A new cryptocurrency launched by World Liberty Financial, associated with the Trump family, has reportedly increased the family’s wealth on paper by approximately $5 billion, even as the digital token experienced a significant drop shortly after its debut. The token, named WLFI, reached a peak value of around 40 cents following its launch on Monday, according to information from CoinMarketCap. However, by Tuesday morning, its price plummeted to about 21 cents, reflecting a decline of 48% from its highest point, before making a slight recovery to about 23 cents in the afternoon. Despite this downturn, the Trump family’s investment in WLFI remains valued at roughly $5 billion, based on their ownership of 22.5 billion WLFI tokens. World Liberty Financial has stated that the family’s ability to sell their holdings is currently restricted, as the tokens held by the founders are locked.
Trump’s Evolving Stance on Cryptocurrency
Once known for his skepticism towards cryptocurrency, former President Trump has shifted his perspective during his second term, advocating for the U.S. to become the “crypto capital of the world.” However, the Trump family’s involvement in World Liberty Financial and other crypto ventures has raised alarms among certain watchdog organizations and Democratic legislators, who express concerns about potential conflicts of interest. White House press secretary Karoline Leavitt responded to these concerns, criticizing the media for what she termed irresponsible reporting that fosters public distrust. She affirmed that neither the former president nor his family has engaged, or plans to engage, in any conflicts of interest. In July, Trump signed the Genius Act, a significant piece of federal legislation that introduced regulations for cryptocurrencies, particularly focusing on “stablecoins,” a type of cryptocurrency regarded as relatively secure due to their value being tied to stable assets like the U.S. dollar.
Understanding WLFI
WLFI is categorized as a token, or a digital asset, that permits its holders to vote on governance matters related to World Liberty Financial. The company has advised token holders that WLFI should not be regarded as an investment, warning that it should not be purchased speculatively or with the expectation of profit from resale. Nic Puckrin, CEO of Coin Bureau, noted that the initial volatility in WLFI’s price is not uncommon for newly launched tokens. He explained that the transition from 40 cents to 21 cents is typical for fresh token introductions, as initial excitement often leads to quick price spikes, followed by a sell-off as early investors take profits. Puckrin also pointed out that, relative to other token launches, WLFI’s price drop has been moderate, with early investors still experiencing substantial returns from private sales. Additionally, World Liberty Financial offers a stablecoin known as USD1, which is tied to the value of the U.S. dollar, providing a more stable investment option in the crypto space. He emphasized that WLFI is distinct in its provision of governance rights that allow token holders to influence the future development and policies of USD1 and World Liberty Financial.
Addressing Insider Ownership Concerns
According to World Liberty Financial’s website, insiders, including the Trump family, possess over 20% of WLFI tokens. However, the company’s regulations stipulate that no single digital wallet can wield more than 5% of governance power, which is intended to mitigate the risk of excessive insider control, Puckrin noted.
Updates on Trump’s Other Cryptocurrency Initiatives
In May, the $TRUMP meme coin attracted attention when it offered its leading investors the opportunity to dine with Mr. Trump. Reports indicated that investors spent around $140 million on the coin to secure an invitation to this event, which raised concerns among regulatory bodies and some Democratic legislators regarding the perceived connection between the asset and access to the former president. Following this surge in interest, the meme coin’s value nearly doubled to about $15 in May but has since experienced a decline, trading at approximately $8.30 on Tuesday, as reported by CoinMarketCap. Furthermore, Trump Media & Technology Group, the parent company of the Truth Social app, has recently ventured into the cryptocurrency market, investing about $2 billion in digital currencies to transform the firm into an investment-focused entity. The company has seen its shares lose nearly 50% of their value this year, with trading at approximately $17.05 on Tuesday.
