What You Need to Know About Trump, Twitter, and FTX
Donald Trump’s Twitter account has been restored to him. The former president’s Twitter account is one of several high-profile ones to be resurrected following entrepreneur Elon Musk’s takeover of the social media platform.
“I think [with] Musk getting in and seeing what was happening behind the scenes, he realized pretty quickly that the content moderation rules that had been put in place by the previous regimes were actually completely arbitrary,” Jake Denton, research associate in The Heritage Foundation’s Tech Policy Center, says. (The Daily Signal is Heritage’s multimedia news organization.)
Denton joins “The Daily Signal Podcast” to discuss what Musk has changed at Twitter as well as the bankruptcy filing of the cryptocurrency exchange FTX.
Listen to the podcast below or read the lightly edited transcript:
Virginia Allen: We are joined today by Heritage Foundation research associate in tech policy Jake Denton. Jake, welcome back to the show.
Jake Denton: Yeah, thanks for having me back.
Allen: So, Jake, we had you on a few weeks ago to talk about Elon Musk buying Twitter, big news after so long. And since Musk purchased Twitter, he’s made some pretty big changes to the platform so far. Some people love the changes. Other people are not so happy. Some of the folks who work at Twitter are not so happy. Some folks on the political Left are pretty angry about these changes. And some of the biggest news, recent news, is that Musk has restored former President Donald Trump’s Twitter account. Why is Musk allowing Trump back on Twitter?
Denton: Well, I think Musk getting in and seeing what was happening behind the scenes, he realized pretty quickly that the content moderation rules that had been put in place by the previous regimes were actually completely arbitrary. There are forums out there where you can see what Trump was banned for and it’s incoherent, and it makes no sense.
And I think Musk sees that the rules of the past regime will always hold back Twitter. He wants to move. He’s saying the previous Parag and Jack was Twitter 1.0. Heading into Twitter 2.0, that’s where kind of these expectations for the new employees come from. And if you carry over the baggage of Twitter 1.0, you’re bound to recreate the same mistakes.
So, I think Trump was the most obvious. It’s the elephant in the room. Is he ever going to come back? If you had said he is a year ago, I don’t think anyone would’ve believed you. But things are changing very quickly and I think this perfectly positions Twitter to move into Twitter 2.0.
Well, and I had to laugh a little bit at the way that Musk did it because he actually put a poll up on Twitter and he let Twitter users vote and say, “Yes, we want the former president back on the platform,” or, “No.” Of course, we can’t say definitively whether that alone was how Musk made his decision.
You feel like he probably already had determined what he wanted to do, but, one way or another, the poll saying, “Yes, bring Trump back,” won out, which was pretty fascinating to see. And yet Trump isn’t tweeting. Why?
Yeah. So, quickly, the poll was actually a totally new direction for the platform because, initially, the Trump ban was going to wait until the oversight board had been formed. And Musk had kind of said no big changes to the platform will occur until this panel of academics assembles and we can review them with every perspective at the table. And I think, in the midst of the chaos of the employees revolting against him, he just kind of went rogue and did it himself.
And I think we’ve gotten, beyond even Musk, Project Veritas, several other accounts that I don’t think would’ve made it through the oversight board. So, very substantial that he’s kind of diverted course from that initial plan, probably the bad advice of an employee who’s no longer there. So, that was a great development.
Allen: Classic Musk.
Denton: Yes. Yeah.
Allen: And then, in regards to former President Trump, it’s fascinating because his account has been restored, but he’s not actually tweeting.
Denton: Yes. So, Truth Social, actually, it’s contractually obligated that Trump remains on the platform exclusively, so to speak. So, there’s a clause within the contract that allows for him, after posting exclusively on Truth, six hours-ish later, he can then post on an adjacent platform. And so, I think it’s kind of boxing him in a bit.
Allen: But this is Trump’s platform. So, … he allowed those rules to be written in for his own platform for himself?
Denton: Yeah, this was trying to create shareholder value.
Allen: Got it.
Denton: Right? Because they go public, why would I invest in this? And so, Trump gave them that reason. You’re going to have the Trump bombshells exclusive on Truth. And so, I believe this contract expires almost like a year out from now. So, he can either lose that exclusivity deal, cross-post on both, quite a few paths.
I think the most likely outcome to this is, heading into the thick of election cycle, we’ll see Trump post exclusively on Truth, and then it’s mirrored on Twitter and any other profile. But I don’t really see him coming back, and I think he’ll play kind of this “You could have had me and I left” type of angle, but it really is a contractual issue.
Allen: That’s fascinating.
Well, Musk, when he bought Twitter, he promised to really model it after a town square, saying, anything that you say in a town square, you should be able to say on Twitter because Twitter is now essentially the world’s town square. But I want to ask you to weigh in on something that was written in The New York Times by the former head of trust and safety at Twitter, Yoel Roth.
So, he had a piece in The New York Times on Friday, and he writes, “Advertisers have played the most direct role thus far in moderating Mr. Musk’s free speech ambitions. As long as 90% of the company’s revenue comes from ads, as was the case when Mr. Musk bought the company, Twitter has a little choice but to operate in a way that won’t imperil the revenue streams that keep the lights on.”
So, the implication here is that advertisers are not going to put up with language on Twitter, with claims on Twitter that are false, or that they deem as hateful conduct, or whatnot.
What are your thoughts here? Can you have the free speech aspect on Twitter and also keep advertisers happy?
Denton: Yeah, it’s very interesting to kind of watch this unfold because it’s almost like selective outrage from the corporate interest bubble.
For years, essentially, since the origins of Twitter, child pornography has been a rampant issue on the platform. And what we’re seeing from Elon Musk is that there was almost like a deliberate, just don’t address it, allowed to exist type of mentality from Yoel Roth’s trust and safety group. And now, Elon’s saying it’s a top priority. They’ve already gotten rid of tons of the hashtags that were used to kind of traffic child pornographic images. But then, if President Trump’s on the platform, advertisers won’t be on the platform.
So, there’s the same people that are objecting to content on the platform that were totally fine with the previous Twitter that had all these explicit images and terrible things on it.
And so, I think it really just comes back to the corporate interests that are aligned with the Left that intend to use their power to drive the direction of the country, Twitter’s critical infrastructure at this point. And they don’t want to have someone like President Trump on the platform. So, it really is a political move here. I don’t think it has anything to do with their true moral objections to the rhetoric that could come out.
Allen: OK, that’s fascinating. Thanks for explaining that. Now, when it comes to Twitter’s future and looking forward, of course, whether you’re on Twitter or not, Pew Research estimates that about 1 in 5 adults in America use Twitter, but a lot of Americans also have stock in the platform. How well or poorly Twitter does affects global markets. So far, for those who use Twitter or have stock in Twitter, they want to know, is the company going to make it under Musk? Your thoughts?
Denton: I think these speculative kind of articles from CBS to any other given publication saying that Twitter’s going to go under and they’re unstable are really just trying to prop up this almost bulk kind of Silicon Valley model where you overstaff. Those TikToks where the IT girl is posting “a day in my life in tech” and they don’t do anything, that is kind of the complex that the media apparatus wants to prop up.
And Elon is bashing it down with a hammer, showing that, I believe, from their 7,500 employees at their all-time high, Twitter is operating almost the exact same structure, same style with almost just around 1,000. So, such a substantial reduction in staff size, yet the thing isn’t burning down. And you’re seeing that model and that kind of perspective spill over across the tech sector.
You have Amazon, Google, all these other companies beginning to lay off these extra staff. And frankly, I don’t know how the past kind of leadership structure found things for 7,500 people to do at Twitter. They have that little round table the other day of the engineers coming together and helping sort through the code, and they’re making changes with just around 30 to 40 top-level coders that we couldn’t get with 7,000 staff.
So, I think we’re seeing that the model is completely flawed for these tech companies. They’ve had so much extra money that the way they decided to spend it was on staff when that really wasn’t what they needed.
Allen: Well, Jake, I want to take a minute to talk about a tech company that has gone under. A cryptocurrency empire has gone bankrupt just recently. So, last week, news broke about the bankruptcy of FTX Exchange. FTX, they were a leading centralized cryptocurrency exchange. Walk us through this. What exactly did FTX do as a company and how did they go bankrupt?
Denton: Yeah. So, in order to really understand this, we have to jump in the time machine and go back to 2017, where the founder of FTX, Sam Bankman-Fried, founds his first company, Alameda Research, which is a quantitative trading company focusing on cryptocurrency.
And so, he kind of develops this lore behind him as he amasses a great deal of wealth, kind of using legitimate quantitative methods to trade cryptocurrency at high volumes, getting all this money, spins up FTX, which is essentially a normal person’s crypto exchange. Right?
Forever, crypto was impossible to invest in because it required a sophisticated knowledge of basically this Korean apparatus that had crypto exchanges that weren’t necessarily legal in the United States. So, Sam brings this kind of layman’s normal person crypto exchange to the states and overnight, it’s a success. It becomes a monopoly. Regulators are cozying up to Sam. There’s no shortage of photos with him and [Rep.] Maxine Waters, to Gary Gensler, the [Securities and Exchange Commission] commissioner.
And then, overnight, essentially, just similar to its rise, it collapses, and there’s no sign as to initially why it could have happened. And then, we begin to sort through the rubble and see that users’ funds that were going onto FTX were being transferred to Alameda Capital, the original company that essentially spun up FTX, to make really risky trades that were kind of baseless.
They were investing in obscure alt coins, which are essentially different from your bitcoins and ethereums. They fulfill very niche purposes. And then the other funds that were still in Alameda were being loaned to Sam Bankman-Fried.
And what Sam was doing with this money, I don’t think at this point it’s any secret, was donating to political causes predominantly of the far-left variety, anywhere from his own family’s PACs to political candidates that were primarying kind of institutional folk. And then they were also just purchasing houses and luxury cars for executives.
So, I mean, you really pull back the curtain here, and it appears the entire thing was just a pass-through entity for basically purchases that had nothing to do with cryptocurrency, everything to do with kind of the hedonistic pleasures of the leadership apparatus, to the political causes that he believed in.
Allen: Now, we know that companies, large companies, do go bankrupt and companies, in general, they go bankrupt all the time. But why is FTX specifically taking the news by storm? Why is everyone so blown away that this company specifically went bankrupt? And what does this mean for global markets?
Denton: Well, I think there’s a handful of reasons why you could say this took such a strong foothold in the news cycle.
I think the first has to be with the kind of speculation over the ties with the Democratic Party and all these other institutional forces that allowed for them to kind of manipulate this regulatory environment and develop a pseudo monopoly over crypto exchanges domestically.
But I think the more interesting thread, and it’s a little less politically valuable, is kind of the complicit behavior with Silicon Valley and the venture capital kind of apparatus.
You have groups like Sequoia Capital, which are known to be very good at due diligence, they don’t invest in obscure companies like this, give Sam $400 million without a corporate structure existing. There was no board of directors. The Day One affidavit of their Chapter 11 filing found that they couldn’t even produce the bank accounts that the company had. There’s no bookkeeping at all of where the money was going.
They couldn’t even provide a list of names of individuals who worked at the company. There was no HR apparatus. People were essentially being paid over a Venmo equivalent, the supervisors approving the process of payments, whether that be reimbursements or just your normal salary or approving the process through the use of emojis. So, you get like a thumbs up or a thumbs down on if you were getting your disbursement.
So, Sequoia Capital and a whole host of other institutional investors hear this pitch from a 20-something who’s on loads of amphetamines. Right? He’s taking everything from Adderall to Parkinson’s medication, overly stimulated, shaking in every video you can find of him. And they ask him for details of FTX, and he presents to them this company that has literally no corporate structure, and yet they still give him all this money.
And the question is, what motivated these really legitimate enterprises, these operations with no shortage of Harvard business grads and veterans of the space, to reject every principle they’ve ever had and invest in Sam?
And I mean, someone with a more pessimistic mind would probably say it’s the political connections. Others could point at the nature of crypto, this fog around the space of whether or not it’s a legitimate enterprise. There’s really not a great understanding of the older crowds of what crypto even means. But there really hasn’t been an answer for that yet.
And groups like Sequoia have slid under the radar. The media isn’t talking about them at all, but they were essentially the pitch deck. You go to Tom Brady. You go to any of these individuals who put money in, and Sam’s telling them, “Oh, Sequoia invested.” So, they kind of need to answer for what they saw in the process beyond an eccentric 20-something loaded on amphetamines that motivated them to give him all this money.
Allen: Yeah, it’s wild because you think about all of the hoops that just a small company in the United States has to jump through, with all of the red tape, and the things that they have to show the IRS, and it’s almost mind-blowing to think that FTX didn’t have some sort of structure set up. So, what happens now?
Denton: Well, it’s very interesting because, now, I mean, every regulator in Washington has essentially met with Sam. There’s been no shortage of cocktail receptions to on-the-Hill meetings. He visits with Gary Gensler of the SEC.
So, all these people are—there’s two classes, right? The folks who are deceived and the people who knew, and I think both are probably equally angry. The folks who were deceived believe a fast one was pulled on them. And the ones who are angry are just mad that this blew up and they’re now implicated.
And so, we’re essentially on this collision course with reality, where these regulators have to react in some form. Inaction basically shows that they’re complicit.
So, I believe that the hammer is just going to drop. I mean, it’s going to supercharge the anti-crypto rhetoric that’s already existed here in D.C. And the golden boy is gone, so everything that was holding them back from already dropping the hammer, it’s going to be open season. I don’t think there’s going to be really another crypto bull run until this is all sorted out with the regulatory environment, but this is not going away anytime soon.
Allen: Keep a close eye on it. Jake Denton of The Heritage Foundation. Jake, thank you so much for your time today. We really appreciate you joining.
Denton: Thanks for having me.
Have an opinion about this article? To sound off, please email [email protected] and we’ll consider publishing your edited remarks in our regular “We Hear You” feature. Remember to include the url or headline of the article plus your name and town and/or state.