Senators Demand Probe: Trump-Linked Crypto Firm Accused of Illicit Ties to North Korea & Russia Amid National Security Concerns

Senators Demand Federal Probe into Trump-Linked Crypto Firm Over Alleged Illicit Ties

Two influential U.S. Senators are spearheading an urgent call for federal investigation into a cryptocurrency firm closely associated with former President Donald Trump and his family. Senators Elizabeth Warren (D-Mass.) and Jack Reed (D-R.I.) have formally requested the Department of Justice and the Treasury Department to probe World Liberty Financial (WLF) over alarming allegations of transactions with illicit actors in North Korea and Russia, citing profound national security risks.

In a letter sent on Tuesday, and exclusively obtained by CNBC, Senators Warren and Reed, both minority members of the Senate Committee on Banking, Housing, and Urban Affairs, expressed deep concerns regarding WLF. They assert that the crypto firm, heavily owned and operated by the Trump family, potentially lacks the robust safeguards necessary to prevent malevolent entities from transferring funds or gaining undue influence over its governance structure.

Watchdog Alleges Suspicious Sales

The senators' request prominently features a September report from Accountable.US, a 501(c)(3) nonprofit corporate watchdog. This report claims that World Liberty Financial sold its $WLFI tokens to "various highly suspicious entities." These entities reportedly include traders with blockchain ties to the notorious North Korean state-sponsored hacking collective, Lazarus Group, as well as a sanctioned Russian "ruble-backed sanctions evasion tool," an Iranian crypto exchange, and Tornado Cash—a platform widely recognized for money laundering activities.

World Liberty Financial has vehemently denied any wrongdoing. A company spokesperson informed CNBC that there is "no conflict of interest between World Liberty Financial, a private crypto company with zero political power, and the U.S. government." They further stated that WLF implemented "rigorous AML/KYC checks on every pre-sale purchaser of the $WLFI governance token — the highest standard in the industry — and turned down millions of dollars from potential purchasers who failed the tests."

The Trump Family's Role

The World Liberty Financial website conspicuously lists Eric Trump, Donald Trump Jr., and Barron Trump as co-founders, with Donald Trump himself designated as "Co-Founder Emeritus." An entity affiliated with the former President and his family members reportedly holds significant equity interests in WLF. The company launched its $WLFI "governance tokens" for public trading in September, following earlier private investment rounds. WLF claims these token holders play a crucial role in shaping the protocol's future through voting on company proposals.

However, Accountable.US's investigation challenged the legitimacy of some token holders. Their report highlighted a January sale of $10,000 worth of $WLFI tokens to traders with a documented history of transacting with a wallet now sanctioned for its links to the Lazarus Group. The senators contend that by facilitating such sales, WLF accepted funds from people with "open and obvious connections to enemies of the U.S.," thereby creating national security risks by granting them "a seat at the table" in the firm's governance.

Financial Conflicts and Expansion Plans

As World Liberty Financial prepares to expand its offerings with new products, including a debit card and tokenized commodity assets, the senators' letter cautioned that the alleged token sales indicate a "absence of robust sanctions and anti-money laundering controls." They warned that "WLF risks supercharging illicit finance activity."

Moreover, the letter underscored a potential financial conflict of interest arising from the Trump family's deep ties to the company. DT Marks DEFI LLC, an entity linked to Donald J. Trump and his family members, holds an astounding 22.5 billion $WLFI tokens, valued at over $3 billion, and is entitled to 75% of all proceeds from $WLFI token sales. "That means every time a governance token is sold, three-quarters of that money goes directly to President Trump and his family, even for sales to entities linked to North Korea and Russia," the senators stated.

Another Accountable.US report from August estimated that approximately $11.6 billion, or 73%, of Trump's net worth, is tied to his cryptocurrency ventures, including the launch of a $TRUMP memecoin. This substantial increase in wealth was also reflected in an annual financial disclosure released by the U.S. Office of Government Ethics for the 2024 calendar year.

Congressional Oversight and Trump's Crypto Pivot

The timing of the senators' requests is critical, as Congress is currently debating new crypto regulations that could potentially exempt governance tokens like $WLFI from existing U.S. oversight, as well as shield issuers from certain recordkeeping and disclosure requirements. The senators emphasized the importance of preventing crypto interests from profiting at the expense of U.S. national security, and ensuring illicit actors are not granted access to financial platforms they could exploit.

Donald Trump, who was once a vocal critic of cryptocurrency during his first term, has conspicuously embraced the industry. His administration has recently advocated for several crypto-friendly bills, including the recently passed GENIUS Act.

Senators Warren and Reed have set a deadline of December 1 for the Treasury and Justice Departments to provide information concerning potential enforcement actions against World Liberty Financial. Neither department immediately responded to CNBC's request for comment.

Ongoing Scrutiny and Related Developments

Senator Warren, a prominent critic of both Trump's pivot to crypto and the industry at large, has previously scrutinized WLF's business dealings, including a recent deal involving its stablecoin, USD1. The USD1 stablecoin, backed by dollars and short-term U.S. government treasuries, was utilized by the U.A.E.-backed investment fund MGX for a $2 billion investment into Binance, significantly boosting USD1's traction and transaction volume.

This deal gained further attention following a New York Times report in September suggesting that the UAE secured a massive chip deal from Washington shortly after the MGX transaction concluded. Compounding the controversies, on October 23, Trump pardoned Binance founder Changpeng Zhao, who had previously pleaded guilty to enabling money laundering. Curiously, Trump later claimed in a "60 Minutes" interview that he knew nothing about Zhao despite granting the pardon.

The Wall Street Journal, citing anonymous sources, reported that Binance not only facilitated MGX's investment settlement using USD1 but also assisted in developing the stablecoin's underlying technology. Binance CEO Richard Teng has since denied any involvement in MGX's decision to invest via USD1.

Donald Trump Jr. and World Liberty Financial CEO Zach Witkoff (son of U.S. Special Envoy to the Middle East Steve Witkoff) dismissed concerns about conflicts of interest with the Trump administration as "complete nonsense" in an October interview with CNBC. Witkoff stated, "Don and my World Liberty mission is big, but our dads' mission is much bigger. They're not focused on stablecoins, nor are they involved in a stablecoin business."