Concerns Raised Over Trump's Linked Crypto Firm and National Security

World Liberty Financial (WLFI), a cryptocurrency firm with connections to former U.S. President Donald Trump and his family, is currently under scrutiny. This follows a letter from two Democratic senators calling for a federal investigation into the company's alleged associations with sanctioned individuals in North Korea and Russia.

Key Takeaways

Investigative Request: Senators Elizabeth Warren and Jack Reed have urged federal regulators to probe WLFI for potential national security risks.
Token Sales Concerns: There are allegations that WLFI's token sales could have linked U.S. interests with foreign adversaries, particularly through connections to the Lazarus Group, a North Korean hacking operation.
Political Ties: The Trump's family's substantial ownership in WLFI raises concerns about financial conflicts of interest.
Defense from WLFI: The company refutes all allegations, claiming they conduct thorough checks on all buyers.
Expert Analysis: A blockchain expert suggests that some allegations may result from misidentifications rather than actual wrongdoing.

Allegations Against WLFI

Senators Elizabeth Warren and Jack Reed have sent a letter to Attorney General Pamela Bondi and Treasury Secretary Scott Bessent, expressing concerns that WLFI's token sales could jeopardize U.S. national security. They cited reports indicating that WLFI governance tokens were acquired through blockchain addresses associated with foreign entities, as reported by CNBC.

The concerns originated from a report by Accountable.US, which revealed that WLFI had sold tokens to traders linked to the Lazarus Group, a North Korean state-backed hacking team, as well as to individuals involved with Russian sanctions avoidance, an Iranian cryptocurrency exchange, and Tornado Cash. The senators noted that these sales effectively granted foreign adversaries governance rights within the WLFI protocol. WLFI has denied the claims, asserting that they have rigorous Anti-Money Laundering (AML) and Know Your Customer (KYC) protocols in place and have denied sales to individuals who do not clear these checks.

Accountable.US report highlights Iranian user buying WLFI tokens
Accountable.US report claims Iranian user bought WLFI tokens. Source: Accountable.US
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The Trump Family's Involvement

The political implications of WLFI's ownership structure are significant. Eric Trump, Donald Trump Jr., and Barron Trump are all co-founders, and Donald Trump is listed as “Co-Founder Emeritus.” A company associated with Trump, DT Marks DEFI LLC, holds 22.5 billion WLFI tokens, worth over $3 billion, and is entitled to 75% of the company's revenue from token sales.

Warren and Reed pointed out that the financial interests of the Trump family in WLFI create potential conflicts, particularly since a significant portion of token-sale proceeds directly benefits them. They expressed concerns that WLFI's rapid growth, which includes plans for a debit card and tokenized commodities, combined with inadequate compliance measures, could exacerbate issues related to illicit financial activities.

WLFI has been facing increased political and regulatory challenges recently. Its USD1 stablecoin was notably used in a $2 billion investment into Binance by a fund backed by the UAE, shortly before the UAE reached a significant semiconductor agreement with the U.S.

Cointelegraph attempted to contact WLFI for comments but did not receive a response before publication.

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Disputed Allegations

Amid these serious allegations, blockchain expert Nick Bax has evaluated the claims regarding a North Korean-linked wallet's investment in WLFI. His analysis of the transactions mentioned in the watchdog report suggests that they may stem from false positives rather than actual connections to sanctioned entities.

Bax found that the transactions labeled as “Lazarus-linked” were generated by a memecoin contract called Dream Cash, which automatically directs tokens from an address associated with Lazarus Group to users who claim them. He confirmed that a user, identified as @shryder1337, merely claimed these tokens jokingly rather than doing so as part of any engagement with North Korea. Bax criticized misrepresentation of the facts and noted that the accused user's WLFI tokens, worth roughly $95,000, were frozen due to the allegations.

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