A sudden infusion of $30 million Donald Trump’s A Chinese billionaire’s cryptocurrency startup, which is being sued by the Securities and Exchange Commission for allegedly defrauding investors, could hand a company linked to the president-elect an eight-figure payout.
The investment has raised new concerns about Trump’s ability to extract profits from foreign investors and his stance on cryptocurrency after a presidential campaign in which he vowed to make the United States the “crypto capital of the planet.”
Justin Sun — a cryptocurrency billionaire famous in part for buying a $6 million banana art piece last month — announced a $30 million investment in Trump-backed World Liberty Financial last week, making it the company’s largest investor.
The proceeds also triggered a provision that allows a Trump-affiliated entity to receive 75% of the company’s revenue, based on terms outlined in a recent company filing.
DT Marks DEFI LLC, a Trump-affiliated company, will make more than $15 million after its investment in Sun, renewing concerns about Trump’s potential impact on cryptocurrency positions and the future of the SEC’s lawsuit against Sun and his companies over alleged securities law violations for violation Sun and his companies have denied wrongdoing.
“It’s hard to have more influence when you’re talking about money in politics than someone who gave you eight figures directly,” said Jordan Libowitz, vice president of the Washington-based group Citizens for Responsibility and Ethics.
The investment comes as Trump announced a slew of crypto-friendly nominees for his administration, including a veteran regulator and cryptocurrency advocate. Paul Atkins to head the Securities and Exchange Commission, and Silicon Valley venture capitalist David Sachs to become the White House AI and cryptography.
Trump has denied all allegations that he profited from his presidency.
Republican presidential candidate, former President Donald Trump at the Dort Financial Center on September 17, 2024 in Flint, Michigan.
Scott Olson/Getty Images
“President Trump removed himself from his multi-billion dollar real estate empire to run for office and cut his government salary,” Trump-Vance transition spokeswoman Karoline Leavitt said in a statement to ABC News. “Unlike most politicians, President Trump didn’t get into politics for profit; he’s fighting because he loves the people of this country and wants to make America great again.”
World Liberty Financial and Justin Sun did not respond to requests for comment.
‘First. we must be number’
Despite Trump once calling cryptocurrency a “fraud”. threw his support in September behind World Liberty Financial, a decentralized financial platform that could eventually be a marketplace for borrowing and lending various cryptocurrencies.
“We have to be No. 1,” Trump said in the announcement, referring to the United States’ position in the crypto market. “I think AI is very important, but I think crypto is one of those things that we have to do.”
World Liberty Financial currently makes money through token sales, which give investors a say in the company’s governance; however, the tokens do not provide a share of the company’s revenue and cannot be sold.
Justin Sun, founder of Tron, at the Token2049 conference in Singapore on September 14, 2023.
Joseph Nair/Bloomberg via Getty Images, FILE
Trump is not an officer or employee of the company, but DT Marks DEFI LLC receives a large portion of World Liberty Financial’s revenue if the venture is successful, and some ethics experts have raised concerns that the company could be a vehicle for funneling funds to Trump. .
“To call it an ethical issue is a fundamentally rotten understatement,” said Robert Weissman, president of the consumer advocacy group Public Citizen. “They’ve established a way for people to funnel money to Donald Trump, and now it’s happening.”
Two months after its launch, the company failed to gain much traction in the cryptocurrency space after criticism of its ambiguous business plan beyond its association with Trump. According to James Butterfill, head of research at asset management firm CoinShares, the company’s initial marketing materials offered little more than “buzzwords.”
The weak launch suggested that its founders and the Trumps would make little money. Because World Liberty Financial had earned less than $30 million in revenue before Sun’s investment, any money the company raised would be kept in a reserve to cover operating expenses while the Trumps would do nothing, according to the company’s terms. calledgold foil.”
Enter Justin Sun, the eclectic cryptocurrency billionaire who — before spending millions on a banana tube taped to a wall — grabbed headlines for spending more than half a billion dollars. NTF of a pet rockand $4.5 million for lunch with Warren Buffet.
A $30 million investment through Tron — the popular cryptocurrency he founded in 2017 — made him the largest investor in the project and revived interest in the once-struggling platform.
“The US is becoming a blockchain hub, and Bitcoin owes it to @realDonaldTrump!” He wrote in Sun X announcing his investment.
‘Would you like to run away’
Last year the SEC sued Sun and his companies for securities fraud, for manipulating the value of a cryptocurrency and for paying celebrities including Lindsey Lohan, Ne-Yo and Jake Paul to promote assets without disclosing what they were paid. Sun and its companies have denied wrongdoing, and the celebrities have settled the case without admitting or denying the allegations.
Tron and other cryptocurrencies have also come under fire for allowing criminals to conduct financial transactions undetected, with a report from the United Nations Office on Drugs and Crime calling Tron “a preferred choice of crypto-money launderers in the East and Southeast.” Tron’s leadership called the report’s allegation “inaccurate” and that it “endorses the UN’s position against rogue actors in the blockchain space.”
Following his $30 million investment, World Liberty Financial appointed Sun as an advisor, saying his “insights and experience will be critical” to the company’s growth.
Weissman told ABC News he was concerned about the arrangement.
“It’s the kind of figure you’d want to run away from if you were starting a business, and instead they’re accepting it,” Weissman said of World Liberty Financial and Sun.
The investment could be a win for Sun, given Trump’s association with the project and the amount of cryptocurrency that has been raised since the election. On Thursday, the shares of the leading cryptocurrency bitcoin It exceeded $100,000 for the first time
“With a lot of cryptocurrencies, having good PR or a good kind of voice goes a long way in getting something noticed, and there’s no better time for World Liberty Financial,” Butterfill said. “The lines between this private endeavor and Trump’s public connections are pretty blurry, and the kind of people who run World Liberty Financial will probably play into that a little bit.”
Trump’s name and likeness appear on World Liberty Financial’s website and marketing materials, and Trump himself is listed as the company’s “senior crypto attorney,” although the firm has not disclosed that Trump and his family members are not company officers. According to the company, World Liberty Financial is “inspired” by Trump and hopes to introduce the platform “to a wider audience that may not already be familiar with or hesitant to engage with decentralized assets and cryptocurrencies.”
“They’re trying to take advantage of President-elect Trump’s popularity and the fact that he just won the election, and see if they can get this business up and running,” said Scott Amey, the watchdog’s senior counsel. Government Oversight Project.
“Money in the hands of the future president”
Although Sun and Trump have never met, some ethics experts ABC News spoke with expressed concern that the investment — and the potential profits Trump might take — could affect Trump’s policy on cryptocurrencies, including the Securities and Exchange Commission. whether he continues to be aggressive or not. Lawsuits brought under the control of the Biden administration.
“If you get charges from the SEC, it’s a pretty good investment to put money in the hands of the future president to influence who can make those decisions at the SEC,” Libowitz said.
Steve Witkoff, a longtime friend of Trump who co-founded World Liberty Financial with his sons, told ABC’s “Good Morning America” in September that Trump’s foray into crypto would not be controversial because it would likely include his own assets. . a trust — as Trump did in his first administration when he placed his assets in a revocable trust controlled by his sons and a business partner.
But such an arrangement would not fully address concerns about conflicts arising from Trump’s crypto firm, according to several experts. Trump is still able to broadly understand the state of his assets, can still profit from them, and has the authority to regain control of the assets, all of which limits the trust’s effectiveness in avoiding disputes, experts said.
“Unless you completely divest and walk away from those investments, you’re still going to benefit,” Amey said.
