Trump tech adviser David Sacks under fire over vast AI investments

David Sacks, President Trump’s influential adviser on artificial intelligence and cryptocurrency, is on the defensive over government paperwork that critics say grant 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 executives of the online payments company who helped spark the digital economy after the dot-com bust.

The debate over Sacks’ investments comes just as he helped shape a controversial executive order instructing the Justice Department to challenge state AI laws deemed “onerous” to the industry — something that’s faced resistance from both parties and members of the MAGA movement who distrust the tech elite.

Ethics expert question scope of waivers

The controversy centers on routine government paperwork known as ethics waivers that special government employees, like Sacks, often receive.

The documents are intended to justify the public interest rationale for the White House to hire a former industry insider and disclose investments related to the sector over which the official will be crafting policy.

Sacks did divest from some tech holdings like Amazon, Meta, and Musk’s xAI, but public documents show that he and his firm, Craft Ventures, maintain more than 400 investments in tech firms with ties to AI.

Kathleen Clark, a government ethics expert at Washington University in St. Louis, characterized the sweeping nature of the waiver as highly unusual.

“These are sham ethics waivers,” Clark said. “They lack the kind of rigorous objective ethics analysis that would ensure that public policy is made for public benefit. Instead, they were aimed at enabling Sacks to profit from his government position,” she said, describing the waivers as “like a presidential pardon in advance.”

Clark said the waivers are essentially saying: “Go ahead and take action that would ordinarily violate the criminal conflict of interest statute, we won’t prosecute you for it.”

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 friends in the tech world rushed to his defense on X, heaping him with praise and maligning 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 sharper or more necessary,” billionaire Salesforce CEO Marc Benioff wrote on X about Sacks, who is also a billionaire.

As the Times was looking into Sacks, he said he hired a defamation law firm to send threatening letters to the paper, which Sacks claims “willfully mischaracterized or ignored the facts to support their bogus narrative.”

In a statement, a Times spokesperson said it remains confident in its reporting on Sacks, which revealed “the ethical complexities and intertwined interests of his dual roles as a government advisor and a major investor.”

Sacks declined to speak with NPR but addressed the controversy on his podcast, All-In, which he continues to co-host even as he works at the White House.

“The truth is that I divested hundreds of millions of dollars in positions in promising technology ventures at a substantial cost to my net worth,” Sacks said. “So not only is this job not benefiting me, it’s actually cost me a lot of money to serve.”

He emphasized that the Office of Government Ethics approved his public waivers and concluded he had no conflicts of interest among his venture firm’s investments.

MAGA factions clash on AI regulation

The conflict-of-interest questions come just as Sacks landed a major victory with Trump’s signing of an executive order Thursday which aims to undo some of the more than 100 laws states have passed to regulate AI. Most target AI deepfakes, or require additional transparency and disclosure of how AI models operate.

The idea had been shelved the first few times Sacks advocated for it, but the president signing the order putting state AI laws in the crosshairs was something Silicon Valley executives have wanted for months.

In particular, OpenAI, Google and the venture capital firm, Andreessen Horowitz, have lobbied for months for the measure, saying a patchwork of state laws could hamper the AI boom and give China an edge.

“A 50-state patchwork is a startup killer,” said Marc Andreessen, an influential venture capitalist, on X last month. “Federal AI legislation is essential. There’s no bigger issue for Little Tech — the builders who create the future, for America.”

On Friday, appearing on Bloomberg Tech, Sacks said: “What we need is a single federal or national framework for AI regulation.”

Overriding state AI laws has drawn resistance, not only from AI safety advocates but also from within the MAGA world.

Steve Bannon, Trump’s former chief strategist, has emerged as a key opponent to Sacks’ policies, calling for a pause on AI labs’ pursuit of superintelligence until the risks are better understood.

“I think the issue with Sacks is, to me, it’s not he’s got these conflicts. My bigger problem is his judgment,” Bannon told NPR shortly after he had spent time lobbying against Sacks’ policies at Trump’s Mar-a-Lago.

Bannon said Sacks is focused solely on the tech industry’s growing dominance, with no regard for public safety.

“Right now, you have more regulations, ten times more regulations, to open a nail salon on Capitol Hill than you have into one of the most promising yet one of the most dangerous technologies ever invented,” Bannon said. “My question to this group: Where’s the risk mitigation? I haven’t seen it.”

Fear of a bailout if 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 should the current AI investment bubble burst.

This concern is amplified by Sacks’ history: two years ago, he was one of the loudest voices advocating for a government rescue of the failed Silicon Valley Bank. And the federal government did step in to backstop $175 billion in deposits.

“When you start talking about their equity, and if the taxpayer is going to step up and give a guarantee, and that’s gonna be kind of chopped up and dealt out, we’re gonna see what kind of public servants these guys are,” Bannon said.

Sacks, in his posts on X, has sent mixed messages about the specter of a federal bailout for the tech industry. Last month, he wrote that if one of the major AI frontier labs, like OpenAI and Anthropic, fails, others will take its place.

“There will be no federal bailout for AI,” Sacks wrote.

But in another post weeks later about the surging pace of AI investments that has analysts fearing a bubble, Sacks wrote: “A reversal would risk recession,” he said. “We can’t afford to go backwards.”

Clark, the ethics expert, said she thinks this shows that “if the bubble breaks, there will be a lot of heart ache, and the folks who have invested in those bubbles are going to be asking for a bailout.”