When Donald Trump embraced blockchain technology during his presidential campaign, the crypto industry celebrated that they finally had an ally running for the top U.S. office. They didn’t expect to also get a competitor.

On Thursday, the president will host a “Gala Dinner” for the top 220 holders of his $TRUMP memecoin at his golf club in Virginia—an unprecedented blend of public duties and private business dealings, especially with most of the attendees remaining pseudonymous.

The formal dinner, which will begin at 7 p.m. and requires a background check, has sparked an outcry from Democrats and ethics experts, who have pointed out that Trump’s family business, which launched the coin, controls the vast majority of the cryptocurrency’s holdings and trading fees. But they are not the only ones expressing concern: The crypto lobby, which Trump wooed on the campaign trail and during his first few months in office, is starting to privately voice its displeasure, partly owing to fear that the optics of the dinner could derail proposed crypto legislation that is at a pivotal juncture in Congress.

“It’s a horrible look for him, the industry, and the country,” said one crypto lobbyist representing major industry firms, who spoke with Fortune on the condition of anonymity to discuss sensitive client relationships. “No one really seems to care in the Trump administration.”

“The President is working to secure GOOD deals for the American people, not for himself. President Trump only acts in the best interests of the American public—which is why they overwhelmingly re-elected him to this office, despite years of lies and false accusations against him and his businesses from the fake news media,” said White House spokesperson Anna Kelly in a statement shared with Fortune.

Memecoin extravaganza

After decrying Bitcoin as a “scam” just a few years ago, Trump warmed up to the sector while running for his second term. He not only attended crypto industry events, including an annual Bitcoin confab in Nashville last summer, but also began developing his own blockchain products with his sons. That culminated in the launch of his self-branded memecoin, named $TRUMP, on the weekend before his inauguration. With Trump-affiliated entities controlling 80% of the supply and collecting trading fees, the memecoin initially soared to a market cap of over $9 billion before dropping by over 80%.

After taking office, Trump continued to release new crypto products through his family’s blockchain project, World Liberty Financial, including launching its own stablecoin USD1 in late March, just as the House of Representatives and Senate were advancing two bills that would establish stablecoin regulation. But perhaps Trump’s most ostentatious move was his April announcement that the top holders of his memecoin could join him for dinner, which caused its price to soar by nearly 60% in just an hour. Attendees will include many foreign individuals, such as the Chinese crypto billionaire Justin Sun, who has been the frequent target of U.S. regulators, raising questions about whether the event violates key ethics provisions.

Trump’s litany of crypto actions has drawn scrutiny from Democratic lawmakers, including those who have previously backed blockchain legislation. His foray into stablecoins, and in particular the use of USD1 to finance a $2 billion investment into Binance by an Emirati investment firm, nearly tanked the prospects of stablecoin legislation in the Senate.

Democrats have introduced legislation that would limit his involvement with crypto, including a bill introduced by House Financial Services Committee ranking member Maxine Waters (D-Calif.) on Thursday called the Stop Trading, Retention, and Unfair Market Payoffs in Crypto Act of 2025, or Stop TRUMP.

“Nowhere is Trump’s blatant disregard and disrespect for the rule of law more apparent than in the way he has exploited the office of the presidency to promote shady, fraudulent crypto ventures that hold no real value, and serve no true purpose other than to pad his pockets,” Waters said in a statement shared with Fortune.

While crypto leaders have publicly supported Trump’s blockchain projects, arguing that it demonstrates his enthusiasm toward the sector, many still privately acknowledge that the memecoin dinner is a blemish on the industry—and could impede legislation. “Trump’s family crypto business dealings are really compromising the ability to get good policy in place,” said another person close to the crypto lobby, who spoke with Fortune on the condition of anonymity.

Few Republican policymakers have acknowledged the awkward position, though crypto booster Cynthia Lummis (R-Wyo.) told NBC that the dinner “gave her pause.” The person close to the crypto lobby told Fortune that they have expressed concerns to David Sacks and Bo Hines, Trump’s top crypto advisors, but without much success.

The other lobbyist said that while many in the industry are publicly supportive of the president, especially after a wave of industry-friendly regulatory actions, the dynamic is different behind closed doors, especially with Trump launching competitive products. “We’re all embarrassed and humiliated,” they said. “It’s so crypto to have this happen.”

Trump is hosting a private dinner for the top 220 buyers of his memecoin tonight—and even the crypto lobby is grumbling