Democratic Lawmakers Ask US Securities Regulator to Preserve Records of President Trump's Crypto Venture

A pair of top Democratic lawmakers asked the US securities regulator on April 2 to preserve records related to President Donald Trump's crypto venture World Liberty Financial

A pair of top Democratic lawmakers asked the US securities regulator on Monday to preserve records related to President Donald Trump’s crypto venture World Liberty Financial and posed questions about potential conflicts of interest.

In a letter sent to acting Securities and Exchange Commission Chairman Mark Uyeda, and seen by Reuters, the lawmakers requested information to “help us better understand the extent to which the Trump family’s financial interest in World Liberty Financial may be influencing your and the Commission’s activities”.

Senator Elizabeth Warren, the ranking member of the US Senate’s banking committee, and Representative Maxine Waters, the ranking member of the US House of Representatives’ financial services committee, signed the letter, which cited a Reuters report this week about the crypto project.

Republicans have a majority in both the US House and Senate, which limits the ability of Democrats to call formal public hearings and conduct investigations. The congressional members’ letter to the SEC does not cite any legal authority that would compel the agency to abide by its requests.

A White House spokesperson said in an e-mailed statement that "President Trump's assets are in a trust managed by his children. There are no conflicts of interest."

The House Financial Services Committee, led by Republicans, on Monday considered legislation that would regulate the broader adoption of crypto stablecoins. The Trump White House has identified promoting their use as a legislative priority.

Reuters published a story on March 31 documenting how, as World Liberty Financial raised more than half a billion dollars in recent months, Mr Trump’s family took control of the crypto venture and grabbed the lion’s share of those funds, aided by governance terms that industry experts say favour insiders.

Overall, the Trump family now has a claim on 75 per cent of net revenues from token sales of World Liberty, and 60 per cent from operations once the core “decentralised finance” business gets going. The arrangement means the Trump family is currently entitled to about US$400 million (S$540 million) in fees, the report said.

The SEC did not respond to a request for comment. Nor did President Trump's three sons, all of whom were named in the letter. The same was true for World Liberty co-founders listed in the letter, including a pair of crypto entrepreneurs; Mr Steve Witkoff, the Trump administration's envoy to the Mideast; and one of Witkoff's sons.

‘Unprecedented financial ties’

The lawmakers' letter requests that the SEC preserve and provide copies of any records or communications from the White House to the SEC regarding World Liberty, with a list of more than half a dozen Trump family members and their business partners.

It asks what procedures might be in place to "prevent the Trump family's unprecedented financial ties to the crypto industry from influencing or guiding the SEC's decisions".

The Trump Organisation announced in January the president's investments, assets and business interests would be held in a trust managed by his children and he would play no role in day-to-day operations or decision-making. The family's business also retained an attorney to serve as an ethics adviser to "avoid any perceived conflicts of interest".

Among the nine items the Democrats are requesting from the SEC are items specific to World Liberty investor Justin Sun and records regarding the SEC's recent decision to pause its case against the Hong Kong-based crypto entrepreneur and his affiliated companies.

As well as its single-largest known investor, at a disclosed amount of US$75 million, Mr Sun has become an adviser to the project. Representatives for Mr Sun did not reply to requests for comment.

Mr Trump has promised sweeping changes in the regulation of crypto to popularise its mainstream use in America. The Trump family has opened multiple beachheads in crypto, gaining hundreds of millions of dollars through related ventures.

The SEC took a strict stance on cryptocurrency in the administration of President Joe Biden, continuing a trend that began in the Obama administration. Mr Uyeda's SEC has created a task force to work with the industry, led by Republican Commissioner Hester Peirce, known for her favourable stance towards the sector. It also downsized the crypto enforcement team by moving lawyers working in that group elsewhere, according to a report by Reuters.

The Trump administration, which left office in January 2021, had set a priority on promoting the use of crypto stablecoins, which are digital tokens designed to maintain a stable value, usually pegged to the US dollar.

World Liberty announced on March 25 it planned to launch a US dollar-pegged stablecoin, called USD1.

During the meeting about stablecoin legislation on Monday, Ms Waters said she would not support the bill unless President Trump was blocked from owning a stablecoin business through World Liberty.

"With this stablecoin bill, this committee is setting an unacceptable and dangerous precedent, validating the president and his insiders' efforts to write rules of the road that will enrich themselves at the expense of everyone else," she said