Trump-Backed DeFi to Boost His Personal Wealth, Not Crypto, Says Digital Asset CEO

The Trump family involved in a grift? Surely not!

But that’s exactly how one crypto industry figure has described the plan from the Trump-backed DeFi project, World Liberty Financial (WLFI), to launch its own ‘strategic token reserve’.

Speaking to The Block, Alexander Blume, the CEO of investment advisory firm Two Prime Digital Assets described the token reserve plan as “mostly as a clever grift”.  

Blume claimed the reserve is primarily designed to allow Trump family members to leverage Donald Trump’s political power in order to increase their own personal wealth. He said an added benefit for the family is that it’ll allow virtually anyone, anywhere on earth to quickly and conveniently pay bribes while skirting bribery regulations. Everyone (named Trump) wins!

“n general, the Trump family is trading on their political power and reputation to profit for themselves. The product also offers a way for global interests to sway favor with the Trump family without having to directly make political donations or comply with political bribery regulations.

Alexander Blume, CEO of Two Prime Digital Assets

Unsurprisingly, the WLFI team characterise their plan differently, saying the token reserve — which they refer to as Macro Strategy — is intended to “serve as a robust financial backbone for WLFI“ allowing the project to stabilise the notoriously volatile crypto market.

The project’s governance token, which is also known as WLFI, launched last October to underwhelming initial sales partly due to its apparent total lack of utility and its fine print stipulating that it’s non-transferable. However, interest grew as Trump’s inauguration neared and now over US$300 million (AU$474.5 million) WLFI have been sold to around 80,000 holders. 

Related: 10X Research: Trump May Have Just Killed the ‘Crypto Pump’, Sees His Memecoin Fade

Can Anyone Trust a Trump-Backed Reserve To ‘Bolster’ Crypto?

Announced on X / Twitter earlier this week, WLFI claimed this ‘Macro Strategy’ reserve will “bolster leading projects like Bitcoin, Ethereum and other cryptocurrencies that are at the forefront of reshaping global finance”.

On the face of it, this is a dubious claim — unless the Trump family can purchase huge percentages of the circulating supply of all the leading cryptocurrencies it seems unlikely their reserve could ‘bolster’ the market. 

Additionally, in the past week, WLFI has transferred around 90% of its existing crypto assets to exchanges, presumably in order to sell them — the project now holds just US$38 million (AU$60 million) in crypto assets, having held around US$360 million (AU$569.4 million) last week. Not a great look for a project saying it’ll stabilise markets.

It’s also not clear where the funds to pay for this reserve would come from, all we know is that WLFI plans to “engage” with financial institutions to contribute tokenised assets to the reserve. That raises the question: what would be the benefit to these financial institutions? 

WLFI says they’d benefit because “contributed assets will be held in WLFI’s publicly accessible wallet, providing institutions with transparent exposure to the crypto community.” Again, this doesn’t seem that compelling.

Nonetheless, WLFI touts its token reserve as a bulwark against crypto market volatility — so how have its crypto holdings performed so far? According to the founder of aarna protocol, Srikumar Misra, on X / Twitter, not particularly well:

WLFI’s recent purchases of multiple tokens have led to losses exceeding $21.78M. A major hit came from buying 56,317 $ETH at $3,373 per $ETH — leading to a $14M loss.

Srikumar Misra, Founder of aarna protocol

DeFi Scheme Won’t Help WLFI Token Holders, Says Blume

Blume pointed out that this new reserve will do nothing to increase utility for WLFI token holders, saying that holders have no claim to anything in the reserve with WLFI management retaining full control of and exclusive access to the assets.

Blume likened this to Strategy’s (formerly MicroStrategy) Bitcoin holdings:

This actually is the truth for MicroStrategy as well, with shareholders having no claim on the bitcoin the company holds.

Alexander Blume, CEO of Two Prime Digital Assets

Related: Trump’s World Liberty Financial Buys ETH, Can it Push Price Higher?

However, the Two Prime CEO pointed out one crucial difference between the two:

At least in the case of MicroStrategy there is some regulatory oversight to protect purchasers and assure the company does what it says it will do.

Alexander Blume, CEO of Two Prime Digital Assets

As with all things Trump, “buyer beware” is the phrase to remember.