Warren, the top Democrat on the Senate Banking Committee, wrote to SEC Chairman Paul Atkins on May 14 asking his agency to investigate whether World Liberty Financial misled people who bought its tokens or violated securities rules.
The company is run by President Donald Trump and his sons.
“The SEC must be prepared to enforce the law even when potential violators include those with strong political connections,” Warren said. He said In her message.
She added that protecting ordinary investors is just as important as “preventing the president and his family from profiting from cryptocurrencies while they are in office.”
A $75 million deal raises red flags
Her doubts come from the WLFI deal that occurred in early April in which the company received a $75 million loan. In return, $440 million worth 5 billion WLFI tokens were placed as a backup. $65.4 million was borrowed in World Liberty Financial’s stablecoin USD1 while $10.3 million was borrowed in USDC. The deal was completed through the “Dolomite” lending platform. Run by WLF Consultant and Chief Technology Officer, Corey Kaplan.
The problem is that ordinary investors are not allowed to sell these same tokens.
WLFI tokens fell to new lows with a 10% decline as news of the deal emerged. The deal was so big that people who put their money into dolomite to earn interest were unable to get cash.
A few days later, a World Liberty Financial announcement revealed a new timeline for when token holders can sell. Under these new conditions, no one will be able to sell for at least two years. Many investors didn’t see this coming, Warren said. They faced an unfair choice. Agree to rules they didn’t like, or reject them and remain tied indefinitely under preconditions, effectively removing any clear path to liquidity.
Warren wrote that early investors can’t touch 80% of their holdings, and that they watch the market move against them without being able to do anything about it.
All of this happened as the Senate Banking Committee was preparing to vote on the now-passed Clarity Act. It is a major bill to create clear rules for how cryptocurrencies are regulated.
Warren wanted the bill to include specific rules preventing government officials and their families from making money from cryptocurrencies while in office. Warren’s efforts It was in vain.
A billionaire investor files a fraud lawsuit
Trump’s cryptocurrency company is already facing legal trouble from another direction, as stated in a report Cryptopolitan. Last April, cryptocurrency billionaire Justin Sun filed a lawsuit in federal court in California. Sun claims that World Liberty Financial blocked him from selling tokens worth up to $1 billion.
Sun says in his lawsuit that the company tried to get him to invest hundreds of millions of dollars in its digital project. When he said no, they froze his codes, according to the complaint. Sun bought $45 million worth of tokens early on and says he was one of their biggest backers.
Sun also claims that the company quietly changed the rules regarding who can sell coins, giving itself the ability to block certain people from trading. “There was no governance proposal (let alone a vote by token holders) as to whether World Liberty should have this authority,” his lawsuit says.
Zach Witkoff, CEO of World Liberty Financial, called Sun’s claims “completely baseless” on social media. Eric Trump, one of the company’s founders, also rejected the lawsuit.
Sun says the cryptocurrency brought in just $22 million in the first month, but after he invested $45 million, other investors joined and the company eventually raised about $550 million.
But once the tokens became tradable on September 1, he was unable to sell them, according to his lawsuit. Since then, WLFI tokens have lost about 25% of their value.
