Former U.S. President Donald Trump is making headlines again by launching a crypto yield product during his current presidential campaign. Trump is set to become the “chief crypto advocate” for World Liberty Financial (WLFI).
Trump's Role and the WLFI Project
World Liberty Financial is an emerging crypto project based on the Dough Finance platform, with Donald Trump taking a leading role. His three sons and other notable individuals are also involved, according to CoinDesk. WLFI plans to sell 30% of its tokens, while the remaining 70% will be kept by the founders, service providers, and team members. This substantial allocation 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 may not shield the project from U.S. securities laws.
Regulatory Challenges
Trump's renewed enthusiasm for crypto contrasts with his anti-crypto stance during his presidency. As he campaigns for the 2024 election, he promises to support the crypto industry by pushing for friendlier regulations. However, Trump's involvement in WLFI could attract 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 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 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. 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.
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.
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