New crypto token boosts Trump family's wealth by $5 billion
A new cryptocurrency issued by the Trump family's World Liberty Financial and that started trading this week has boosted the family's wealth on paper by roughly $5 billion despite the digital token sinking in its first two days of being listed on the exchange.
The crypto, called WLFI, reached a high of about 40 cents after launching on Monday, according to data from CoinMarketCap. By Tuesday morning, the value of the token had fallen to as low as about 21 cents, down 48% from its peak, before recovering to about 23 cents in the afternoon.
Even with the decline, the Trump family's stake in WLFI is worth about $5 billion based on its holdings of 22.5 billion WLFI tokens. Mr. Trump and his family aren't yet able to sell their holdings as its founders' tokens remained locked, according to World Liberty Financial.
World Liberty Financial didn't immediately return a request for comment. Here's what to know about the company's token.
Trump's support for cryptoOnce an avowed skeptic of cryptocurrency, Mr. Trump has championed the digital asset in his second term, vowing to make the U.S. the "crypto capital of the world."
World Liberty Financial and the Trump family's other private crypto ventures have raised concerns among some watchdog groups and Democratic lawmakers over potential conflicts of interest.
"The media's continued attempts to fabricate conflicts of interest are irresponsible and reinforce the public's distrust in what they read," White House press secretary Karoline Leavitt said in a statement to CBS MoneyWatch. "Neither the president nor his family have ever engaged, or will ever engage, in conflicts of interest."
In July, Mr. Trump signed the Genius Act, the first major federal law governing cryptocurrencies, into law. The act established federal regulations for "stablecoins," which are viewed as a relatively safe type of cryptocurrency because their value is pegged to fixed assets, like the dollar.
The surging value of World Liberty Financial, whose co-founders include Mr. Trump and his sons Eric, Donald Jr. and Barron, underscores the president's growing interest in cryptocurrency, a focus that spans both personal investments and policy moves during his presidency. Those efforts include $TRUMP and $Melania meme coins, which are cryptos whose value is linked to internet trends and which began trading in January.
What is WLFI?WLFI is a token, or a digital asset, that guarantees its holders the right to vote on governance issues for World Liberty Financial, according to the company.
World Liberty Financial cautions token owners that WLFI isn't an investment, with its terms stating: "You should not acquire $WLFI as an investment on a speculative basis or otherwise, for a financial purpose or with an expectation of resale for a profit or otherwise."
The early swing in WLFI's price isn't unusual for tokens making their market debut, said Nic Puckrin, CEO of Coin Bureau, a provider of crypto and blockchain information.
"The price action from 40 cents to 21 cents is typical for new token launches," Puckrin told CBS MoneyWatch. "Early hype usually drives initial spikes, followed by a wave of selling as early entrants take profits."
He added, "Compared to other major token debuts, WLFI's decline is relatively moderate, and early backers have still seen strong returns from private sales."
World Liberty Financial also offers a stablecoin called USD1, which is pegged to the value of the U.S. dollar. Because stablecoins are linked to fixed assets, they are generally seen as less volatile to other cryptos.
"WLFI is carving out a unique position by offering token holders real governance rights over the direction of USD1, a dollar-backed stablecoin that is growing rapidly," Puckrin said.
That's important because WLFI holders, through their governance votes, can help influence the future development and policies of USD1 and World Liberty Financial's policies, he added. That capacity "sets it apart in a crowded market," he said.
What about insider concentration risk?The Trump family and other insiders own more than 20% of the WLFI tokens, according to World Liberty Financial's site.
But World Liberty Financial's terms note that no single digital wallet can exercise more than 5% of governance power, which should deter outsized insider influence, Puckrin said.
What's happening with Mr. Trump's other crypto ventures?In May, the $TRUMP meme coin drew scrutiny when the venture offered its top holders the chance to join Mr. Trump for dinner. Investors spent about $140 million to snap up the coins and secure an invite to the event, data showed at the time.
That sparked concerns from government watchdogs and some Democratic lawmakers that the Trump-branded asset was being linked to gain access to the president.
As investors snapped up the meme coin, the asset's value almost doubled to about $15 in May. Since then, the coin has given up most of the gains and was trading at about $8.30 on Tuesday, according to CoinMarketCap.
Trump Media & Technology Group — the owner of the Truth Social app — has expanded into crypto in recent months. In July, it bought about $2 billion in cryptocurrencies to refashion the business as an investment firm.
Shares of Trump Media & Technology group have shed about 50% of their value year to date and traded Tuesday at $17.05.
Aimee Picchi is the associate managing editor for CBS MoneyWatch, where she covers business and personal finance. She previously worked at Bloomberg News and has written for national news outlets including USA Today and Consumer Reports.
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