The struggling tech company with ties to China and relies on Tiktok made a rare announcement this week. He had secured funds to buy the $300 million Trump, the so-called mimecoin that President Trump sells.
GD Culture Group, a public company with a Chinese subsidiary, has only eight employees, and its public application has been shown to have zero revenue last year from its e-commerce business run by Tiktok, a Chinese-owned video sharing app.
But on Monday, GD Culture Group became the latest business with foreign ties to seize Trump's crypto venture. This has led to conflicts of interest that conveyed profits directly to the Trump family and surprised ethics experts. (Memecoin like $Trump is a kind of cryptocurrency based on online jokes and celebrity mascots, and traditionally no utility exceeded speculation.)
The GD Culture Group, which trades on Nasdaq, said in its statement it will spend $300 million on Bitcoin and $Trump stockpiling, using revenue to the unnamed presence of the popular tax shelter British Virgin Islands. The securities investment plans filed late Tuesday have been confirmed.
The purchase creates clear ethical conflicts, enrich Trump's family and seeks to reach a deal that allows Tiktok to continue operating in the United States rather than facing a congressionally approved ban.
The announcement also shows investors around the world, including those who do not have a virtually public footprint, have been tied up by the president's crypto venture to boost their business outlook.
Simply claiming Trump's business connections will help him quickly raise his company profile. GD Culture Group's struggling inventory rose 12% on Monday, losing profits the following day.
“Don't make any mistakes. These foreign groups and the government clearly want to curry favor with the president,” said Charles Dent, a former representative of the Pennsylvania Republican, who was chairman of the House Ethics Committee. “This is completely out of scope and raises all sorts of ethical, legal and constitutional issues that must be addressed.”
Foreign investors have been rushing to acquire $Trump coins in stock since they entered the market in January. Some people have explicitly stated they would like to use the purchase to influence Trump.
The GD Culture Group was less clear about its intentions. In a statement, the company said it would “want to strengthen its balance sheet with high-performance, scalable digital assets.”
However, the purchase by GD Culture Group is the first known example of a Chinese-linked company that purchases Trump's Memecoin. The financial disclosure states that its subsidiary Shanghai Xianzhui may be affected by demands from the Chinese government, but that is not an unusual language for Chinese companies.
“The Chinese government may affect intervention or its activities at any time,” the company said in its annual report filed in March.
In recent weeks, the Trump tribe has faced a fierce backlash in Washington over business deals with foreign countries.
On the Senator's floor on Tuesday, Sen. Christopher S. Murphy, a Connecticut Democrat, walked 20 minutes through various sources of overseas money poured into Trump's family business, including real estate contracts involving the Qatar government and another $2 billion crypto deal with a company backed by the Arab Emirates.
“If a small town mayor was selling a meeting at city hall for a thousand dollars, he would run out of town on the railroad, but that's exactly what Donald Trump does in the Middle East and around the world,” Murphy said.
Representatives from the White House, Trump Organization, and GD Culture Group did not respond to requests for comment.
Trump began selling $Trump Coin three days before his inauguration, one of several crypto ventures he and his sons pursued. The price of the coin suddenly surged, then crashed quickly, costing investors billions of dollars.
Last month, Trump and his business partners announced that the top 220 buyers on the coin were invited to dinner with the president at a golf club in Virginia, sparking another round of desperate deals that further enriched Trump's family. An analysis by The New York Times and Crypto Forensics company Nansen found that many of Coin's buyers are based overseas in countries including Mexico, Singapore and Australia.
Under federal law, foreign investors are prohibited from making political campaigns or donating to the president's first fund. But Trump's Crypto Ventures offered a new avenue for these overseas buyers to support him financially.
In April, Mexico-based shipping company FR8Tech announced it would spend $20 million on Trump's Memecoin as “a way to defend fair, balanced and free trade between Mexico and the United States.”
The GD Culture Group statement did not mention policy goals. Chief Executive Xiaojian Wang said the company is moving to embrace “industrial transformation” through cryptocurrency and “strengthen the financial foundation.”
It was unclear how exactly GD Culture Group secured funds to buy hundreds of millions of dollars of crypto. In its statement, the company did not disclose information about the British Virgin Islands entities that it agreed to purchase the shares.
In a filing with the SEC on Tuesday, GD Culture Group confirmed its plans to buy $Trump, but again omitted information about the entities funding the purchase.
Historically, the British Virgin Islands have been a favorite jurisdiction for foreign investors seeking to maintain confidentiality.
Matthew Goldstein Reports of contributions.
