Trump’s New Crypto Project Sparks Controversy ahead of $540M Fundraise

Former U.S. President Donald Trump and his sons have heavily promoted World Liberty Financial, positioning it as a revolutionary tool in finance and claiming it could empower everyday people. The platform has also been pushed as a solution to what the Trump family describes as a “rigged” traditional finance system.

Despite these promises, the proposed allocation of WLFI tokens has raised concerns within the crypto community.

According to the report, most of them will be controlled by a select group of insiders, with only 30% allocated for public sale.

Notably, a portion of the funds raised from this public sale is also set aside for project insiders, while the remaining funds will be held in a treasury to support operations.

While World Liberty Financial has yet to finalize its tokenomics, code tests revealed by the online community indicate the tokens are being sold at a valuation of $1.8 billion, leading to concerns about the allocation of funds.

Specifically, 70% of the WLFI tokens, worth around $540 million, are earmarked for insiders, including the project’s founders, Donald Trump’s close family members, and other key service providers.

When compare to especially to other prominent projects within the crypto space, the 70% allocation seems significantly high.

For instance, Ethereum reserved roughly 16.6% of its total supply for early contributors, while Cardano kept about 20% of its ADA tokens for insiders.

Consequently, this disproportionate allocation has sparked controversial debate within the cryptocurrency community.

Trump Has Made Crypto a Key Campaign Flashpoint

Donald Trump has increasingly leaned into cryptocurrency as a key flashpoint in his election campaign, framing it as part of his larger message on economic independence and financial empowerment. This marks a notable shift from the  perceived skepticism of the Joe Biden administration.

With crypto regulation and adoption becoming hot topics in the U.S., Trump’s embrace of these technologies has resonate with a large segment of the crypto enthusiasts.

The timing of World Liberty Financial’s fundraising efforts coincides with the 2024 election cycle. The $540 million potentially raised through the sale of tokens has led to speculation that part of these funds could potentially be channeled into Trump’s political campaigns, especially as Trump still owes $454 million in fines to the state of New York from his business fraud lawsuit.

While there is no direct link between the project’s finances and his campaign, political analysts note that such substantial cash inflows would bolster Trump’s ability to fund expensive campaign efforts, especially as he faces mounting legal challenges and debt from previous business ventures.

Regulatory Scrutiny and Industry Concerns

While the project’s white paper highlights its ambition to drive mass adoption of stablecoins and decentralized finance, many are wary of its close connection to Dough Finance, a previous DeFi project that was hacked for $2.1 million earlier in the year. Although World Liberty Financial has reassured potential investors that its code has been thoroughly reviewed, concerns linger.

As the project develops, it remains unclear whether it will attract the attention of U.S. regulators, particularly given the SEC’s history of scrutinizing token sales and initial coin offerings (ICOs). Nonetheless, Trump’s possible involvement and the platform’s potential profitability have divided opinions within the crypto industry.

Industry observers, including Castle Island Ventures’ Nic Carter, view the project as a potential liability, raising questions about its long-term viability and potential legal challenges. Despite these concerns, World Liberty Financial continues to push forward, seeking to capitalize on the growing interest in decentralized finance while also generating financial returns for its prominent backers.