Cash News
Donald Trump’s new cryptocurrency venture World Liberty Financial, which aims to raise $300 million in crypto token sales, has drawn criticism from industry experts.
Promoted by Trump and his three sons—Donald Jr., Eric, and Barron—the project seeks to “leverage the global reach and recognition of the Trump brand” to promote cryptocurrency adoption, according to the official website.
The World Liberty Financial (WLF) website went live on Tuesday, but the launch was marred by technical difficulties. The company’s website crashed shortly after going live, reportedly due to excessive traffic.
Sandy Peng, cofounder of tech research firm Scroll and adviser to WLF, told website CoinDesk that the website received 72 million unique visits in the first hour, causing the outages.
However, blockchain data tracked by analytic platform Etherscan showed that just over 5,000 unique wallet addresses held the firm’s WLFI token by Tuesday afternoon.
The venture has met with criticism from cryptocurrency and decentralized finance (DeFi) industry experts who are concerned about potential conflicts of interest and unclear investor protections, and are wary of damage to the reputation of an already tarnished industry.
“There have been such a parade of undesirables in the crypto and DeFi world that adding Trump to the list couldn’t possibly push the needle on popularity or enthusiasm. Bear in mind these markets, the original crypto markets, got their start by facilitating drug trafficking,” Michael Dowling, professor of finance at the Dublin City University Business School told Newsweek.
Spencer Platt/Getty Images
Investors looking for a buzzy new cryptocurrency may be wary, Dowling said. “Trump’s ‘new tech’ corporate investments have tended to be very costly for investors. $10,000 invested three years ago in the shares of the Truth Social company he is associated with would now be worth less than $3,000,” he said.
“That past cost will be a very painful reminder to potential investors. Indeed, his whole investment history is less than exemplary. That said, a lot of his views would overlap with the libertarian views of crypto investors,” Dowling added.
“More particularly JD Vance is associated with the libertarian side of the U.S. tech industry. So he might find a more natural market of enthusiasm in the crypto world than in the stock world. It is a spectacularly bizarre idea though that a candidate for U.S. president has, in effect, their own private currency (even if that currency is just for managing transactions on a DeFi platform).”
Nic Carter, general partner at venture capital firm Castle Island Ventures, expressed doubts about the project’s intentions. “He said nice things about crypto but he immediately wants to extract value. None of this is liberalizing or democratizing access to finance,” Carter told the Financial Times.
But Dowling said current crypto investors predominantly view the crypto market as a way to make money. “So, while the moral view of Nic Carter might be a valid view, it’s unlikely to sway investors,” he added.
WLF has brought crypto experts on board to advise and guide the venture. It currently has a panel of eight advisers from the industry including Peng and Alex Dulub, a blockchain expert and founder and CEO of the software development firm PixelPlex.
“At PixelPlex, we provided blockchain development and security expertise to World Liberty, advising on best practices and innovative solutions,” Dulub told Newsweek.
“Currently, through Web3 Antivirus, we’re proactively guarding against phishing attempts to keep the community safe. For example, we recently detected a fake WLFI website that was registered at 11:02 a.m. today. A related tweet followed at 11:17 a.m., and within an hour the website was suspended and is now inaccessible,” he added.
According to technology website The Verge, only 2 percent of the 20 billion WLFI tokens available for public sale were purchased in the initial hours, raising about $12 million. As of Thursday 10:30 a.m. 856 million tokens or 4.32 percent have sold.
Dowling said it constituted a “decent launch.” “Most usually only a small number of total coins would actually be sold in the initial sale. The hope is that the price soars and the bulk of the coins can be sold at a higher price. It would be a much more negative sign if a lot of coins were sold,” he added.
On launch day Trump posted on X, formerly Twitter: “Today’s the day! @WorldLibertyFi token sale is live. Get your $WLFI tokens now.” This was met with a community note from X users saying: “In the fine print it notes that the ‘token’ is not transferable and is locked in the wallet, so you cannot withdraw until this ‘scheme’ sees fit to allow it. Read the small print!”
The structure of WLF’s token is such that it offers voting rights but no economic rights. It is also not available to anyone in the U.S. unless they are a registered investor.
“To some respect, World Liberty resembles an older style of crypto, which is maybe what you would expect from a 78-year-old first-time crypto-enthusiast,” Dowling told Newsweek.
“Increasingly tokens are offering economic participation rights, while almost no earlier coins did this, but it’s still far from universal. For ‘investors,’ though, these economic rights tend to be minor compared to the value of a token rising in price. It does suggest though that the coin is intended as more a speculative instrument than an investment instrument,” he added.
WLF might appear to be a U-turn for the Republican presidential nominee. In the past, Trump has been outspoken in his negative views of digital currencies: “I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air,” Trump posted on X in 2019.
“We have only one real currency in the USA, and it is stronger than ever, both dependable and reliable. It is by far the most dominant currency anywhere in the World, and it will always stay that way. It is called the United States Dollar!” he added.
However, the former president has been bullish about cryptocurrency in 2024, using Bitcoin to pay for dinner after a rally in New York in September and saying at the time: “I just made [my] first transaction in Bitcoin.”
“Everybody that’s a crypto guy—crypto maniac as I call them—get out and vote. Because if you vote, we cannot lose,” added Trump.
In July he attended the annual Bitcoin Conference in Nashville, Tennessee, where he compared the cryptocurrency sector to the steel industry in its prime, telling attendees that he wanted the U.S. to become “the crypto capital of the planet and bitcoin superpower of the world.”
Dowling warned that some inexperienced investors might put themselves at risk. He said: “If more of Trumps supporters start joining the crypto rush, given the general demographics of those voters, they are probably much more likely to be subject to scams and fraud. These are really complex markets, with many layers of choices and decisions that will leave people vulnerable to being exploited.”