Prize Draw?

Fraser Nelson writes:

The general election may be years away but Nigel Farage is already acting like a winner — and one flush with cash. His political campaigns are starting to look like gameshow giveaways, with huge cash prizes for all. We have seen a Reform UK petrol station selling cut-price fuel. This week Farage announced a prize draw where Reform will pay not just for your electricity but that of your whole street. In the current local election campaigns, Reform seems to be outspending every other party, and by a country mile.

On a personal level, Farage also seems to have never had it so good. Last week he announced he is personally investing £215,000 in a Bitcoin company chaired by none other than Kwasi Kwarteng. Not a name that normally inspires much financial confidence, but with crypto it’s all about hype. As Farage would have expected, the share price of the tiny Stack BTC jumped so far that at one point it quadrupled. On paper, at least, he made more in a day than many of his Clacton constituents make in a decade.

The struggle takes many forms and Reform is certainly a revolutionary party. Farage’s allies say he has always had outside business interests. But this new one could be his most lucrative, with a bonus potentially worth millions being triggered if Stack’s market valuation hits £100 million. It’s a ludicrously ambitious for a company that produces nothing. But crypto does not operate on conventional metrics. Its calculations move on narrative, momentum and perceived political tailwinds.

If investors come to believe that Nigel Farage is within reach of No 10 — and that a Reform government would actively promote his crypto backers — the upside becomes self-fulfilling. The investment is not just a bet on Bitcoin but on political power itself. It was only a matter of time before the worlds of crypto and populist-right politics found each other. They arguably both originate from the 2008 financial crash. Banks were bailed out by the taxpayer and a precedent was set: when governments are in a jam (a crash, lockdowns) they start printing money. The experts will tell you that it’s safe, that it won’t lead to rampant inflation. Few foresaw either the asset price inflation after the crash (which sent prices of shares and property surging) or the two lost decades for pay growth.

Kwasi Kwarteng gets his spelling wrong

The result? The richest became a lot richer and the workers were marooned. This led to a feeling that the system is rigged, and demand for radical change. During the crash, a paper was published under the name of “Satoshi Nakamoto” asking a simple question: why, in the digital age, could money not be taken out of the hands of governments and banks entirely? Why could there not be a digitally created currency that no central bank could print or inflate, no government could manipulate, no financial crisis could corrupt? The answer was Bitcoin

 Its anonymous creator hard-coded a fixed supply of 21 million coins into its design and set it loose on the internet. Early adopters saw it less as an investment than an act of political defiance, a way of opting out of a corrupt financial system. For years, Bitcoin remained a niche obsession of cyberpunks, libertarians and monetary cranks on the fringes of tech and finance. And then, mysteriously, it started to be worth something.

Bubbles burst. Bitcoin revives. From near-zero it rose to $1, then to $1,000, collapsed, recovered and then surged again to $20,000 in 2017. Each time it was declared finished, each time it returned larger. What changed was not just the price, but perception. It was at first dismissed as a curiosity or a scam but after multiple cycles it began to look like something else: an asset whose volatility was the point rather than a flaw. Boom and bust were not signs of failure but features of a system driven by belief. With each recovery, the pool of believers widened — and with it the scale of the next surge. Even sceptics started to ask whether they were witnessing not a bubble but a new kind of market altogether.

One of those sceptics-turned-believers was a British businessman based in Thailand. Christopher Harborne had made his first fortune in aviation fuel, supplying military aircraft across Asia. He was an early investor in ethereum, the second-biggest cryptocurrency, and holds a major stake Tether, the stablecoin that has become the closest thing to the dollar of the crypto world. With a staff of about 200, Tether generates profits to rival those of Goldman Sachs.

Last year, Harborne made the biggest donation in the history of British politics by giving £9 million to Reform, the latest in a long run of his support. This reclusive crypto king, who goes by the name of Chakrit Sakunkrit in Thailand, has provided two-thirds of all money given to Reform. It’s all perfectly legal: proposals to ban foreign residents from influencing UK politics were never enacted. But the crypto factor marks a conflict of interest that has never been formally acknowledged, let alone managed. And it raises obvious concerns, given what’s been happening on the other side of the Atlantic.

Donald Trump was a late convert to crypto and was calling Bitcoin a “scam” as late as 2021. “I don’t like it,” he said then, “It’s another currency competing against the dollar.” But he then discovered the crypto world was anti-government, anti-establishment, anti-regulation and served as a massive source of political funding. During the 2024 election campaign, crypto money didn’t just flow into American politics; it was a flood, and ended up accounting for nearly half of all company donations. No other sector — Big Pharma, oil, Wall Street — came close. “The crypto army is striking,” declared Tyler Winklevoss, co-founder of the crypto exchange Gemini, as the various crypto-backed candidates started to win. Or take down their enemies: they spent $40 million to oust Sherrod Brown, a US senator who ran an investigation into links between Bitcoin and terrorism.

When Donald Trump arrived in the White House, he was as good as his word and set about making America the “crypto capital of the world”. The US crypto investigations unit, set up to root out fraud and money laundering in the industry, was disbanded. The US government was to hoard Bitcoin as a national asset the way other countries hold gold. Bitcoin surged. The Trump family lost no time getting in on the action. A digital token called $TRUMP was launched, which had no underlying value, no product, no business — nothing except the name. It was soon worth $10 billion. At one stage, the First Lady launched her Melania coin.

Melania Coin

These ventures crashed, as is the nature of such things. But the more lasting venture was a crypto operation called World Liberty Financial with Eric Trump, Donald Trump Jr and 19-year-old Barron Trump (listed as the project’s “DeFi visionary”). It’s worth about $2 billion.

Now the “crypto army” is marching on London, the currency exchange capital of the world. America has shown the model: enlist the leader, promise to make him rich (or even richer) and then wait for him to throw open the financial gates for you. “When it comes to your industry, then I am your champion,” Farage told a crypto conference last year. “What we’re going to need is a ‘Big Bang 2’.” He wants a Bitcoin reserve at the Bank of England and tax on crypto deals cut from 24 per cent to 10 per cent. He’d set up a sovereign wealth fund comprised of crypto assets.

Brave new Bitcoin world in Britain

If this brave new Bitcoin world ever comes to pass in the UK, it will be good business for Stack BTC. It is what’s known as a “Bitcoin treasury company”: one that exists simply to buy and hold crypto. It has a peculiar business model. If investors value your shares above the Bitcoin you own, you can issue new stock, use the proceeds to buy more Bitcoin and thereby justify a higher valuation. The cycle feeds on itself. To its enthusiasts, it is an “infinite money glitch” and one that has attracted tens of billions of dollars worldwide.

Metaplanet, a lossmaking Tokyo hotel group, adopted the strategy and saw its stock rise 15-fold in under a year. A Florida toymaker followed. So did nail salons and electric-bike firms. The common ingredient is not the underlying business but the story being told. The biggest shareholder in Stack BTC is not Kwasi Kwarteng but Paul Withers, co-founder of the precious metals trader Direct Bullion — which has previously paid Farage some £400,000 to advertise gold coin investments to his supporters. The gold salesman, it seems, has gone digital.

Just two years ago, Kwarteng was dismissing Bitcoin as “a total crapshoot”. Now he’s the face of its future. In his Stack BTC video address, his first since delivering Liz Truss’s calamitous mini-Budget, he spoke of his company’s “institutional credibility”. As he said the c-word, it was slapped on the screen — its impact only slightly reduced by the misspelling (“credability”). But the numbers tell the real tale: shares at 1½p a month ago, Farage buying at 5p, a spike to 20p, now offered at 10p. The company is valued at roughly £9 million. Farage’s bonus depends on that valuation reaching £100 million. In a conventional business, that would require heroic growth of profits or output. Here, it requires belief: that he might reach No 10, and that policy will follow.

Farage would be pro-crypto even without Thai donors. It’s a natural fit for his kind of politics and Britain has been undeniably slow to adjust to the new realities. Millions of Brits (and a quarter of under-35s) own crypto. BlackRock, the world’s largest asset manager, holds more Bitcoin than it does gold. A new system is on the way: investor protection rules, anti-money laundering oversight and the other basics. But the Farage vision (and that of Trump) go further: an explicitly pro-crypto government, offering special privileges and a lower tax rate. This is not just playing fields. It’s using government power to pick winners.

The theme emerging here isn’t Thatcherism or socialism but something else: state capitalism. Where a political party overtly aligns itself with certain companies or sectors and acts in their interests. Farage proposes, for example, to stop the Bank of England paying interest on certain deposits placed by normal banks, saying it would save £40 billion. “Some of the banks won’t like it,” he said in Davos. “Well, I don’t like the banks very much because they debanked me, didn’t they?”

The closure of his personal account by Coutts was, at the time, a scandal. But what’s new is his follow-up logic: banks annoy him, so he will legislate against the banks. Crypto pleases him, so he will legislate to benefit crypto. This isn’t petulance but a careful model of political power from the playbook of what Viktor Orban calls “illiberal Conservatism”. It defines itself against the Reagan/Thatcher model, revels in its bad-boy status and frames politics as a battle of culture. So what may be seen as an egregious conflict of interest (politicians and crypto) is reframed as a power alliance against the reviled establishment.

It’s not new. Silvio Berlusconi prided himself on mixing his own business interests with being prime minister of Italy. Orban’s best friend from childhood, a former plumber, is now the richest man in Hungary. The crony capitalist model may appal some voters. But others see — and admire — strength. A leader who can call companies to heel, who can get things done: and if he makes a bit of money for himself on the side, what’s the problem? This model has been the scourge of post-communist states in eastern Europe fighting corruption. The odd thing is that the “illiberal Conservative” model is coming to the West.

Picking winners, punishing rebels

Trump is also picking winners and punishing those who resist. When Anthropic refused to allow the Pentagon unrestricted use of its Claude AI — objecting to automated weapons and mass surveillance of Americans — Trump didn’t simply cancel the contract. Anthropic was officially designated an “unacceptable risk” to national security, a status previously reserved for Chinese and Russian state-linked firms. The contract was given to OpenAI, whose president and chief executive had donated $26 million to Trump’s political operation. The message to corporate America: obedience is rewarded; independence is punished.

Farage presents Reform UK as a vehicle to bypass elites, back new technology and return power to “the people”. But the direction of travel points elsewhere. When politicians hold stakes in the sectors they promote, promise regulatory favours to friends and openly threaten disfavoured companies, the boundary between public policy and private gain begins to dissolve. What emerges is not a freer market but a managed one where advantage flows through proximity to power. The risk is that it starts to look less like a revolution and more like a racket.

This month Lord Chadlington, a Tory peer, resigned from the House of Lords after an investigation found he used parliamentary access to assist a company in which he held a financial interest. He argued that he acted in good faith during the Covid emergency, but accepted that even the appearance of a conflict of interest warranted stepping down rather than contesting a lengthy suspension.

That reflects an older expectation: that public office requires distance from private gain; that crossing the line carries consequences. Chadlington, 83, acted on an old code. Farage is building a new one. Britain has seen versions of this before in milder form and has long prided itself on resisting it. The danger now is not a sudden break but a gradual normalisation: incentives aligning, rules bending, expectations shifting.

By the time it is obvious, it is already embedded. The question is not whether a new, populist model can generate excitement or wide public support: it quite clearly can. The question is whether a political elite that rigs the system to suit its friends can really be trusted to serve anyone else.

BlackRock holds more Bitcoin than it does gold? This BlackRock? But a crypto launched by a Kwasi is funny in itself. Other than Nigel Farage, who could possibly think that anything involving Kwasi Kwarteng were an investment opportunity? Why would you want anyone of that mind as First Lord of the Treasury? And when Farage and Kwarteng launched their product, then would it make some sort of reference to Winston Churchill, or would that invite retaliation from those insurance people with the dog?

Having taken £12 million from Christopher Harborne, Reform UK’s ties to cryptocurrencies are very much current and very far from cryptic. There is being right-wing, and then there is having two kings. But do you have to take a Thai name to be naturalised in Thailand? If not, then why does Harborne have “Christopher Harborne” on his British passport, but “Chakrit Sakunkrit” on his Thai one? Harbone’s generosity has made Nigel Farage the political spokesman for cryptocurrencies, and specifically for Harbone’s Tether.

Yet the speculative value of cryptocurrencies is hurtling towards their intrinsic value of zero. A suspicious number of those who decry us sceptics of the cashless society also claim that we are under constant threat of cyberattacks, and a surprising number of those who are forthright against the cashless society are enthusiasts for cryptocurrencies, about which the clue is in the name. In the cashless economy, every penny that we spent would be tracked. Cryptocurrencies are beyond democratic political control. The combination of the two would be, and increasingly is, that level of tracking by those who were thus unaccountable.

Unaccountable not least because Tony Blair and Gordon Brown surrendered democratic political control over monetary policy, a surrender for which they had no electoral mandate but which they had plotted in Opposition, just as Keir Starmer and his cronies plotted fiscal drag, assisted suicide, puberty blockers, digital ID, facial recognition, the abolition of trial by jury, the taxation of family farms to the point that they would have to sell up to giant American agribusinesses, and much more to which we have yet to be made privy. At least Brown did keep us out of the euro. Much to the chagrin of Peter Mandelson, who used to enjoy the hospitality of George Osborne. Osborne has recently said that he would never have paid off Mandelson, but he would say that now, wouldn’t he? Whitney Webb and Mark Goodwin have vital information, with a book due out this year, about the Epstein network’s connections to cryptocurrencies. Osborne has written in the venerable pages of the Financial Times that Britain risked being “left behind” by stablecoins.

All that, and digital ID and facial recognition, too? Starmer has said that to access our own money, we would need the digital ID that the Tony Blair Institute would have linked to facial recognition. Expect it to be illegal to fail to produce whichever form of it a state functionary demanded, and impossible to make or receive payment without it. There is a word for the merger of state and corporate power to the point of the physical violence on which that merger depended. Not that it would be anything new in this country. If the spycops inquiry received anything like the coverage that it deserved, then digital ID would have public approval below 10 per cent. Facial recognition probably already does. Reform wants to hold the line against them. But it already has 12 million reasons why it cannot.