White House AI Advisor Sacks Divests $200M in Crypto Holdings to Comply with Ethics Regulations

David Sacks, the newly appointed special advisor for artificial intelligence and cryptocurrencies at the White House, and his venture capital firm Craft Ventures have divested over $200 million in digital asset-related investments. This significant move was undertaken to comply with government ethics regulations as Sacks assumed his advisory role. The divestment encompassed all liquid cryptocurrency holdings, including Bitcoin, Ethereum, and Solana, as well as stocks in prominent companies such as coinbase global Inc. and robinhood markets Inc. Additionally, Sacks and Craft Ventures sold their interests in several crypto funds, including Multicoin Capital, Blockchain Capital, and Bitwise Asset Management Inc.

The divestment process was detailed in a memo dated March 5, which revealed that at least $85 million of the divestments was directly attributable to Sacks. The sales were made at a significant tax cost, as special government employees like Sacks are not entitled to deferments of capital-gains taxes. The disclosures were part of a memo that provided Sacks with a waiver from conflict-of-interest regulations to serve as the President's special advisor for AI and crypto. This role is designed to guide the President's digital-asset policies, and Sacks was also named as chair of the President’s Working Group on Digital Asset Markets.

Sacks' divestment also included the sale of his limited-partner interests in Sequoia funds and 90 other VC funds. He is also in the process of divesting minor stakes in several companies, including Animoca Brands Co., Open Deal Inc., and amalgamated Token Services Inc. Despite these sales, Sacks disclosed remaining investments in several VC funds managed by Craft Ventures, which own private equity in digital-asset companies that are highly illiquid and thus not easily divested.

The President, who was initially a critic of crypto but later became a vocal supporter, has already delivered several wins to the digital-asset industry in the first two months of his administration. These include the creation of a Strategic Bitcoin Reserve and a separate stockpile of other digital assets, as well as the dismissal of legal actions against crypto companies by the Securities and Exchange Commission. Sacks' appointment as the AI and crypto czar is part of a broader trend of ultra-wealthy individuals securing influential seats in the new administration.

This divestment underscores the commitment of the new administration to ensuring ethical standards and minimizing potential conflicts of interest. By liquidating his significant holdings in the digital asset industry, Sacks aims to maintain the integrity of his advisory role and focus on guiding the President's digital-asset policies. The move also highlights the growing importance of digital assets in the global financial landscape and the need for regulatory clarity and oversight.