Democratic Lawmakers Raise Conflicts of Interest Concerns Over Trump Family's Crypto Investments

Democratic lawmakers have raised questions about potential conflicts of interest between the Trump family's crypto investments and U.S. financial regulation.

Lawmakers are raising questions about potential conflicts of interest between the Trump family’s crypto investments and U.S. financial regulation, specifically highlighting World Liberty Financial Inc. (WLFI) (NYSE: WLFI).

In a joint letter on Monday, Senator Elizabeth Warren (D-MA) and Representative Maxine Waters (D-CA) demanded that Acting Chair Mark Uyeda provide records and communications related to WLFI since October 15, 2024.

This request comes as the SEC has reportedly pivoted from aggressive enforcement to a more hands-off approach to crypto regulation.

What Happened: According to recent SEC filings and reports, Donald Trump, Donald Trump Jr., and Eric Trump have a significant stake in WLFI through an entity called DT Marks DEFI LLC, which is claimed to hold 75% of token revenue and 60% of future earnings from the company’s operations.

The lawmakers expressed concern that the family’s deep financial involvement “represents an unprecedented conflict of interest with the potential to influence the Trump Administration’s oversight—or lack thereof—of the cryptocurrency industry.”

They noted that the agency has paused or dropped multiple crypto lawsuits in recent months, including cases against Coinbase (NASDAQ:COIN), Kraken, Uniswap Labs, and OpenSea.

One case that has drawn particular attention is that of Tron founder Justin Sun, whose fraud case was quietly put on hold by the SEC in February. This timing has sparked speculation about possible regulatory favoritism, especially given Sun’s $75 million investment in WLFI shortly after the case was dropped.

The lawmakers asked the SEC to preserve “all internal memoranda justifying the initial enforcement decision” and records of meetings between SEC officials and representatives of Sun or the Trump family.

Trump has promised broad changes to crypto regulation to encourage mainstream adoption in America. Since Trump appointed Uyeda as acting chair in January, the SEC has created a task force to work with the crypto industry, which will be led by Republican Commissioner Hester Peirce, known for her pro-crypto stance.

Stablecoin Legislation: The lawmakers’ letter arrived on the same day the House Financial Services Committee voted to advance a bill that would set up a framework for dollar-denominated stablecoins, including reserve requirements and anti-money laundering standards.

The committee approved the STABLE Act with 32 members in favor and 17 opposed.

The legislation, formally named the Stablecoin Transparency and Accountability for a Better Ledger Economy Act, would create a pathway for state-chartered banks to provide banking services to crypto firms. It would also mandate that stablecoin issuers maintain reserves to fully cover customer deposits and be subject to enhanced reporting requirements.

The vote on the bill comes amid ongoing scrutiny of the Trump administration's financial ties to crypto firms. Earlier this year, a report by the Center for Responsive Politics found that the Trump family has received at least $1 million in contributions from the cryptocurrency industry.

Democrats on the committee proposed several amendments to the bill, including one that would have barred the president and top officials from launching such financial products while in office. However, these amendments were rejected by the Republican majority.

The White House responded to the concerns, saying that “President Trump’s assets are in a trust managed by his children. There are no conflicts of interest.”

A spokesperson for WLFI responded to the lawmakers’ letter, saying it was “disappointing that Senator Warren is attempting to weaponize the power of the government to continue to harass and target the Trump family and our project.”

The SEC has until April 14 to respond to the lawmakers’ request.

“The American people deserve to know whether their financial markets are being regulated impartially or whether regulatory decisions are being made to benefit the President’s family financial interests,” concluded Senators Elizabeth Warren (D-MA) and Maxine Waters (D-CA).

An SEC spokesperson said in a statement that “Acting Chairman Uyeda will respond to Members of Congress directly.”