Former US president launches crypto yield product while appealing to crypto sector in his current run for government. World Liberty Financial, which has provided little details about its plans, will name Donald Trump its "chief crypto advocate".
As he prepares to endorse a crypto project, how should the former president and Republican candidate view securities and anti-money laundering laws?
This week, my colleagues Danny Nelson, Cheyenne Ligon, and Sam Kessler reported that former President Donald Trump will be the "chief crypto advocate" for World Liberty Financial, a project based on Dough Finance and featuring his three sons and others in key roles.
According to a draft white paper reviewed by CoinDesk, World Liberty Financial will sell 30% of the WLFI tokens created, keeping 70% for founders, service providers, and team members.
I want to concentrate on this aspect since it creates important regulatory problems. Naturally, Trump has spent months appealing to crypto voters, promising to install industry-friendly regulators and make the U.S. the "crypto capital of the planet" in numerous public speeches.
This sympathetic approach, despite his resistance to crypto in government, may benefit him personally with the World Liberty Financial launch.
CoinDesk has viewed draft materials, thus the final project may change from what is described.
In the paper CoinDesk saw, one recurrent theme was that a 70% allocation to existing project developers is high for crypto initiatives.
A non-transferability language in the white paper seems to limit resales or indicate investors may benefit from the tokens upon launch.
This alone would not sidestep securities rules, said Rodman Law Group founder and managing partner Dave Rodman.
"If all that happens is that people buy tokens that are 'locked,' nothing has been done to reduce exposure to US securities laws if Americans purchase the token," stated.
The wallets' owners are likewise unknown, according to attorney and expert Alexandra Damsker.
Whether each developer and project leader receives an equal share of the 70% kept is likewise questionable.
Governance token WLFI. Holders with a minimum amount of tokens may submit protocol modifications or other proposals, and all holders can vote with up to 5% of the token supply. The document claims this would "ensure fairness and distributed participation," yet any aligned party with a majority of tokens may influence these recommendations.
The white paper also mentioned vetting buyers for sanctions compliance.
Attackers will target the project. We saw this last week when Lara (Eric Trump's wife) and Tiffany (one of Donald Trump's daughters)'s X (previously Twitter) accounts were hacked to promote random addresses. In response to Eric Trump's tweet saying the addresses were a hoax, many were confused about whether World Liberty Financial was a legitimate enterprise or merely the addresses.
