Roman Storm’s trial draws ever nearer.
- Senate holds market structure hearing without a bill
- Coinbase’s ‘six-figure’ DC ad buy presses/warns Congress
- A busy week for Trump’s crypto ventures
- DWF stablecoin depegs
- Tornado Cash co-founder’s trial looms
- Roman Storm has deep-pocketed friends in low places
On July 9, the U.S. Senate Banking Committee held a hearing titled ‘From Wall Street to Web3: Building Tomorrow’s Digital Asset Markets,’ which focused squarely on digital asset market structure regulation.
There’s just one problem: the Senate has yet to introduce a market structure bill, and the expected discussion draft failed to appear ahead of Wednesday’s hearing. This left only the set of ‘principles’ the committee’s GOP leadership issued late last month to guide the proceedings.
Sen. Elizabeth Warren (D-MA), the committee’s ranking member, used her opening statement to declare her own principles. These include ensuring investor protections, enforcing anti-money laundering (AML) compliance, and preventing President Donald Trump and his family members from profiting off their growing list of digital asset ventures. But the Dems don’t run this committee, so Warren’s principles aren’t worth much.
Initially, the invited guests were Ripple Labs CEO Brad Garlinghouse, Blockchain Association CEO/former Commodity Futures Trading Commission (CFTC) commissioner Summer Mersinger, Paradigm partner Dan Robinson, and Jonathan Levin from blockchain analysts Chainalysis.
However, the GOP has been accused of stacking the witness decks with undeniably pro-crypto figures (as above), so at the 11th hour, some crypto critics were hastily summoned. These seats were filled by former CFTC chair Timothy Massad and Richard Painter, a current University of Minnesota Law School professor and a former White House ethics lawyer.
At times, it seemed the critics had been invited solely so pro-crypto committee members could abuse them. For example, Sen. John Kennedy (R-LA) provoked Painter’s ire by repeatedly claiming the latter thought all politicians were crooks.
When Kennedy directly asked Painter whether he thought pro-crypto Sen. Kirsten Gillibrand (D-NY) was a crook and whether Painter should apologize, Painter retorted that he didn’t want Kennedy to “have to apologize for passing legislation that destroys our economy.”
Sen. Bernie Moreno (R-OH) took some real shots at Massad, quibbling over his definition of ‘native token’ by saying “this is why we need to have this market structure legislation because the idea that we would turn over this industry to some bureaucrat working at some agency is insane … when you have people who are just completely … lacking the fundamental technical base.”
The Senate may not have a bill to discuss, but the House of Representatives is advancing its CLARITY Act, which is scheduled for a floor vote next week. That left Senate committee members and witnesses largely discussing what they liked or didn’t like about CLARITY, speaking mainly in general terms, with the pro/con sides mostly living up to their reputations.
However, there were a few unexpected moments, particularly when Kennedy commented on the pro-crypto witnesses all declaring digital assets to be ‘different’ and thus requiring bespoke rules to govern them.
While Kennedy said he largely agreed with this, the request reminded him of how Congress had let the current tech giants “draft their own rules and, uh, frankly … what we got as a result looks like somebody knocked over a urine sample.”
Much of the discussion involved CLARITY assigning primary responsibility for digital asset oversight to the CFTC, leaving only a minor role for the Securities and Exchange Commission (SEC).
However, Sen. Tina Smith (D-MN) noted that CLARITY would exempt certain digital assets from SEC oversight if they were deemed to be “collectible or as art or as something that has inherent value or utility.” Smith called this “a loophole you could drive a truck through and I don’t think that is an accident.”
Massad agreed, saying CLARITY contained an ‘innovation exemption’ for so-called ‘mature’ blockchain systems. The definition is vague and reliant on the principals behind these networks to self-report only their intention to achieve ‘mature’ status, effectively allowing them to embark upon ICO-style fundraising like it was 2017 all over again.
Most of the Dems on the committee singled out Trump’s crypto ties and the need for clear conflict-of-interest rules. But Sen. Bill Haggerty (R-TN), who helped steer the stablecoin-focused GENIUS Act through the Senate last month, dismissed these comments, noting that many Dems made similar pronouncements before ultimately voting in favor of GENIUS.
Coinbase spends/warns Congress not to screw this up
Given the CFTC’s featured role in the looming crypto regulatory landscape, the Senate Agriculture Committee has scheduled its own hearing for July 15. The hearing, titled ‘Stakeholder Perspectives on Federal Oversight of Digital Commodities,’ has yet to release its witness list or other details.
In the meantime, crypto operators are ratcheting up their lobbying pressure on Congress. On July 7, the Coinbase (NASDAQ: COIN) digital asset exchange‘s grassroots/astroturf group, Stand with Crypto, delivered a letter” to the House of Representatives. The letter was “signed by over 65 Crypto Founders representing 6,100+ jobs across 21 states,” all of them urging House members to support CLARITY.
The letter struck an ominous tone, claiming that crypto is “approaching a pivotal crossroads” but “[t]here are already signs of U.S. crypto leadership slipping.” A ‘no’ vote on CLARITY will push “talent and businesses to more crypto-friendly jurisdictions abroad,” and “the U.S. risks falling behind unless we adopt pro-crypto policies that fully embrace blockchain technology.”
On July 8, Coinbase paid for a full-page ad in the Washington Post claiming that “America voted pro-crypto” and thus it is “time for Congress to act.” (Emphasis in the original.) Similar ads appeared in the Wall Street Journal along with video ads on X and Facebook, as well as physical ads at D.C. bus stops and on billboards.
The Hill reported that Coinbase’s ad campaign was a “six-figure” spend and quoted Kara Calvert, Coinbase’s VP of U.S. policy, warning politicians that “crypto voters are watching” to see how they vote on bills during the House’s ‘crypto week.’
Among the bills expected to come up for floor votes in the House next week are CLARITY, GENIUS, and the 2025 version of Rep. Tom Emmer’s Anti-CBDC Surveillance State Act.
Some House Dems have already signaled that they won’t vote in favor of CLARITY unless GOP leaders agree to add guardrails to restrict the Trump family from profiting off their burgeoning crypto ventures.
On July 8, Politico quoted Rep. Jim Himes (D-CT) saying “For me, and I suspect for some other Democrats, if we can satisfy this question of conflict of interest—meaning there’s a prohibition on the president being an issuer — a lot of us can get to ‘yes.'” Himes claimed that GOP leadership was “working in good faith to try to get us to ‘yes.'”
It’s worth noting that leaked chat group messages suggest Dems will engage in this kind of performative resistance before they inevitably ‘get to yes,’ because an actual ‘no’ vote might result in big-spending crypto groups targeting them for destruction ahead of the 2026 midterm elections.
Trump family crypto ventures not letting up
The reach of Trump-related crypto activity grew a little wider this week on news that Trump Media & Technology Group (TMTG) had filed an application with the SEC for its third crypto-focused exchange-traded fund (ETF) that it hopes to launch “later this year.”
TMTG’s first ETF focused on BTC, while the second was a mix of BTC (75%) and ETH (25%). This new ‘blue chip ETF’ application is a multi-token affair, comprising BTC (70%), ETH (15%), SOL (8%), CRO (5%), and XRP (2%).
The Crypto.com exchange will act as this blue-chip ETF’s “exclusive digital asset custodian and prime execution agent, as well as staking and liquidity provider.” The announcement lit a fire under CRO, the native token of Crypto.com’s Cronos chain. CRO started Tuesday at $0.08, then shot up by one-fifth to just under $0.10, before retreating slightly to $0.096 as of mid-Wednesday.Earlier Wednesday, Thumzup Media Corporation informed the SEC that a certain Donald Trump Jr. now held 350,000 shares in the company worth ~$3.3 million as of Wednesday’s closing price of $9.50. That’s down 23% from Tuesday’s close of $12.36, but still better than their position below $7 on July 1.
Bloomberg reported that Don Jr. acquired the shares “on the recommendation of his investment adviser and has no other involvement with the company.” However, the $6 million private placement of Thumzup shares was handled by Dominari Securities, whose parent company Don Jr. and his brother Eric serve as advisers.
Thumzup is a struggling social media firm that posted revenue of $151 (not a typo) in the first quarter of this year, resulting in a net loss of $2.1 million. On January 7, Thumzup announced it had bought 9.8 BTC worth ~$1 million at the time as part of a previously announced plan to join the crypto treasury hordes. Thumzup announced this week that it now holds 19.1 BTC and will soon add ETH, XRP, SOL, DOGE, and LITE to its treasury.
We’re not done recapping all things Trump, as Justin Sun, founder of the TRON network, declared Wednesday that “[w]e are committed to buying $100M of” the president’s $TRUMP memecoin. ‘We’ in this case is likely a reference to TRON, which revealed this week that it would launch $TRUMP (previously available only on Solana) at some point in the not-too-distant future.
Sun has been among the biggest backers of the president’s crypto ventures, having previously purchased over $20 million worth of $TRUMP. That followed Sun purchasing $75 million worth of WLFI, the governance token of the Trump-linked decentralized finance (DeFi) platform World Liberty Finance (WLF). (Sun’s big-spending ways scored him an appointment as a WLF advisor.)
That’s still not the end, as the Bybit exchange announced Wednesday that it had officially listed USD1, the WLF stablecoin that made its debut this spring. Bybit joins Binance, Bitget, MEXC, and the Sun-affiliated HTX (formerly Huobi), as well as decentralized exchanges such as PancakeSwap and Sun.io, in making USD1 available to their users.
Bybit is celebrating the launch by giving away $300,000 worth of USD1 to users who make trades with USD1, which is currently paired only with USDT (Tether) and MNT (Mantle), but it’s still in the early days.
DWF-backed stablecoin depegs
Speaking of Trump-linked stables, market-maker DWF Labs is coming under fire after Falcon Labs’ dollar-denominated Falcon USD (USDF) stablecoin abruptly lost its 1:1 peg with the U.S. dollar late July 7. The token briefly dipped below $0.98 before regaining some ground but had yet to regain its full 1:1 peg as of late Wednesday.
The depeg appears to have been sparked by fresh concerns over USDF’s liquidity and lingering concerns over the soundness of the reserve assets backing the ~$547 million in circulating USDF. Concerns over USDF aren’t new, as ChainArgos recounted the project’s lack of adequate data disclosure back in March.
On July 8, DWF/Falcon Finance managing partner Andrei Grachev tweeted “a short summary” of Falcon’s activities in a bid to calm the waters. Grachev claimed USDF’s “reserves are audited,” but Falcon’s transparency page suggests it’s only the protocol’s smart contracts that are audited.
The company handling USDF’s reserve reports stresses that “we have not performed any procedures over the control and ownership of the above assets, nor any procedures over whether any security has been placed on these assets.”
Grachev claimed the transparency page was being updated “next week” to show “a proper assets breakdown, lock BTC, stables, altcoins.” Given Grachev’s previous claims re USDF’s ‘audits,’ only time will tell whether the update meets user expectations.
If you’re wondering what this has to do with Trump, DWF recently struck a ‘strategic liquidity partnership’ with the Bitget exchange to promote USD1 adoption. DWF also purchased $25 million worth of WLFI (which might soon be tradable on the open market, pending the results of a governance vote).
Storm brewing over Tornado Cash founder’s trial
During his Senate committee testimony on Wednesday, Chainalysis CEO Levin was asked about the role that ‘coin mixing’ services like Tornado Cash play in facilitating illicit finance.
Levin acknowledged mixers’ role in obfuscating the trail of digital assets but claimed “it’s possible to continue to trace through certain types of mixers in certain instances.” Levin also claimed his company has “seen less use of mixers in the context of terrorist financing actually than you would expect.”
While it’s true that obfuscation options aren’t limited to mixers—cross-chain bridges and decentralized exchanges also play a role—terrorists and other criminals do make frequent use of mixers. Last month, the individuals behind the 2023 hack of Singapore’s Bitrue exchange began laundering $22 million in stolen tokens through Tornado Cash.
North Korea’s infamous Lazarus Group of hackers has also patronized mixers like Tornado Cash, leading the U.S. Department of Justice (DoJ) to file charges of money laundering and sanctions violations against the mixer’s co-founders in 2023. The trial of one of those co-founders, Roman Storm, is set to start on July 14. Last month, Storm tweeted that if he loses his case, “DeFi dies with me.”
Ahead of the trial, there has been the usual flurry of motions to determine what evidence will be permitted, what experts will give testimony, and the like. At a pre-trial hearing this week, U.S. District Court Judge Katherine Polk Failla granted the Storm team’s motion to bar discussion of the sanctions imposed on Tornado Cash by the Treasury Department’s Office of Foreign Assets Control (OFAC) in August 2022.
Failla claimed the trial was already too complicated for a jury without including the sanctions discussion, particularly since OFAC’s new management lifted those sanctions in March. However, Failla warned that she might yet allow a “unicorn document” that prosecutors might introduce regarding Storm’s post-sanction activities.
Failla also won’t allow testimony referring to ‘the Van Loon case,’ a reference to the civil suit filed by several Tornado Cash users who claimed OFAC had no right to apply sanctions on software. Last November, a federal appeals court ruled that OFAC couldn’t sanction Tornado Cash’s smart contracts. The same court later ruled that smart contracts aren’t property and thus they’re beyond OFAC’s ability to sanction.
While Failla’s rulings were a mixed bag for Storm, he likely took heart from the fact that the Treasury Department announced this week that it was dropping its appeal of the November sanctions ruling. Treasury claimed the issue was moot following OFAC’s delisting of Tornado Cash.
In another positive development, when the House was advancing the CLARITY Act, it included language excluding “any ‘non-controlling blockchain developer or provider of a blockchain service’ from having to conform to money transmitting rules and regulations.” This language was previously part of a standalone bill called the Blockchain Regulatory Certainty Act. So perhaps DeFi will survive just fine regardless of Storm’s fate.
Not helping, guys…
Earlier this month, Storm gave his first podcast interview since his indictment. Speaking to Crypto in America, Storm offered the standard DeFi defense that all he and his fellow developers did was write code and had no control over how their tools were used.
That defense didn’t save Alexey Pertsev, the Tornado Cash developer who was sentenced to 64 months in prison in May 2024 after a Dutch court convicted him of facilitating money laundering. Pertsev was released from pre-trial detention in February as he prepares to appeal his sentence.
Around the same time, Pertsev received $1.25 million from the Ethereum Foundation to help pay his legal bills. Pertsev received a similar amount from venture capital firm Paradigm the previous month.
The Ethereum Foundation also donated $500,000 to Storm’s legal fund, offering to match a further $750,000 in community donations, for which Storm offered “a huge, heartfelt THANK YOU.”
Less helpful was the $24,000 sent to Storm’s defense fund by the individual(s) who exploited the Cork Protocol in May. Last month, PeckShield reported that the hacker(s) were busy laundering $11 million worth of stolen ETH through Tornado Cash, but apparently felt the need to throw Storm a bone for building such a fine product. Storm later tweeted that he “couldn’t accept such funds” and returned the stolen loot to the Cork team.
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