WLFI Truth Report: Trump's "Political Fundraising Techniques"

Author | danny

Twitter | @agintender

Original Title | WLFI Eagle: A Crowning Feast of Alchemy Merging Political Capital and Crypto Financial Engineering

WLFI is a project that combines political branding with decentralized finance, led by the Trump family, and is highly centralized in structure. It rapidly amplifies its valuation through a capital circulation design with ALT5 and adopts a low circulation + high FDV token model. While it has attracted participation from institutions and crypto capital, it also comes with technical security, governance centralization, and potential regulatory risks.

1. Project Origin: The TRUMP FAMILY's Journey to Crown in DeFi

Since its inception, World Liberty Financial has deeply tied its core values to Trump's political brand, demonstrating that its strategic intent is not technological innovation, but rather leveraging a strong brand identity for market penetration and capital raising.

1.1. Vision and Mission: “Financial Democratization” and Political Narrative

World Liberty Financial officially debuted to the public in September 2024, with its official positioning clearly stating that the project is “inspired by the vision of President Donald Trump.” This brand positioning is not accidental; it constitutes the project's most core unique selling point. Its publicly stated mission is to “democratize DeFi” by creating user-friendly tools, aiming to attract mainstream Web2 users, and it boldly proclaims the slogan “Make Cryptocurrency and America Great Again.” This politically charged promotion shapes WLFI as a “counter-establishment” movement against the “manipulated” traditional financial system.

1.2. Core Leadership and Operations Team

The involvement of the Trump family is direct and official. According to project documents, Donald Trump himself serves as the “Chief Cryptocurrency Advocate,” while his sons Donald Trump Jr. and Eric Trump hold the titles of “Web3 Ambassadors,” and even his 18-year-old son Barron Trump has been given the title of “Chief DeFi Visionary.” Is this what they call a father-son team in action?!

The daily operations of the project are managed by a core team of three, consisting of COO Zachary Folkman, Data and Strategy Chase Herro, and CEO Zach Witkoff. It is worth noting that Witkoff is the son of Steve Witkoff, Trump's Middle East advisor, and whether there is any political connection is open to interpretation.

1.3. Initial Strategy: Build a User-Friendly DeFi Lending Portal through Aave

The technical blueprint initially presented to the outside world was relatively simple. The first and only important technical solution proposed by WLFI is to launch an instance of the Aave v3 protocol. Aave is one of the most mature and battle-tested lending protocols in the DeFi space.

The core of this strategy is not to independently develop new DeFi technologies, but to utilize the existing, robust infrastructure and liquidity pools of Aave to build a simplified, user-friendly interface on top of it for beginners. The aim is to lower the barriers for users to enter DeFi, thereby significantly increasing user acquisition. This strategy indicates that the initial focus of the project is to quickly acquire users through brand influence rather than engaging in underlying technological innovation.

The initially set, relatively conservative target provides an important reference point for understanding the project's later significant strategic transformation. The original lending narrative was simple and easy to understand, helping the project attract public attention and the first batch of funding in its early stages. However, this simple concept was soon replaced by a far grander and more complex plan, namely to build a financial empire centered around stablecoins and publicly listed companies.

This transformation suggests that the initial Aave plan may have been merely a “narrative beachhead”—a story that was easy to accept for entering the market, while the truly complex and profitable financial machine was being constructed behind the scenes. This is not just a simple business evolution, but a fundamental change in the project's core business model—from a software service provider to a full-fledged financial institution.

2. Investor Constellation: A mix of institutions, insiders, and controversial figures.

The investor composition of World Liberty Financial is extremely complex, presenting a capital network composed of traditional financial institutions, insiders of the project, and controversial figures in the crypto world. This diversified capital structure not only provides funding for the project but also brings significant reputational risks.

2.1. The Trump family's controlling interests and financial arrangements

The Trump family holds an absolute dominant position in World Liberty Financial. A Trump business entity named DT Marks DEFI LLC owns 60% of the company. More critically, this entity is entitled to receive up to 75% of the revenue from all WLFI token sales. This profit distribution model is extremely rare in startups, far exceeding the typical founder equity incentive, ensuring that the vast majority of the financing proceeds will flow directly into the Trump family's pockets.

According to public documents and market data estimates, the paper value of WLFI tokens held by the Trump family has exceeded $6 billion, with Donald Trump reportedly controlling about two-thirds of the share. This figure makes the cryptocurrency business surpass real estate, becoming the Trump family's primary business interest.

2.2. Institutional Endorsement: The Cloak of Legitimacy

In order to shape its legitimate image in the mainstream financial market, WLFI successfully attracted the participation of several well-known institutional investors. These include Point72 Asset Management, led by billionaire Steve Cohen, Hong Kong-based Soul Ventures, and DWF Labs, which invested $25 million. The involvement of these institutions has added a layer of recognition from the traditional financial market to this politically charged crypto project, becoming an important capital for its external promotion and building credibility.

2.3. The Key Role of Justin Sun: Investment, Advisor, and Regulatory Concerns

TRON founder Justin Sun is one of the cornerstone investors of WLFI. He initially invested $30 million in the project and later increased his total investment to at least $75 million. In return, Justin Sun was officially appointed as an advisor to the project, and the USD1 stablecoin launched subsequently by WLFI also chose to operate on the TRON network he leads.

One of the most striking aspects of this investment relationship is the subtle timeline of its interactions with U.S. regulators. The SEC had previously filed a fraud lawsuit against Justin Sun and his company. However, shortly after Trump took office in February 2025, the SEC suddenly dropped the case. Reports suggest that this decision left many officials within the SEC, who were confident of a win, feeling “surprised.” This series of events—from Justin Sun's significant investment in the Trump family business to the major regulatory threats he faced quickly vanishing after the new government took office—has sparked widespread speculation about whether there was a quid pro quo.

This makes WLFI no longer just a commercial project, but potentially a tool used to exert political influence. For investors, this means that the success or failure of the project may no longer depend on market performance or technical strength, but is closely tied to the political direction and regulatory decisions of the U.S. government, introducing an unprecedented and unquantifiable special risk.

2.4. Aqua 1 / Web3Port Controversy: Clouds of Suspicious Capital

Another controversial large investment comes from a UAE-based foundation, Aqua 1 Foundation, which invested $100 million in WLFI. However, an independent investigation report pointed out that Aqua 1 is linked to a Hong Kong market maker named Web3Port, which has been banned by several exchanges for alleged market manipulation.

There have been news reports claiming that the co-founder of Aqua 1, “Dave Lee,” is actually the same person as David Jia Hua Li from Web3Port, and that the websites of both companies share the same server infrastructure. In response to these allegations, Aqua 1 and Dave Lee publicly denied any operational connection, stating that the reports are “inconsistent with the facts,” but did not specify which information is incorrect, citing ongoing regulatory and compliance processes.

This strategic classification of investor backgrounds reveals the project's complex fundraising strategies. On one hand, the project utilizes “clean” institutional capital from sources like Point72 to showcase its legitimacy and credibility to the public and traditional markets. On the other hand, it raises substantial funds through channels associated with controversial figures like Justin Sun and rumored connections to tainted entities such as Web3Port.

3. Strategic Evolution: Transitioning to an Ecosystem Centered Around the Stablecoin USD1

The World Liberty Financial project has undergone a crucial strategic transformation, evolving from a simple application layer project into a grand ecosystem dedicated to building underlying financial infrastructure, with the core being the USD1 stablecoin.

3.1. From Lending Frontend to Financial Infrastructure

The initial narrative of the project was to provide users with “access to third-party DeFi applications,” making it appear as a gateway or aggregator of the DeFi world. However, this narrative underwent a fundamental shift in March 2025, when the project team officially announced the launch of its native stablecoin USD1 and committed to building a “next-generation financial platform.”

This transformation marks a qualitative leap in the project's ambition, scope, and risk status.

3.2. In-depth Analysis of USD1 Stablecoin: Mechanism, Custody, and Growth Drivers

• Mechanism: USD1 is a fiat-collateralized stablecoin pegged to the US dollar at a 1:1 ratio. Its reserve assets consist of short-term U.S. Treasury bills, dollar cash deposits, and other cash equivalents. This is a conservatively recognized and mature stablecoin model in the industry, similar to leading counterparts like USDC and USDT.
• Custody: To enhance its credibility, the reserve assets of USD1 are held by the well-known digital asset custody institution BitGo. BitGo has a good reputation among institutional clients, and its involvement provides an important layer of security for the assets of USD1.
• Growth: USD1 has achieved remarkable growth since its launch. After going live in March 2025, it took just over a month for its market value to exceed $2.1 billion, being touted as “the fastest growing stablecoin in history.”
• Key Growth Driver: However, this explosive growth did not stem from widespread organic adoption in the market. The vast majority of its market capitalization comes from a single, massive transaction: a $2 billion investment agreement between the Abu Dhabi investment company MGX and Binance, which specifies the use of USD1 as the sole medium of exchange. Secondly, the activity of USD1 on the BNB CHAIN.
• Lack of Transparency: Although the project team promised to conduct regular third-party audits, as of May 2025, no publicly available, detailed audit report or asset proof outlining the composition of the USD1 reserves has been seen in the market. For stablecoins, reserve transparency is the lifeline for maintaining user confidence. Later, in June 2025, one of the co-founders stated that the audit report had been received and would be published soon, but this still reflects the project's lag in disclosing key information.

This strategic transformation reveals the real economic position of stablecoins within the WLFI ecosystem. The WLFI token itself is clearly defined as a pure governance token with no economic rights attached. So, what is the engine that creates value for the business entity controlled 60% by the Trump family? The answer is the USD1 stablecoin.

Similar to the business models of Tether and Circle, the issuers of fiat-collateralized stablecoins can generate significant income by investing reserve assets in interest-bearing financial instruments such as U.S. Treasury bonds. Therefore, stablecoins are not only a product of WLFI but also the core engine on which the entire enterprise relies for survival and cash flow generation. Shifting from a lending narrative to stablecoins is an inevitable choice for building a sustainable business model for the project.

However, this growth model also brings significant risks. The so-called “fastest-growing” narrative is a product of financial engineering, not a result of natural market selection. Its market value is highly dependent on a single transaction with MGX/Binance, which means that the liquidity and stability of USD1 are deeply tied to a very small number of institutional counterparties, creating severe systemic risks. Unlike USDC or USDT, which are integrated into thousands of protocols and widely used by millions of users, the foundation of USD1 is both narrow and fragile. Any fluctuations in its relationship with MGX or Binance could trigger a catastrophic collapse in its perceived value and utility.

3.3. Ecosystem Partners and Integration

To build its DeFi ecosystem, WLFI is actively establishing partnerships with other leading blockchain protocols, including Ondo Finance, Ethena, Chainlink, Sui, and Aave. Additionally, the project has established a diversified digital asset reserve through its “macroeconomic strategy,” holding a variety of mainstream crypto assets such as BTC, ETH, TRX, LINK, SUI, and ONDO.

4. ALT5 Sigma Mechanism: Constructing a Siphoning Tool for the Public Market

The transaction between World Liberty Financial and the Nasdaq-listed company ALT5 Sigma is at the core of this project's financial engineering, whose complexity and non-traditional design are extremely rare in both the cryptocurrency and traditional financial markets. This mechanism aims to create a tradable public market proxy for the illiquid WLFI tokens and establish its market valuation through a sophisticated capital closed loop.

4.1. Analysis of the $1.5 Billion “Cryptocurrency Vault” Transaction

In August 2025, WLFI effectively completed a control acquisition of ALT5 Sigma (ALTS). ALT5 Sigma is a publicly listed company that originally engaged in pain treatment business and later transformed into a payment technology company. The core content of the transaction is that ALT5 announced it would raise $1.5 billion through a targeted issuance and a concurrent private placement to implement a “WLFI Treasury Strategy.”

As part of the trading, the core executive team of WLFI has fully joined the leadership of ALT5: WLFI's CEO Zach Witkoff has become the chairman of the board of ALT5, while Eric Trump has become a board member.

4.2. The Circulation of Capital: How WLFI Funds Its Own Treasury

The cleverness of this transaction lies in its designed capital circulation mechanism, with the specific steps as follows:

Step 1: WLFI exchanges tokens for equity. World Liberty Financial, as the lead investor, participated in ALT5's private fundraising. However, the consideration it paid was not cash, but WLFI tokens worth $750 million, issued by itself. Through this non-cash transaction, WLFI exchanged for ALT5's stock and warrants.

Step 2: ALT5 raises cash from external investors. At the same time, ALT5 raised an additional $750 million in cash from other external institutional investors through a targeted issuance.

Step 3: ALT5 uses the raised cash to buy back WLFI tokens. Finally, ALT5 will use the $750 million cash raised from external investors to directly purchase more WLFI tokens from World Liberty Financial, to enrich its so-called “company treasury.”

This process creates a perfect capital closed loop: WLFI uses its self-created tokens at zero cost to gain control of a listed company; then, this listed company uses the real money raised from the public market to buy back WLFI's tokens. This operation not only creates real demand for WLFI tokens but also assigns a public market price to them through the trading behavior of the listed company.

4.3. Strategic Objective: Create Valuation and Liquidity for Illiquid Assets

Before trading with ALT5, the WLFI token was set to be non-transferable, so there was no price in the market. The trading with ALT5 was the first time an official valuation was assigned to the WLFI token – $0.20 each. This price was set by the trading parties (which were actually the same controlling entity), but since it occurred within the trading framework of a listed company, it created substantial paper wealth for the billions of tokens held by insiders.

This structure mimics MicroStrategy's strategy of transforming the company into a Bitcoin proxy stock. It effectively turns ALTS shares into a public market trading proxy for the WLFI token. Investors can gain indirect exposure to WLFI by purchasing ALTS shares, thereby addressing the early liquidity issues of the WLFI token.

This mechanism is a perfect combination of regulatory arbitrage and financial alchemy. Its core lies in utilizing regulated public markets to endorse and price an unregulated crypto asset. By orchestrating a transaction in which a Nasdaq-listed company acquires WLFI tokens at a specific price, the project party creates an auditable valuation that even needs to be reported to the SEC. This is akin to a form of financial alchemy: transforming a self-issued, illiquid digital token into an asset with a verifiable paper value, which can subsequently be used as collateral, included on a balance sheet, or as a basis for further financing.

Former SEC officials have issued serious warnings about the transaction, pointing out that its inherent conflicts of interest “bring the worst practices of the crypto ecosystem into the regulated public markets.” However, from the perspective of the project parties, this conflict of interest is not a loophole, but rather a core feature of the mechanism's design. Since the same group of people controls the asset seller (WLF) and the buyer (ALT5), they can completely dominate the terms of the transaction for their own benefit. This is not a fair trade, but a carefully orchestrated performance with the sole purpose of achieving specific financial goals for WLF insiders (i.e., creating valuation and liquidity). This structure poses a significant risk to external investors in ALTS, as their capital is being used to support an asset controlled by a management team with inherent conflicts of interest.

5. WLFI Token Economics: Supply, Distribution, and Utility Analysis

The economic model design of the WLFI token is filled with contradictions and obscurities, with its supply distribution and release mechanisms seemingly carefully crafted to create the greatest market advantage for insiders.

5.1. Total Supply and Contradictory Distribution Model

The total supply and maximum supply of the WLFI token are both 100 billion pieces. However, there are two completely different and contradictory versions circulating in the market regarding how these tokens are allocated:

According to the public statement from project partner Chase Herro, the token distribution plan is as follows: 63% is sold to public investors, 17% is used for user rewards, and 20% is reserved for the project team.

5.2. Token Sale Rounds and Early Investor Distribution

The WLFI project has successfully raised a total of $550 million from over 85,000 KYC-verified participants through multiple rounds of token sales, as of March 2025. However, its early sales process was not without challenges. A sales event in October 2024 was chaotic due to a website crash, raising only over $8 million, far below its set target of $300 million.

Early investors acquired tokens at extremely low prices, including rounds at $0.015 and $0.05 per token. This means that once the tokens are listed for trading, these early investors will hold substantial unrealized gains.

5.3. Token Release Plan: Unblocking on September 1 and Future Lock-ups

According to the announcement from the project party, the WLFI token is scheduled to start trading in the market on September 1. This initial unlock is specifically for early investors: 20% of the tokens they purchased in the $0.015 and $0.05 rounds will be released and become tradable. It is worth noting that the delivery price of ALTS to WLFI is $0.2.

The number of tokens unlocked this time accounts for about 5% of the total supply of WLFI. This is a key design as it ensures that the circulating supply at the time of listing (i.e., the “floating cap”) is extremely low. Meanwhile, the tokens allocated to founders, team members, and advisors will remain locked at the time of listing to prevent immediate sell-offs. Additionally, the remaining 80% of the tokens held by investors will also continue to be locked, with the specific release schedule to be determined by future community governance votes.

This token release arrangement is meticulously designed to create a “low circulation, high FDV” market dynamic. By unlocking only a tiny portion of the total supply (approximately 5%), the circulating tokens are artificially kept in a state of scarcity. At the same time, the project's strong brand background and endorsements from institutional investors generate significant market hype, thus driving up its price in the futures market and overall FDV. This “low circulation, high FDV” situation is a classic breeding ground for market manipulation. A small amount of buying capital can trigger a sharp rise in token prices. This price surge is extremely advantageous for insiders, as it can greatly inflate the paper value of their large amounts of locked tokens, even if these tokens cannot be sold temporarily.

5.4. Utility Analysis: Pure Governance Tokens with No Economic Rights