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When Vultron announced its $22 million funding round<\/a> earlier this week, the AI startup made sure to highlight a key investor: Craft Ventures, the firm \u201cco-founded by White House AI adviser David Sacks.\u201d <\/p>\n The announcement has raised questions about conflicts of interest in the Trump administration, where Sacks serves as both AI and crypto czar while maintaining his role at Craft Ventures \u2014 an arrangement that critics see as a new model of government service where the lines between public duty and private gain have become unclear.<\/p>\n Sacks has secured not one but two ethics waivers allowing him to shape federal policy while maintaining financial stakes in the very industries he oversees. The first<\/a>, an 11-page document from March, covers his crypto investments. The second<\/a>, issued in June, specifically addresses his AI holdings. Together, they\u2019ve enabled what ethics experts call an unprecedented arrangement.<\/p>\n \u201cThis is graft,\u201d said Kathleen Clark, a Washington University law professor specializing in government ethics, after reviewing Sacks\u2019 crypto waiver. \u201cThis is a lawyer<\/a> in the White House Counsel\u2019s office doing Trump\u2019s bidding, letting [Sacks] make money while insulating him from criminal liability.\u201d<\/p>\n Clark\u2019s analysis is critical. She notes the waiver discusses percentages of Sacks\u2019 total assets \u2013 when it was signed, his stake in Craft\u2019s overall portfolio represented less than 3.8% of his total assets, for example \u2013 but never reveals actual dollar amounts. \u201cThe fact that this interest is just 3.8% of someone\u2019s total assets, that\u2019s something if you\u2019re talking about a law professor. But 3.8% of this guy\u2019s assets is a heck of a lot of money,\u201d Clark said.<\/p>\n Clark also argues that the waiver fails to consider any consideration of potential upside. Federal regulations require examining not just current value but \u201cpotential profit or loss.\u201d For a venture capitalist like Sacks, Clark notes, \u201ceven if right now [if his shares are] less than 3.8% of his assets, if it does well, it could be more than that.\u201d <\/p>\n Craft Ventures did not respond to several requests from TechCrunch this week to discuss this story.<\/p>\n Techcrunch event<\/p>\n \n\t\t\t\t\t\t\t\t\tSan Francisco<\/span> The Vultron investment<\/strong><\/p>\n The timing of Vultron\u2019s announcement illustrates the complexity. Vultron creates AI tools specifically for federal contractors, helping them win government contracts more efficiently. The company boasts of reducing proposal timelines \u201cfrom weeks to days\u201d and claims one Fortune 500 client now saves \u201cmore than 20 hours per user each week\u201d on federal contracting work.<\/p>\n A source close to the company says Craft Ventures\u2019 investment predates Sacks\u2019 government appointment. However, the timing raises questions: the nation\u2019s AI czar has a financial stake in a company that profits from helping businesses win the very federal contracts his policies will influence.<\/p>\n Senator Elizabeth Warren has been among the most vocal critics of these arrangements. In a May letter to the Office of Government Ethics, the ranking member of the Senate Banking Committee questioned Sacks\u2019 crypto waiver, noting he was simultaneously \u201cco-hosting a $1.5 million-a-head dinner for crypto industry players\u201d while shaping federal crypto policy.<\/p>\n \u201cMr. Sacks simultaneously leads a firm invested in crypto while guiding the nation\u2019s crypto policy,\u201d Warren wrote. \u201cNormally, federal law would prohibit such an explicit conflict of interest.\u201d<\/p>\n Sacks has largely dismissed Warren\u2019s concerns, accusing her of having a \u201cpathological hatred<\/a> for the crypto community.\u201d He has separately said that he sold a fortune in crypto before joining the White House \u201cbecause I didn\u2019t want to even have the appearance<\/a> of a conflict.\u201d<\/p>\n Indeed, supporters of Sacks point to the sacrifices he\u2019s made for government service. According to his waivers, he and Craft Ventures have divested over $200 million in digital assets, with at least $85 million directly attributable to him. He has sold stakes in fast-growing companies, including his position in Elon Musk\u2019s xAI, and initiated the sale of interests in approximately 90 venture capital funds, including Sequoia funds. <\/p>\n The source close to Sacks emphasizes these divestments, noting that because of his government role, Craft Ventures must now run every AI and crypto-related deal past the White House ethics committee. This oversight, they suggest, makes it implausible to invest in feeder funds and smaller deals, given the volume of work that might entail for everyone involved.<\/p>\n Clark argues that the underlying ethical framework remains flawed. The waivers themselves, she argues, are designed to provide legal cover rather than address ethical concerns. \u201cThis is whitewashing,\u201d she said. Complicating matters further, Sacks works as a government employee just 130 days per year \u2013 effectively every other week \u2013 while maintaining his commercial activities during off periods. In September, for example, Sacks and his co-hosts in their popular podcast, All In, will stage what has become an annual three-day conference to which attendees pay $7,500 per person to join. While legally permissible, these activities further blur the lines between his public and private roles.<\/p>\n Some observers wonder whether Sacks \u2013 a self-made billionaire by Forbes\u2019 estimates \u2013 will declare victory and exit government service altogether. With the GENIUS Act now law, he may consider his primary mission accomplished: bringing cryptocurrency from the fringes to center stage.<\/p>\n But that will likely take time. Sacks used a Fox News appearance yesterday to detail his immediate priorities following the act\u2019s passage, emphasizing the development of regulatory frameworks in three key areas, including defining market structure categories (securities versus commodities versus digital assets), expanding stablecoin regulations, and evaluating a potential national digital asset stockpile.<\/p>\n Meanwhile, critics concerned about conflicts of interest argue the precedent has been set. The rapid passage of crypto-friendly legislation, combined with ongoing investments in AI companies serving the federal government, suggests that Sacks and others with similar arrangements have positioned themselves and their wider orbit to benefit from their government access.<\/p>\n Whether this represents a new normal for Silicon Valley relations with Washington, or instead an aberration that future administrations will reverse, remains to be seen. What\u2019s clear is that traditional ethics frameworks may be inadequate for an era when venture capitalists can maintain their investment activities while simultaneously shaping the policies that determine those investments\u2019 future value.<\/p>\n For now, the arrangement continues, protected by carefully crafted waivers that ethics experts have questioned but find legally unassailable. As Clark puts it: \u201cNo one will be able to prosecute him.\u201d<\/p>\n<\/div>\n
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