Elizabeth Warren is pushing a new SEC investigation into World Liberty Financial, a crypto project related to the Trump family, for reasons related to investor support, token trading, and a controversial $75 million crypto-backed loan.
The move comes at a tumultuous time for the crypto industry as US lawmakers debate major digital finance laws through CLARITY Act.
Warren Questions WLFI Token Structure
In a letter sent to SEC Chairman Paul Atkins on May 14, Warren asked regulators to investigate whether World Liberty Financial may have misled investors or violated securities laws associated with its WLFI symbol.
According to Warren, entities affiliated with the Trump family are said to be entitled to 75% of the sales proceeds after the investment, while traders who bought WLFI tokens faced lock-up laws that prevented them from selling.
The senator cited reports showing that World Liberty Financial raised about $715 million through token sales, while the Trump family reportedly made more than $1 billion in crypto-related assets linked to the project.
Warren said that strong trade protections are needed as Congress continues to look at the regulation of the crypto market.
$75 Million Debt Raises Big Concerns
The most worrying thing in the Warren’s letter puts around a $75 million loan related to the WLFI brand.
According to the statement, World Liberty Financial used approximately $440 million worth of WLFI tokens as collateral to borrow money through the Dolomite lending platform earlier this year.
The deal reportedly allowed WLF to withdraw approximately $65.4 million in its USD1 stablecoin along with $10.3 million in USDC.
The conflict escalated because regular investors were prohibited from trading WLFI tokens at the same time. Following the sale, WLFI’s stock reportedly fell nearly 10% to record lows.
The Political Debate over Crypto Continues to Grow
The timing of the letter also coincides with the ongoing debate over the CLARITY Act, one of the largest cryptocurrency regulations in US history.
At the meeting, Warren introduced changes related to Trump’s involvement in crypto, although that idea was later defeated.
Currently, Donald Trump and his family own 22.5 billion WLFI tokens through DT Marks DEFI LLC, making the project a significant portion of their crypto-related wealth.
Warren has now asked the SEC for official answers by May 26 as the pressure around politics in the crypto markets grows.
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