As World Liberty Financial secured over half a billion dollars in funding, the Trump family quietly took control of the emerging crypto firm, securing a substantial portion of its proceeds. Industry experts have raised concerns over the governance structure, which they claim heavily favors insiders.
Founded last fall, World Liberty Financial set out to provide decentralized financial services, eliminating traditional banking intermediaries. However, despite its ambitious vision, the firm has yet to launch a public platform and currently operates with a minimal workforce.
Despite these challenges, World Liberty announced in mid-March that it had raised $550 million through the sale of governance tokens. A significant portion of this fundraising occurred after Donald Trump’s re-election victory in November, according to Reuters calculations.
These governance tokens, designated as $WLFI, grant holders voting rights on project decisions but are not tradable. In January, the company discreetly updated its governance structure, revealing that control had shifted from its original co-founders, Zak Folkman and Chase Herro, to an entity in which the Trump family holds a 60% stake.
With these changes, the Trump family now stands to claim 75% of net revenues from token sales and 60% of the company’s future operating revenues. This means the family is entitled to approximately $400 million in fees, leaving only 5% of the raised capital for the actual development of World Liberty’s platform, according to industry calculations.
Concerns Over Centralization and Investor Impact
The governance model of World Liberty Financial has drawn criticism from industry observers who argue that it contradicts the principles of decentralized finance (DeFi). Unlike major DeFi platforms, where governance tokens typically offer financial benefits or voting power to a broad investor base, World Liberty’s model appears highly centralized.
Jim Angel, an associate professor at Georgetown University specializing in DeFi regulation, expressed skepticism over the utility of the $WLFI tokens, stating, “It’s difficult to see any economic advantage for token holders.” Similarly, David Krause, a finance professor at Marquette University, highlighted that the structure effectively excludes public investors from meaningful participation.
The White House referred inquiries about World Liberty to the Trump Organization, which has yet to comment. The Trump Organization previously stated in January that the president’s assets would be managed by a trust overseen by his children and that he would not be involved in day-to-day operations.
Crypto and Political Influence
Donald Trump has positioned himself as the “crypto president,” advocating for broader adoption and regulation of digital assets. His family’s deepening involvement in the sector has raised ethical concerns regarding potential conflicts of interest, particularly as he continues to push for policies that could benefit the industry.
Critics argue that the close ties between the Trump administration and World Liberty Financial could open avenues for political influence. Ross Delston, a former U.S. banking regulator, warned that the governance token model could be exploited for political favor, stating, “It creates the perfect mechanism for foreign governments or influential figures to channel funds to the president.”
An analysis of World Liberty’s funding sources found that nearly 70% of its raised capital came from wallets spending at least $100,000, with over half of the investments exceeding $1 million. The identities of most high-value investors remain undisclosed due to the anonymity inherent in blockchain transactions.
The Origins of World Liberty Financial
World Liberty’s formation was driven by the collaboration of two crypto entrepreneurs, Folkman and Herro, who found their way into Trump’s business circles through real estate mogul Steve Witkoff, a longtime Trump associate. Witkoff connected the pair with the Trump family, leading to discussions on the potential of decentralized finance. Following these meetings, the Trumps agreed to back the project.
Initial fundraising efforts were slow, with an October regulatory filing showing only $2.7 million raised. However, momentum shifted dramatically in late November after Trump’s election victory. Hong Kong-based crypto entrepreneur Justin Sun, who was facing a U.S. securities fraud lawsuit at the time, injected $30 million into the project, marking a turning point. Sun’s investment has since grown to $75 million, and he now serves as an advisor to the firm.
Structural Changes and Corporate Strategy
As World Liberty’s token sales surged, its leadership structure underwent significant changes. By January 19—coinciding with Trump’s inauguration—World Liberty Financial was brought under the control of WLF Holdco LLC, with Trump’s entity, DT Marks DeFi LLC, acquiring a 60% stake. Additionally, Eric Trump secured a position on WLF Holdco’s board.
The corporate restructuring has created legal and financial buffers that may shield Trump from direct accountability should the venture face scrutiny. Georgetown’s Jim Angel noted that the layered entity structure ensures, “He can say: ‘You can’t sue me because I’m not involved.’”
Uncertainty Around Future Development
Despite its significant fundraising, World Liberty Financial remains in the development phase. The company has outlined plans for a lending and borrowing marketplace, a personal finance application, and a stablecoin backed by assets like U.S. Treasuries. However, tangible progress has been limited.
A partnership with Ondo Finance, a blockchain-based investment firm, was announced to facilitate tokenized real-world assets. While this collaboration offers potential benefits, World Liberty has yet to launch its core DeFi platform.
Moreover, security concerns have emerged. CertiK, a cybersecurity firm specializing in blockchain audits, reviewed World Liberty’s contracts and found that several functionalities were not fully implemented as of late March.
World Liberty Financial’s governance model, fundraising strategies, and high-level political connections make it an outlier in the DeFi industry. While the Trump family has secured significant financial gains from the venture, the lack of transparency, token liquidity, and clear development progress raise red flags for investors and regulators alike. As scrutiny intensifies, the future of World Liberty Financial remains uncertain, with its success—or failure—potentially carrying far-reaching implications for both the crypto industry and political landscape.
