Investment consultant reviews Trump's crypto project WLFI: a clever eyewash crafted by political forces

President Trump and his family-backed DeFi project World Liberty Financial (WLFI) announced the establishment of a strategic Token reserve aimed at supporting mainstream Cryptocurrencies led by BTC and Ethereum. However, investment advisors believe that the true purpose of the plan may be to profit from political influence, and investors may not even have a say in the reserve assets.

WLFI attempts to empower its own Token, but controversies continue

In October 2024, WLFI launched its own governance Token WLFI, but the market response was mediocre. The original fundraising plan of 300 million US dollars was once reduced to 30 million US dollars as a result. On-chain data shows that the Token currently has over 80,000 holders and has completed nearly 120,000 transactions.

(Justin Sun has just invested 30 million to become the largest investor in World Liberty Financial, and officially serves as a consultant to WLF)

Despite the Trump administration's emphasis on support for the encryption industry, there are still doubts about the actual function of WLFI. The Block reported that Alexander Blume, CEO of investment advisor Two Prime Digital Assets, said that the project seems more like a clever business tactic, allowing the Trump family to profit from political influence.

Essentially, the Trump family uses political power and reputation to profit for themselves. WLFI even offers a way for global stakeholders to influence the Trump family without the need for direct donations or compliance with political bribery regulations.

(Bourse Investment World Liberty Raises Questions from U.S. Experts Trump Will Produce Conflict of Interest)

In addition, before the WLFI team has launched a complete product, it has successfully raised hundreds of millions of dollars, and the project is still in the development stage. However, judging by the team's current actions, WLFI seems to be more focused on building its strategic Token reserve rather than the progress of the project itself.

Is 'Macro Strategy' using the name of MicroStrategy to deceive?

Recently, WLFI exchanged 5 million USDC for ETH, increasing its ETH holdings to 48.4 million US dollars, and holding assets such as TRX, LINK, and AAVE to build a diversified investment portfolio. However, the journey of this strategic holding seems to have encountered difficulties, with losses of 21.78 million US dollars in the process of purchasing different tokens multiple times in the near term.

(Trump encryption project adds WLFI Token supply! Sun Yuchen: additional investment of 45 million euros into WLFI)

As for the Macro Strategy reserve established by WLFI, trying to diversify its investment portfolio through tokenization of assets and seeking cooperation with financial institutions, hoping that these institutions can inject assets into the reserve. However, Blume bluntly stated: 'WLFI is primarily a sophisticated scam'.

( Trump encryption project WLFI sets up a strategic Token reserve, focusing on BTC and Tokenized asset areas )

He compared the model with Strategy ('s previous micro-strategy ), pointing out that Strategy buys BTC through issuing stocks and convertible bonds, while WLFI invests in encryption projects by selling Tokens. For WLFI holders, their assets are not guaranteed:

WLFI token holders cannot redeem their tokens to obtain a portion of the assets held in that strategic reserve. In fact, shareholders of the Strategy also cannot directly own the BTC held by the company, but at least MicroStrategy is bound by regulatory agencies to ensure compliance with its commitments.

WLFI is also considering incorporating Ondo Finance's tokenized assets into its reserves recently, but Blume believes that this will not change its essence:

Market participants may try to follow the investment footsteps of WLFI, believing that they have insider information and thus profit. This is similar to tracking Pelosi's stock trades, trying to profit from political influence.

( reveals the latest trades of Congresswoman Pelosi, the female stock god! Liquidating Nvidia and Apple, buying bullish options, Tempus AI surged over 30% on news )

After political influence penetration, is it still DeFi?

Outlier Ventures partner Rumi Morales believes that while the growth of DeFi and the participation of traditional financial institutions are commendable, the emergence of WLFI may also pose potential risks.

She pointed out that the Trump family's media and financial technology company has applied for a series of trademarks related to ETFs, such as 'Made in America ETF' and 'Bitcoin Plus ETF', further consolidating its influence in the encryption financial field:

These developments are indeed positive trends, but they also mean that more digital assets and traditional financial companies will be influenced by the Trump family, and may even rely on their political protection.

(Trump Group enters the encryption financial business, joins hands with Jiaxin Wealth Management to create the new brand "Truth.Fi")

Morales is concerned that the existence of WLFI is contrary to the original intention of decentralization of Cryptocurrency:

The birth of encryption is not just to get rid of government control, isn't it? Do we really want this market to be restrained by political pressure?

In addition, WLFI has also been involved in controversy in the past. Three days before Trump took office, his family issued two meme coins. This week, Zach Witkoff, co-founder of WLFI, even had his X account hacked by hackers to promote the scam meme coin Barron Trump.

Morales expressed his concerns with a heavy heart.

If the Securities and Exchange Commission (SEC) decides to launch an in-depth investigation into WLFI, the consequences could be unimaginable.

This article Investment Advisor Comments on Trump's encryption project WLFI: A clever scam created by political forces first appeared on Chain News ABMedia.