Numerous media outlets have mischaracterized David Sacks‘ recent withdrawal of over $200 million in crypto assets, prompting a sharp rebuke from Trump’s newly appointed cryptocurrency advisor. Sacks, who currently serves as an advisor on digital assets and artificial intelligence policies in the Trump administration, made it clear that the disinvestment was mandated by government ethics regulations applicable to special employees, rather than a lack of confidence in the market as some reports suggested.
The divestiture included significant holdings in major cryptocurrencies and related stocks, such as Bitcoin, Ethereum, Solana, Coinbase, and Robinhood, which Sacks was required to sell to comply with conflict of interest provisions. Despite completing this substantial financial sacrifice, Sacks maintains investments in certain highly illiquid venture capital funds focused on digital assets, which were permitted under the regulatory framework. The former venture capitalist initiated sales of limited-partner interests in nearly 90 other VC funds as part of his compliance efforts.
In compliance with ethics regulations, Sacks divested from Bitcoin, Ethereum, and crypto stocks while retaining permitted illiquid venture capital investments.
Industry leaders, including Binance’s CZ, have rallied behind Sacks, questioning whether media coverage reflects inherent bias against cryptocurrency rather than accurate reporting of regulatory compliance. The framing of the disinvestment as a “dump” rather than an ethically required action has fueled debate about media priorities and the representation of crypto-related news in mainstream outlets.
The Trump administration has demonstrated support for cryptocurrency through policy initiatives such as creating a strategic Bitcoin reserve and addressing “de-banking” challenges faced by crypto companies. These measures potentially legitimize digital assets in the financial landscape, potentially attracting institutional investors despite initial market skepticism. As chair of the executive order’s crypto working group, Sacks will focus on developing consumer protection policies to safeguard against scams and fraud in the industry.
Sacks’ disinvestment carries significant tax implications, as government ethics rules do not allow for capital gains deferrals typically available in other scenarios. The regulatory framework demands transparency and disclosure to maintain public trust in government advisors’ financial decisions, ensuring they operate free from conflicts of interest. His crypto sales likely triggered capital gains taxation since the IRS classifies cryptocurrencies as property rather than currency.
The controversy highlights the tension between regulatory compliance and public perception, with Sacks emphasizing that his financial decisions were driven by legal requirements rather than market outlook. This distinction underscores the complex interplay between government service, financial interests, and the evolving landscape of cryptocurrency regulation.
