Trump's Labor Day payday
Yesterday, millions of Americans took the day off to celebrate Labor Day, a holiday that honors the achievements of organized labor. President Trump, however, was hard at work leveraging his public office for personal financial gain.
September 1 marked the first day of public trading for the World Liberty Financial token, part of a complex and unprecedented scheme by Trump and his sons to monetize the presidency.
World Liberty Financial and its eponymous cryptocurrency token, also known as WLFI, were launched about a year ago. At the time, the Biden administration was in charge of the SEC, and such crypto tokens that were marketed as investments were treated as illegal, unregistered securities.
Trump and his family took two steps to evade legal issues. First, they created a pretextual purpose for the token other than financial speculation. Owners of the token would get a vote on the governance of the company. The vast majority of tokens, however, were reserved for Trump and other insiders, meaning there is no way for outsiders to actually influence the company's activities. Second, all tokens were "locked" and could not be resold to anyone. The restriction on resale would remain in place "until such time, if ever, [the tokens] are unlocked through protocol governance procedures in a manner that does not contravene applicable law."
Who would buy a token that has no meaningful purpose and cannot be resold? Initially, not many people did. The company set out to sell $300 million worth of WLFI, with Trump and his sons personally receiving 75% of the proceeds. But in the first six weeks, World Liberty Financial had sold only $22 million worth of WLFI.
In the meantime, Trump won the 2024 presidential election. Now, purchasing the tokens was a way to put cash directly in the pocket of the president-elect of the United States. On November 25, crypto entrepreneur Justin Sun — who was being prosecuted by the SEC for fraud and market manipulation — announced he was purchasing $30 million worth of WLFI. Sun later bought another $45 million in WLFI, bringing his total investment to $75 million. That purchase directly resulted in a $50 million windfall for Trump and his sons.
Sun's investment paid off. In February, the SEC told a judge it was halting the prosecution of Sun to work out a settlement. In March, World Liberty Financial announced that it had sold $550 million worth of WLFI. The purchasers of these tokens are anonymous. (Sun's identity is only known because he chose to publicly disclose his purchases.) Trump and his sons have made hundreds of millions of dollars from WLFI sales.
Unlocking a big payoff
In addition to a 75% cut of all initial WLFI sales, Trump also personally owns 15.75 billion WLFI tokens. Right now, Trump is not able to sell these tokens and put them into cash. Lifting that restriction could mean a multi-billion dollar payoff for Trump.
Shortly after taking office, Trump sought to create a significantly friendlier regulatory environment for crypto. Trump nominated Paul Atkins, who has spent years advocating for the interests of the crypto industry, to be the new SEC chairman. Atkins previously served as the CEO of a consulting firm where he advised numerous clients in the crypto industry and as co-chair of the Token Alliance, a crypto industry lobbying group. Atkins was confirmed in April, and quickly shut down enforcement actions against major crypto companies. The agency also "drastically cut staffing of a crypto enforcement unit." At the Justice Department, the Trump administration disbanded a unit responsible for investigating crypto crimes. Moving forward, according to an internal memo, the unit will focus exclusively on protecting crypto investors and companies from hackers and other threats.
With the risk of legal issues effectively reduced to zero, WLFI token holders voted in July to unlock 24.6 billion tokens, including 20% of those purchased by the public. The unlock became official at 8 a.m. Eastern on Monday, and WLFI coins began trading at about 22 cents each.
Trump's tokens remain locked for now, which ultimately benefits him. If Trump were to try to unload some or all of his tokens on the first day of public trading, it would tank WLFI's price. Trump can only realize his gains if the price of WLFI becomes stable enough to withstand a major sale by the person who owns the most tokens.
How to buy your own tokens with other people's money
World Liberty Financial undertook extraordinary measures to create demand for WLFI tokens. On August 11, an obscure publicly traded company called Alt5 Sigma announced that co-founder of World Liberty Financial, Zach Witkoff, will become Alt5 Sigma's chairman and Eric Trump will join the board.
Alt5 Sigma will then pursue a crypto treasury strategy of acquiring $1.5 billion in WLFI tokens. This tactic allows investors to get exposure to the WLFI token by buying Alt5 Sigma stock. Half of this $1.5 billion will be financed through an investment by World Liberty Financial, which it is paying for in WLFI tokens.
Alt5 Sigma is also financing is WLFI token binge by raising $750 million from various hedge funds, including Jane Street. It may be that these hedge funds think it's a smart bet to align their financial interests with Trump. But there are other reasons why hedge funds are spending millions on a circular transaction that directly enriches Trump.
Recently, Jane Street had $567 million impounded by the Indian government and was banned from trading in India for alleged market manipulation. In June, Jane Street co-founder Robert Granieri was also accused of funding an attempted coup in South Sudan. (Granieri says he was duped.) Does Jane Street believe Alt5 Sigma is a sound investment? Or is it trying to improve its relationship with Trump to get the administration's assistance in resolving its international legal troubles?
Whatever the rationale, World Liberty Financial has effectively taken over Alt5 Sigma and is acting as both the buyer and seller of hundreds of millions of dollars of WLFI tokens. This is how you create artificial demand.
A $3.4 billion disappointment
It is very easy to create a cryptocurrency. There are dozens created every day. What is more challenging is getting your new cryptocurrency listed on a prominent trading platform. Trump, however, ingratiated himself with these platforms by dropping prosecutions against companies like Binance, Coinbase, and Kraken. All three of these companies listed WLFI on its first day of trading.
Yet despite hundreds of millions in artificial demand and preferred access to the top trading platforms, interest in WLFI tokens was tepid on its first day of trading. WLFI was initially offered at about 22.9 cents at 8 a.m. By 5 p.m., WLFI had slumped to 21.2 cents.
It wasn't all bad news for Trump. Even at its current value, Trump's stockpile of WLFI has a paper value of over $3.4 billion.
Perhaps if I believed in heaven or hell I’d say there is a special place in hell for the Trump gangster mob, but I want justice for these crimes in my lifetime. The scale and scope of the corruption is mind boggling. I don’t want Trump to die in office because his heart fails. I want this pathologically lying malignant narcissist to suffer and die behind bars in a tiny cell like the petty Queens real estate mob boss he is.
Is Zach Witkoff any relation to Steve, the Russian negotiator?