As we already discussed here, Trump's ‘Strategic Crypto Reserve’ appears to be just another way to legalize bribery, but as award winning economist Paul Krugman discussed in his latest post on Substack and during an interview with CNN's Erin Burnett this Friday, it's also just a giant pump and dump leaving taxpayers and small investors on the hook and vulnerable to hackers:

Look, there’s a lot going on, most of it terrible. Even so, I’m surprised that we’re just starting to get widespread coverage of the biggest theft in world history — at least so far. And as I’ll explain, a related but even bigger theft, promoted by Donald Trump, is in progress as you read this.

Here’s the story: last month hackers looted Ethereum coins worth $1.5 billion from Bybit, a Dubai-based crypto exchange — apparently the most money anyone has ever stolen in a single caper. The FBI believes that the North Korean regime was behind the hack. Most of the coins have already been laundered into Bitcoin, and will eventually be turned into real money that will be used to sustain Kim Jong Un’s brutal dictatorship. [...]

But small investors continue to lose large sums in crypto scams, like “rug-pulls.” And the biggest rug-pull yet is underway: Donald Trump’s plan for a “strategic crypto reserve.”

What’s a rug-pull? A textbook example just happened in Argentina, where Javier Milei, the president, touted a new cryptocurrency called $Libra. The currency’s price soared as thousands of small players bought in, while insiders sold their holdings for huge profits. Then the price collapsed, leaving small players owning worthless bits of code.

Here's more on the topic from Krugman's interview with Burnett:

KRUGMAN: Okay, so a rug pull is actually what just happened with the Trump and Melania coins. You introduce a new asset. A lot of -- with celebrity endorsements, a lot of small investors buy in while the insiders sell out and make a lot of money. And then the little people are left with big losses.

This is kind of a variant on that. It's the -- the crypto coins already exist, although nobody knows what you do with them. So it's not at all clear what a strategic crypto reserve will actually do for -- for the United States. But you have the ultimate celebrity endorsement, which is that the U.S. government is buying the stuff.

This is a little bit like another related thing where sometimes dishonest traders have hacked into computers of brokerage houses to use them to buy up penny stocks that they own, and then they sell out before the price crashes.

And so this is like a hack pump and dump. It's like a -- it's very close. Although worse than what, a scandal that may be about to bring down the president of Argentina, which is another rug pull. It's truly amazing because, again, nobody has any idea what -- what do you do with, you know, a crypto reserve is just strings of ones and zeros on, on servers somewhere. What does that do for the United States?

BURNETT: Right. And certainly, you know, I mean, I understand money in a sense is faith in its own way. But -- but none nothing exists in that yet.

I mean, you were talking about how and obviously a lot of, you know, Trump knows these guys who are in the room, right? All you got a strategic reserve. It's their -- their stocks that are going to go up.

You were talking about in one of your articles how the biggest theft in world history -- in world history just happened a couple of weeks ago. It happened via crypto hackers looted $1.5 billion worth of crypto. And that's -- and there's obviously a lot of other theft that we've heard about. But that would be the biggest in history.

I mean, Trump's got to know that.

KRUGMAN: Yeah, I'm not sure that he probably, you know, he probably thinks, gosh, those guys were smart.

And we're pretty sure we know who those guys were. In this case, it was actually the government of North Korea that pulled off the biggest bank heist in history. And we're kind of, you know, exposing now the U.S. taxpayer to a risk of further heists. It's -- it's just an amazing thing to see this happening.

Sadly, nothing is "amazing" these days with this criminal in the White House.