Donald Trumps’ $750 million crypto deal sparks scrutiny: Family firm sells to itself, cashes in big; why watchdogs see red flags

The Trump family’s latest foray into cryptocurrency has triggered questions over conflict of interest after a $750 million transaction put their businesses on both sides of the deal, The Wall Street Journal reported.According to the WSJ, the arrangement centres on World Liberty Financial (WLFI) — the Trump family’s flagship crypto venture launched last year. Earlier this month, WLFI took over Alt5 Sigma, a publicly listed payments firm that evolved from a pain-treatment business. Alt5 then raised $750 million from outside investors and used the funds to buy WLFI’s newly created cryptocurrency.That structure, the Journal said, will deliver the Trump family a windfall of about $500 million, since an entity it controls retains up to three-quarters of revenues from WLFI sales.Such “circular” transactions — with the same party effectively acting as both buyer and seller — are common in crypto markets but rare in traditional finance, and often raise red flags. Half a dozen former financial-market regulators told WSJ the deal could expose investors to risks, though it likely complies with US securities laws as long as disclosures are made.Billion-dollar paper wealthPublic filings reviewed by WSJ show that President Donald Trump personally holds two-thirds of the WLFI tokens, with the family’s total stake valued at more than $6 billion on paper.

Crypto has now overtaken real estate as the Trump family’s dominant business interest, overshadowing the former president’s half-century property empire.The WLFI token — described by the family as the crypto equivalent of an IPO — is set to debut trading on Monday. While some enthusiasts expect its value to soar, earlier Trump-linked tokens surged before collapsing, WSJ noted.The family could, in theory, earn billions more from the eventual public sale of WLFI’s 33 billion tokens, on top of those held directly.

However, cashing out remains challenging: “even a small amount of selling can trigger prices to drop,” the report cautioned.Trump sons, Nasdaq bell and investor betsDonald Trump Jr. and Eric Trump celebrated the deal alongside WLFI co-founder Zach Witkoff by ringing the Nasdaq opening bell in New York earlier this month. Warren Hui of Soul Ventures, one of the investors in Alt5’s fundraising, told WSJ: “They are launching their product at the right time with the right team.”Among backers in the $750 million raise were Point72 Asset Management, run by billionaire Steve Cohen, and Hong Kong-based Soul Ventures. Alt5 itself, valued at about $1 billion, has said it will accumulate WLFI under a “treasury strategy” modelled after MicroStrategy’s bitcoin purchases.Unlike MicroStrategy, however, Alt5 is buying tokens directly from WLFI — a related party that also controls supply. Alt5 paid 20 cents per WLFI token, a 50% premium to the price in a recent private sale, boosting the overall valuation.Regulators and red flagsHoward Fischer, former senior trial counsel at the US Securities and Exchange Commission (SEC), told WSJ: “We are in strange and uncharted territory in the securities world. People are making investment decisions that they wouldn’t make in other times.”Corey Frayer, a former SEC official who oversaw crypto policy, warned that the deal “brings the worst practices of the crypto ecosystem into regulated public markets.”While spokespeople for WLFI and Alt5 did not respond to WSJ’s requests for comment, the White House pushed back at criticism. Press secretary Karoline Leavitt said: “Neither the president nor his family have ever engaged, or will ever engage, in conflicts of interest.”Trump’s wider crypto empireBeyond WLFI, the family holds several billion dollars in $Trump memecoin and in Trump Media, the parent of Truth Social, which also invests in cryptocurrencies.

WLFI separately runs a dollar-pegged stablecoin, USD1, and plans a crypto payments app.Launched last September with the slogan “Make America Great Again, this time with crypto,” WLFI had already raised $650 million privately, including funds from Chinese crypto billionaire Justin Sun, WSJ reported.Investors like Morten Christensen, founder of crypto site AirdropAlert, told the Journal they expect WLFI’s value to surge: “It ticks all the boxes for a token to go up violently,” he said, adding he hopes the president will tweet in support after trading begins.Alt5’s chequered pastUntil 2023, Alt5 operated as JanOne, a recycling and pain-medication company that settled SEC fraud allegations by paying a fine without admitting or denying charges. After buying a small crypto payments firm, it rebranded as Alt5 Sigma and pivoted into digital assets.WLFI paid for its stake in Alt5 using its own WLFI tokens, valued at $750 million. The deal also gave Eric Trump a board seat at Alt5 and installed Witkoff as chairman.As part of its strategy, WLFI has even indicated it will use profits from its USD1 stablecoin to buy back WLFI — a move a developer described on X as creating “permanent buying pressure.”