Trump Family Takes Over Crypto Firm: $550M Raised Under Scrutiny

World Liberty Financial, a cryptocurrency company aiming to provide financial services without traditional banks, has raised over $550 million. During this process, the Trump family gained significant control over the company, sparking concerns over transparency and fairness.

The firm was launched with a mission to create a decentralized financial platform, also known as DeFi. Unlike traditional finance, DeFi platforms allow users to interact directly without intermediaries. However, despite the company’s claims of decentralization, the Trump family now holds a 60% stake, giving them substantial influence over operations and finances.

How Did the Trump Family Gain Control?

Initially, World Liberty Financial was led by its co-founders, Zak Folkman and Chase Herro. However, in January, it was disclosed that the Trump family had taken over, holding the majority stake through a company called WLF Holdco LLC. This gave them a significant say in decision-making and a large share of the firm’s profits.

The family now claims 75% of net revenue from token sales and 60% of future operational earnings. These financial gains amount to an estimated $400 million from the fundraising efforts alone. Meanwhile, only 5% of the raised funds are expected to go toward developing the platform.

Governance Tokens and Limited Benefits for Investors

The company issued governance tokens called $WLFI, which offer holders voting rights on specific decisions related to the project. However, these tokens cannot be traded or sold. Unlike other DeFi tokens that allow profit-sharing, $WLFI tokens provide no financial rewards to holders.

Some industry experts have voiced concerns that the arrangement is unusually centralized for a DeFi project. In decentralized platforms, governance tokens typically offer more substantial financial incentives or decision-making power for investors. However, in World Liberty’s case, most control remains in the hands of the Trump family and a few insiders.

Ethical and Political Concerns

The Trump family’s involvement in World Liberty Financial has raised ethical questions, particularly given Donald Trump’s position as a prominent political figure. Critics argue that this situation could lead to conflicts of interest, especially as Trump has advocated for cryptocurrency deregulation. Others worry that anonymous buyers may use token purchases to gain political influence.

Reports suggest that around 70% of the money raised came from large investors who spent at least $100,000, with many transactions exceeding $1 million. While World Liberty tracks the identities of its buyers, the names of these high-value investors are not publicly disclosed.

Trump’s Support for Cryptocurrency

Donald Trump has publicly positioned himself as a strong supporter of cryptocurrency. He has even referred to himself as the “crypto president,” advocating for the mainstream adoption of digital currencies. The Trump family’s growing presence in the crypto space reflects this enthusiasm, with significant financial gains from both World Liberty and other crypto-related ventures.

Notable Investments and Partnerships

A notable investor in World Liberty Financial is Justin Sun, a prominent figure in the cryptocurrency world. He reportedly invested $30 million in the company shortly after Trump’s election victory, contributing to the rapid increase in fundraising. Sun’s investment has since grown significantly, further establishing his influence within the project.

World Liberty also announced plans to launch a stablecoin called USD1, which would be backed by U.S. Treasury assets. Additionally, the company has partnered with Ondo Finance, a firm specializing in tokenized financial products. These initiatives are part of the company’s effort to create a more accessible financial system.

Questions About Transparency and Development

Despite the large amounts of money raised, World Liberty Financial has yet to launch its platform. Cybersecurity audits have indicated that the project is still under development, with many features not yet operational. The firm employs a small development team, including engineers based in Romania, raising further concerns about its ability to meet its ambitious goals.

Transparency issues have also been highlighted, with critics pointing to the limited information available on the company’s financial structure and operations. The Trump family’s involvement adds another layer of complexity, as their control over the venture is seen as contradictory to the principles of decentralized finance.

Also Read: Trump’s Crypto Firm WLFI Launches Token Reserve to Support Bitcoin & Ethereum