White House AI and crypto czar David Sacks looks on before President Donald Trump signs executive orders earlier this year.
Brendan Smialowski/AFP via Getty Images
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Brendan Smialowski/AFP via Getty Images
David Sacks, President Trump’s influential adviser on artificial intelligence and cryptocurrency, is on the defensive over government documents that critics say give him “carte blanche” to shape U.S. policy while retaining hundreds of investments in the tech world.
Sacks is a prominent venture capitalist who, along with Elon Musk and Peter Thiel, is a member of the Paypal Mafia, a group of online payment company executives who helped revive the digital economy after the collapse of the dot-com bubble.
The debate over Sacks’ investments comes just as he helped shape a controversial decree asking the Justice Department to challenge national AI laws deemed “burdensome” to the industry – which was met with resistance from both parties and from members of the MAGA movement who distrust the tech elite.
An ethics expert questions the scope of exemptions
The controversy centers on routine government paperwork, known as ethics waivers, that special government employees, like Sacks, often receive.
The documents seek to substantiate the public interest rationale for the White House to hire a former industry insider and disclose investments tied to the sector the official will craft policy on.
Sacks did divest from some tech stocks like Amazon, Meta and Musk’s xAI, but public documents show that he and his company, Craft Ventures, maintain more than 400 investments in AI-related technology companies.
Kathleen Clark, an expert on government ethics at Washington University in St. Louis, called the sweeping nature of the waiver highly unusual.
“These are false ethical departures,” Clark said. “They lack the kind of objective and rigorous ethical analysis that would ensure that public policy is made in the public interest. Instead, they were intended to allow Sacks to take advantage of his government position,” she said, describing the waivers as “like a presidential pardon in advance.”
Clark said the waivers essentially say, “Go ahead and take actions that would normally violate criminal conflict of interest law, we won’t prosecute you for that.” »
Silicon Valley defends one of its own
After The New York Times recently published an investigation into Sacks’ AI and crypto holdings, dozens of his tech friends rushed to his defense on X, showering him with praise and slandering the newspaper.
“While Americans bicker, our rivals are studying David’s every move. I’ve known David for decades and I’ve never seen him so sharp or so necessary,” said Marc Benioff, CEO of billionaire Salesforce. written the about Sacks, who is also a billionaire.
Like the Times was investigating Sacks, he said he hiring a defamation law firm to send threatening letters to the newspaper, which Sacks said “willfully misinterpreted or ignored the facts to support its false narrative.”
In a press release, a Times spokesperson said he remains confident in his reporting on Sacks, which revealed “the ethical complexities and intertwined interests of his dual roles as government advisor and major investor.”
Sacks declined to speak with NPR but addressed the controversy on his podcast: All inclusivewhich he continues to co-host even while working at the White House.
“The truth is that I gave up hundreds of millions of dollars in promising technology companies, which took a huge toll on my net worth,” Sacks said. “So not only does this job not benefit me, it actually costs me a lot of money.”
He noted that the Office of Government Ethics approved his public waivers and concluded that there was no conflict of interest among his venture capital firm’s investments.
MAGA factions clash over AI regulation
The conflict of interest questions come just as Sacks scored a major victory with Trump signing an executive order Thursday to reverse some of the more than 100 laws states have adopted to regulate AI. Most target AI deepfakes or require additional transparency and disclosure about how AI models work.
The idea had been abandoned the first few times Sacks advocated it, but the president signing the order putting state AI laws in the crosshairs was something Silicon Valley executives had wanted for months.
In particular, OpenAI, Google and venture capital firm Andreessen Horowitz have been pushing for the measure for months, saying a patchwork of state laws could hamper the AI boom and give China an advantage.
“A patchwork of 50 states is killing startups,” said Marc Andreessen, an influential venture capitalist. on last month. “Federal AI legislation is essential. There is no bigger problem for Little Tech – the builders who are creating the future, for America.”
Friday, appearing on Bloomberg TechnologySacks said: “What we need is a single federal or state framework for regulating AI. »
The rolling back of national AI laws has been met with resistance, not only from AI safety advocates, but also from within the MAGA world.
Steve Bannon, Trump’s former chief strategist, has become a leading opponent of Sacks’ policies, calling for a pause in AI labs’ search for superintelligence until the risks are better understood.
“I think the problem with Sacks is, for me, he doesn’t have those conflicts. My biggest problem is his judgment,” Bannon told NPR shortly after spending time lobbying against Sacks’ policies at Trump’s Mar-a-Lago.
Bannon said Sacks was focused solely on the growing dominance of the tech industry, with little regard for public safety.
“Right now there are more regulations, ten times more regulations, for opening a nail salon on Capitol Hill than for one of the most promising and dangerous technologies ever invented,” Bannon said. “My question to this group: Where is the risk mitigation? I haven’t seen it.”
Fear of a bailout if the AI bubble bursts
Bannon also expressed deep concern that Sacks and his allies could push the federal government to orchestrate a taxpayer bailout for the tech industry if the current situation AI investment bubble bursting.
This concern is amplified by Sacks’ history: two years ago, he was one of the loudest voices in favor of a government bailout of Silicon Valley bank goes bankrupt. And the federal government stepped in to guarantee $175 billion in deposits.
“When you start talking about their equity, and if the taxpayer wants to step in and give a guarantee, and that gets sort of carved up and distributed, we’ll see what kind of public servants these guys are,” Bannon said.
Sacks, in his articles on X, has sent mixed messages on the specter of a federal bailout for the tech industry. Last month, he wrote that if one of the major pioneering AI labs, like OpenAI and Anthropic, failed, others would take their place.
“There will be no federal bailout for AI,” says Sacks wrote.
But in another job A few weeks later, about the accelerating pace of AI investment that has analysts fearing a bubble, Sacks wrote: “A reversal would risk a recession,” he said. “We cannot afford to go back.”
Clark, the ethics expert, said she thinks it shows that “if the bubble bursts, there’s going to be a lot of heartache, and the people who invested in these bubbles are going to ask for a bailout.”