WLFI's debut surged and then fell back, the crypto world offering $5 billion to the Trump family.

Author: Ye Zhen, Wall Street Insights

The cryptocurrency project World Liberty Financial, associated with the Trump family, has made its market debut. Although its core token WLFI experienced a brief surge before quickly falling back, underperforming expectations, this does not affect the Trump family's substantial locked-in profits.

On Monday (September 1), the highly anticipated WLFI token was officially listed for trading on major cryptocurrency exchanges such as Binance, Bybit, and OKX. The token opened at a price of 20 cents and quickly surged to a peak of about 40 cents within five minutes of trading, but the increase was significantly curtailed shortly thereafter. As of now, its price has fallen back to around 23 cents, performing below expectations.

According to the rules, approximately 35,000 early buyers who purchased tokens for a total of about $550 million before this spring are allowed to sell 20% of their holdings on Monday. Since their buying cost is much lower than the opening price, many choose to take profits immediately.

However, the performance of the token's secondary market has not affected the Trump family's earnings. The New York Times reports that disclosed documents reveal an “unusual internal arrangement” with Nasdaq-listed Alt5 Sigma Corporation, which has potentially brought the Trump family entities direct cash benefits of up to hundreds of millions of dollars. In short, the Trump family makes money through special agreements, not through the fluctuations in token prices. The publicly traded company Alt5 spent $1.5 billion to buy WLFI, of which 75% of the sales proceeds go directly into the Trump family's pockets, instantly locking in hundreds of millions of dollars in cash.

In addition, based on Monday's closing price, the 22.5 billion $WLFI tokens controlled by the Trump family have an estimated value of about $5 billion, making it one of Trump's most valuable assets, far exceeding his traditional real estate investments such as hotels and golf courses. However, the tokens held by the management team are currently still locked and cannot be sold immediately.

Special Internal Arrangement Locks in Huge Profits for the Trump Family

According to the New York Times, despite a lackluster market debut, the Trump family's substantial earnings have been secured through another channel. This is attributed to an unusual agreement reached with the Nasdaq-listed Alt5 Sigma Corporation, as revealed in World Liberty's disclosure documents.

In August of this year, Alt5 announced the appointment of Zach Witkoff, co-founder of World Liberty Financial, as its chairman, with Eric Trump, the son of President Trump, becoming a board member, and another executive, Zachary Folkman, becoming a board observer. This series of appointments puts three executives from World Liberty in leadership positions at Alt5.

At the same time as announcing changes in its leadership, Alt5 also disclosed plans to use the $1.5 billion it raised to make purchases when WLFI starts trading on Monday. On Monday, World Liberty confirmed in a statement that it had sold over 7.5 billion tokens (approximately 8% of the total supply) to Alt5. This transaction was the largest token transaction in the market that day.

According to the agreement established at the inception of the project, in return for Trump's personal endorsement and family involvement in management, a Trump family entity named DT Marks DEFI is entitled to “75% of the net proceeds from the $WLFI token sale”. This transaction sold to Alt5 is expected to generate several hundred million dollars in cash benefits for the Trump family.

Conflicts of Interest Disputes and Market Reactions

The close corporate ties between Alt5 and World Liberty have raised external scrutiny regarding potential conflicts of interest.

John Reed Stark, a lawyer who served at the SEC for twenty years, stated that the most surprising aspect of this series of business operations is the Trump family's openness about their efforts to make money.

“There is a clear conflict of interest with the role of the president,” Stark said, “but it is worth noting: everything they do is out in the open. In the past, such associations would be hidden, but now the president's family displays them like celebrating a medal of honor.”

Eric Trump, the son of Donald Trump, and Donald Trump Jr. both celebrated WLFI's listing on social media on Monday. Eric Trump is currently visiting Japan, having previously attended two cryptocurrency-related events in Hong Kong to promote the company's products.

At the same time, according to some industry news agencies, the relationship between the project and Alt5 may be under review by the U.S. Securities and Exchange Commission (SEC), but Alt5 has denied these reports. As of Monday, neither Eric Trump nor World Liberty has responded to media requests for comment.

On-paper wealth reaches $5 billion, but liquidity is constrained

With the launch of WLFI trading, the Trump family's cryptocurrency wealth has achieved a significant paper leap. As of Monday afternoon, the 2.25 billion WLFI tokens under their control are worth approximately $5 billion.

In addition, the holdings of the partners are also quite valuable. The Witkoff family and other investors, including Chase Herro and Zachary Folkman, control a total of 3.75 billion tokens, which, based on Monday's closing price, have a total value of approximately $1.7 billion.

However, this wealth currently exists only on paper. World Liberty announced on Monday that the tokens held by the management team, including the Trump family, the Witkoff family, and other partners, are still locked and cannot be sold on the open market.