World Liberty Financial (WLFI), a cryptocurrency company with reported ties to former President Donald Trump and his family, is facing new scrutiny. Two Democratic senators have called for federal regulators to investigate the firm due to alleged connections with sanctioned individuals in North Korea and Russia.
Senators Elizabeth Warren and Jack Reed sent a letter to Attorney General Pamela Bondi and Treasury Secretary Scott Bessent, expressing concerns that the company's token sales might have endangered U.S. national security. They cited evidence suggesting that WLFI governance tokens were acquired by blockchain addresses associated with foreign entities, as reported by CNBC.
These concerns were initially raised in a September report by the nonpartisan watchdog group Accountable.US. The report claimed that World Liberty Financial sold tokens to traders whose on-chain activity linked them to the Lazarus Group, North Korea's state-sponsored hacking organization. Additionally, the report alleged connections to a sanctioned Russian entity involved in sanctions evasion, an Iranian cryptocurrency exchange, and Tornado Cash.
The senators argued that these sales provided adversaries with governance rights within the protocol, effectively giving them a "seat at the table." World Liberty Financial has refuted these allegations, stating to CNBC that they implemented "rigorous AML/KYC checks" for all presale buyers and rejected millions of dollars from individuals who did not pass screening.
Trump Family's Significant Stake in WLFI Token Revenue
The ownership structure of WLFI has amplified the controversy surrounding the company. According to its website, Eric Trump, Donald Trump Jr., and Barron Trump are listed as co-founders, with Donald Trump designated as "Co-Founder Emeritus." A Trump-affiliated entity, DT Marks DEFI LLC, possesses 22.5 billion WLFI tokens, which are valued at over $3 billion. This entity is also entitled to 75% of the revenue generated from token sales.
Senators Warren and Reed highlighted this arrangement as a direct financial conflict of interest for administration officials, emphasizing that a substantial portion of token-sale proceeds flows directly to President Trump and his family.
The senators also expressed concerns about the company's rapid expansion, which includes plans for a debit card and tokenized commodities. They warned that this growth, coupled with alleged weak compliance controls, "risks supercharging illicit finance activity."
World Liberty Financial has encountered increasing political and regulatory pressure in recent months. Its USD1 stablecoin was notably used in a $2 billion investment into Binance by the UAE-backed fund MGX, occurring shortly before the UAE secured a significant chip agreement from Washington.
Cointelegraph sought comment from WLFI but had not received a response by the time of publication.
Expert Analysis Questions Some Allegations
In contrast to some of the accusations, a recent analysis by blockchain researcher Nick Bax has cast doubt on claims that a North Korea-linked wallet invested in WLFI. Bax reviewed the transactions cited in the watchdog report and concluded that they were the result of false positives rather than direct interactions with sanctioned entities.
Bax explained that the transactions identified as "Lazarus-linked" originated from a memecoin contract called Dream Cash. This contract automatically routes tokens from an address labeled as belonging to the Lazarus Group to anyone who claims them. Bax confirmed that an independent user, @shryder1337, claimed these tokens as a jest, not as a transaction with North Korea.
The analyst further stated that the situation was compounded by the fact that Shryder was not only falsely accused of being a North Korean hacker but also appeared to have his substantial WLFI tokens, valued at approximately $95,000, frozen as a consequence of this false positive.