Senators seek probe of Trump crypto venture over alleged token sales linked to North Korea and Russia
People walk past an ad in Hong Kong featuring Donald Trump with Solana, XRP and USDC Bitcoin.
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Two U.S. Senators are pressuring the Justice Department and Treasury to investigate a crypto company closely linked to the family of U.S. President Donald Trump for alleged ties to illegal actors in North Korea and Russia.
U.S. Senators Elizabeth Warren, D-Mass., minority members of the Senate Banking, Housing and Urban Affairs Committee, wrote in a letter Tuesday. and Jack Reed, D.R.I., expressed concerns that World Liberty Financial, a crypto company predominantly owned and operated by the Trump family, could pose national security risks.
The letter, obtained exclusively by CNBC and sent to Attorney General Pamela Bondi and Treasury Secretary Scott Bessent, argued that World Liberty Financial lacked adequate safeguards to prevent bad actors from moving funds or gaining influence over its management.
Senators cited September report From a 501(c)(3) nonprofit corporate watchdog Responsible.USAHe said World Liberty Financial sold $WLFI tokens to “various very questionable entities.”
These assets include traders on the blockchain with links to a notorious North Korean hacking organization, a sanctioned Russian “Ruble-backed sanctions evasion tool,” an Iranian crypto exchange, and Tornado Cash, a known money laundering platform, the watchdog alleged.
CNBC contacted World Liberty Financial for comment on the letter and related reports.
Who runs WLF?
World Freedom Finance website family members Eric Trump, Donald Trump Jr. and Barron Trump as co-founders. The website lists Donald Trump as an “Honorary Co-Founder.” An entity affiliated with the US President and some of his family members also holds large equity stakes in WLF.
A series of the company’s “governance tokens,” $WLFI, were launched for public trading in September following earlier private investment rounds. WLF said token holders “play an important role in shaping the future of the protocol.” ability to propose and vote about company offers.
But, Responsible.USA‘ investigation raised the question of who these owners were. World Liberty Financial sold $10,000 worth of WLFI tokens in January to traders with a history of trading with a wallet currently approved for collaboration with the North Korean state-backed hacking team Lazarus Group, the group’s report said.
In their letter, the senators alleged that by selling the tokens, World Liberty Financial took money from people with “clear and obvious connections to enemies of the United States” and increased national security risks by giving them a “seat at the table” to influence the company’s management.
‘There is a risk of increasing illegal activity’
World Liberty Financial’s plans Continue to expand and launch new products, including debit cards and tokenized commodity assets.
The senators’ letter noted these expansions but warned that token sales to bad actors “demonstrate the absence of strong enforcement and anti-money laundering controls” and “risk unduly escalating WLF’s illicit financial activities.”
The report stated that “the Trump family’s close ties to the company also create a financial conflict of interest for Trump Administration officials who report to the President: prioritizing token sales will directly enrich the Trump family; Adaptation activities may interfere with this wealth creation.”
The letter stated that DT Marks DEFI LLC, “an entity affiliated with Donald J. Trump and certain family members,” owns $22.5 billion in WLFI tokens valued at over $3 billion and is entitled to 75% of the proceeds from $WLFI token sales.
“This means that every time a governance token is sold, three-quarters of that money goes directly to President Trump and his family, even for sales to entities linked to North Korea and Russia,” the two senators said.
Responsible.USA, separate report In August, it was estimated that roughly $11.6 billion, or 73%, of Trump’s net worth was tied to his cryptocurrency ventures, including the launch of the $TRUMP memecoin. According to Reuters, the annual financial disclosure released by the U.S. Office of Government Ethics for calendar year 2024 showed that Trump’s switch to crypto has significantly added to his wealth.
Democratic senators added that the timing of their demands is important as Congress considers new crypto regulation that could shield governance tokens like $WLFI from existing U.S. oversight and exempt issuers of such tokens from certain recordkeeping and disclosure requirements.
“As Congress considers market structure legislation for digital assets, we must ensure that crypto interests do not profit at the expense of U.S. national security and hand over the keys to financial platforms that illicit actors can then exploit,” he added.
Once a critic of crypto during his first term, Trump has since embraced the industry, and his administration has pushed forward several crypto-friendly bills, including the recently passed GENIUS Act.
Warren and Reed’s letter asked the Treasury and Justice Department to outline information regarding possible enforcement actions against World Liberty Financial by December 1.
The Treasury and Justice Departments did not immediately respond to CNBC’s request for comment.
ongoing review
Warren, a ranking member of the Senate Banking, Housing and Urban Affairs Committee, is a frequent critic of Trump’s embrace of the crypto industry and the crypto industry more broadly. His has previously pressured World Liberty Financial over its business dealings, including a recent deal for the firm’s stablecoin.
The company’s stablecoin USD1, backed by the dollar and short-term US government treasury bonds, was used by UAE-backed investment fund MGX to invest $2 billion in Binance, helping increase USD1’s traction and trading volume.
New York Times reported It was reported in September that the UAE had received a major chip deal from Washington shortly after the MGX deal closed.
Meanwhile, on October 23, Trump pardoned Binance founder Changpeng Zhao, who previously pleaded guilty to charges that he enabled money laundering while he was head of the cryptocurrency exchange. Trump would say in a CBS “60 Minutes” interview a few days later that he knew nothing about Zhao, even though he was granted a pardon.
A report from the Wall Street Journal claimed that Binance not only facilitated the settlement of MGX’s investment using USD1, but also helped create the technology behind the stablecoin, citing unnamed sources familiar with the matter.
Binance CEO Richard Teng denied that the company had any role in MGX’s decision to complete its $1.5 billion investment.
Donald Trump Jr. and World Liberty Financial CEO Zach Witkoff, son of U.S. Special Representative for the Middle East Steve Witkoff, told CNBC in September that concerns about conflicts of interest with the Trump administration were “complete nonsense.”
“Don and I have a big mission for World Liberty, but our fathers’ mission is much bigger. They are not focused on stablecoins and are not involved in the stablecoin business,” Witkoff said.
