Somehow, Eric Trump’s “money printing” bitcoin business left investors holding the bag
The money got printed. It just didn't get to the investors.
Eric Trump sold his bitcoin company as a profit machine. But as the stock soared and then cratered, it was investors, not family insiders, who ended up stuck with the losses.
Eric Trump’s newest bitcoin venture may be selling a story more than a business. As he tells it, American Bitcoin can print money by mining bitcoin for roughly half of what it is worth. But a closer look at the numbers calls into question whether the company can mine bitcoin profitably at all, let alone with such massive margins. Representatives of Eric Trump, the Trump Organization and American Bitcoin did not respond to repeated requests for comment. Plenty of people trust in the president’s son, putting real money at stake. When American Bitcoin hit the public markets on Sept. 3, investors valued Eric Trump’s company—with an estimated $270 million of bitcoin on its balance sheet—at $13.2 billion.
Over the last eight months, American Bitcoin has taken advantage of that astronomical valuation, dumping shares to buy more bitcoin. The much-diluted stock is now down 92% from its peak. Given that Eric Trump seems to have invested little to get involved with the venture in the first place, he’s still doing fine, having boosted his personal fortune from an estimated $190 million to $280 million through a stroke of financial alchemy. Other insiders have done well, too. The everyday investors who bought into the sales pitch, by contrast, are down an estimated $500 million.
The money got printed alright.
Bernie Madoff would be envious.