Former U.S. President Donald Trump is making headlines again, this time by launching a crypto yield product while appealing to the crypto community in his current presidential campaign. Trump is set to become the “chief crypto advocate” for World Liberty Financial (WLFI), a new venture that has yet to provide much clarity on its actual goals or operations.
WLFI and Trump’s Role
World Liberty Financial is an emerging crypto project reportedly based on the financial platform Dough Finance, with Trump at the helm as the face of the venture. His three sons, along with other notable individuals, are also said to be involved, according to insights gathered by CoinDesk reporters. A draft white paper suggests that WLFI will sell 30% of its tokens, leaving 70% in the hands of the project’s founders, service providers, and team members.
This substantial allocation of tokens to developers and insiders has raised eyebrows, especially when compared to other crypto projects where developers typically hold a smaller percentage. Moreover, the white paper includes a non-transferability clause, which limits token resale at launch, a tactic that may not shield the project from U.S. securities laws.
Regulatory Challenges
Trump’s newfound enthusiasm for crypto stands in contrast to his anti-crypto stance during his presidency. As he campaigns for the 2024 election, he has promised to support the crypto industry by pushing for friendlier regulations. However, Trump’s involvement in WLFI could come with significant legal scrutiny.
Crypto legal experts point out that if American investors buy into WLFI’s tokens, regulatory exposure is still very likely. Dave Rodman, a lawyer specializing in cryptocurrency, noted that the restrictions on reselling tokens may not be enough to sidestep U.S. securities laws.
Questions also remain about how the tokens will be distributed, who controls the wallets, and whether all project developers will receive equal token shares. Alexandra Damsker, an attorney and consultant, emphasized that the opacity surrounding the token breakdown could create regulatory challenges.
Additionally, WLFI includes governance tokens, which allow holders to propose changes and vote on project matters. While the white paper suggests this promotes fairness, it also opens the door to the possibility of concentrated voting power among a small group of insiders.
Security and Compliance Risks
As with any high-profile crypto venture, security risks are high. Already, X (formerly Twitter) accounts linked to Trump’s family members, including Lara Trump and Tiffany Trump, were hacked and used to promote fraudulent addresses. While these addresses were unrelated to WLFI, the incidents have raised concerns about the project’s susceptibility to scams and attacks.
Moreover, the WLFI white paper includes provisions for compliance with sanctions regulations, underscoring the importance of screening token purchasers. However, given the scrutiny Trump’s crypto product is likely to face, regulatory authorities will be watching closely to ensure compliance with anti-money laundering (AML) laws and other legal frameworks.
Conclusion
Donald Trump’s entry into the world of cryptocurrency could mark a new chapter for both his political career and the crypto industry. However, with regulatory questions still looming and the project shrouded in uncertainty, WLFI will need to navigate a complex legal landscape to succeed.
