A newly launched cryptocurrency from World Liberty Financial, associated with the Trump family, has reportedly increased their wealth by approximately $5 billion on paper, despite experiencing a significant downturn shortly after its debut on the exchange. The digital asset, named WLFI, initially soared to nearly 40 cents following its launch on Monday, as per CoinMarketCap data. However, by Tuesday morning, its value plummeted to around 21 cents, marking a 48% decline from its peak, before experiencing a slight rebound to roughly 23 cents in the afternoon. Even with this drop, the Trump’s family investment in WLFI—which consists of 22.5 billion tokens—is valued at about $5 billion. Nevertheless, the family cannot liquidate their holdings at this time because the tokens allocated to the founders are still locked, as stated by World Liberty Financial. The company has not yet provided any comments regarding this situation.
Trump’s Evolving Stance on Cryptocurrency
Once a vocal critic of cryptocurrencies, former President Trump has now embraced digital assets during his second term, expressing his ambition for the U.S. to become the “crypto capital of the world.” The Trump family’s involvement with World Liberty Financial and other private crypto initiatives has raised eyebrows among certain watchdog organizations and Democratic legislators, who are concerned about potential conflicts of interest. In response, White House press secretary Karoline Leavitt criticized the media for allegedly attempting to create unfounded conflicts of interest, asserting that neither the president nor his family have engaged in such practices. In July, Trump signed the Genius Act into law, marking a significant step in federal cryptocurrency regulation, particularly concerning “stablecoins,” which are regarded as a safer form of digital currency due to their value being tied to stable assets like the U.S. dollar.
Understanding WLFI
WLFI is a digital token that grants its holders governance rights within World Liberty Financial. However, the company warns that WLFI should not be viewed as an investment, stating explicitly that buyers should not acquire it for speculative purposes or with the expectation of making a profit. The fluctuations in WLFI’s price are not unusual for newly launched tokens, according to Nic Puckrin, CEO of Coin Bureau, who indicated that such volatility is typical during the beginning phases of a token’s market presence. He noted that while early excitement can drive initial price increases, it is often followed by profit-taking from early investors. Compared to other tokens that have debuted recently, WLFI’s price drop is considered relatively mild, and initial investors still stand to gain from prior private sales. Additionally, World Liberty Financial has introduced a stablecoin called USD1, which is pegged to the U.S. dollar, thus providing a more stable investment option in the volatile crypto market.
Addressing Insider Ownership Risks
According to World Liberty Financial, the Trump family and other insiders hold over 20% of the WLFI tokens. However, the company’s governance structure stipulates that no single digital wallet can wield more than 5% of governance power, a measure designed to mitigate excessive influence from insiders, as noted by Puckrin.
Trump’s Other Crypto Initiatives
In May, the $TRUMP meme coin attracted attention when it offered its top holders an exclusive dinner with Mr. Trump, prompting concerns from government watchdogs and some Democratic lawmakers regarding the potential for the asset to offer privileged access to the former president. At that time, investors reportedly spent around $140 million on the meme coins to gain an invitation to the event. Following this surge in interest, the value of the coin nearly doubled to about $15 in May but has since retreated significantly, trading at approximately $8.30 as of Tuesday. Additionally, Trump Media & Technology Group, which oversees the Truth Social app, has ventured into the cryptocurrency realm recently, investing roughly $2 billion in digital currencies to pivot the business towards investment opportunities. Year-to-date, shares of Trump Media & Technology Group have seen a decline of nearly 50%, with stock trading around $17.05 on Tuesday.
