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WLFI

The narrative

In this current election period, cryptocurrency is aiming to leave its mark. Interestingly, one of the major presidential candidates in the U.S. has connections with an upcoming cryptocurrency project.

Why it matters

Breaking it down

According to reports from Danny Nelson, Cheyenne Ligon, and Sam Kessler this week, it has been announced that the former President, Donald Trump, will serve as the main advocate for cryptocurrency in World Liberty Financial, a venture that appears to be linked with Dough Finance and includes Trump’s three sons and several other key individuals in its leadership.

According to a preliminary report viewed by CoinDesk, it appears that World Liberty Financial plans to distribute 30% of the newly minted WLFI tokens for sale, while keeping the rest, approximately 70%, with the founders, collaborators, and team members associated with the project.

Let’s zero in on this aspect because it presents some thought-provoking regulatory dilemmas. It’s worth noting that Trump has been actively courting crypto supporters during the past few months, pledging to appoint regulation-friendly figures and position the U.S. as the global leader in cryptocurrency, as he stated in numerous public statements.

Despite his past opposition to cryptocurrency while in office, this supportive attitude towards it now – which seems somewhat contradictory – could potentially bring him personal advantages with the imminent launch of World Liberty Financial.

The major caveat here is that CoinDesk has seen draft documents; the final project may differ from what CoinDesk has reported on.

In the document provided by CoinDesk, it’s frequently pointed out that allocating 70% of funds to established project developers is quite substantial when compared to typical allocation practices in other cryptocurrency projects.

The whitepaper includes a provision that prohibits the transfer of assets, which appears to be aimed at disallowing resales and suggesting that investors may gain profits from the tokens upon their initial release, at least initially.

According to Dave Rodman, the founder and managing partner at Rodman Law Group, this action on its own wouldn’t be sufficient to circumvent securities regulations.

He stated, ‘Buying tokens that are locked doesn’t automatically mean compliance with U.S. securities laws for American purchases. It simply hasn’t addressed this issue.’

It’s still uncertain, for now, who has authority over these digital wallets, as stated by Alexandra Damsker, an attorney and advisor.

It’s uncertain how the 70% that remains will be distributed among the developers and project leaders, or if it will be divided equally for everyone.

The WLFI token is used for governance purposes. Those holding a specific, as-of-yet undisclosed quantity of tokens will have the ability to suggest changes in the protocol or make other recommendations. All token holders can cast their votes, but they can only use up to 5% of the total token supply. This system is intended to promote fairness and widespread participation. However, a group with aligned interests who control a majority of tokens may potentially influence these proposals.

The white paper also included a line about screening purchasers to comply with sanctions regulations.

The project is likely to attract unwanted attention from cyber-attackers, as demonstrated by recent incidents involving Twitter accounts associated with Lara (Eric Trump’s wife) and Tiffany Trump (one of Donald Trump’s daughters), which were compromised this week to promote questionable addresses. Eric Trump clarified that these addresses were a scam, leading to additional confusion among people unsure if it implied World Liberty Financial itself was fraudulent or merely the specific addresses (for clarification: World Liberty Financial is a genuine project; the promoted addresses were not part of it).

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See ya’ll next week!