What is Donald Trump’s new crypto project and why are people worried?

World Liberty Financial promises to revolutionise finance, though some fear it could be a ‘huge embarrassment’

Republican nominee Donald Trump speaks at the Bitcoin 2024 conference in Nashville on 27 July, 2024 (AP)

Three years after deriding bitcoin as a “scam” and “disaster waiting to happen”, former US president and convicted felon Donald Trump has unveiled his own crypto project - one he promises will “revolutionise” finance.

Led by his two sons Eric and Donald Jr, with 18-year-old son Barron as its “visionary”, World Liberty Financial claims that it will challenge the power of big banks and revolutionise finance through the launch of a brand new cryptocurrency.

More than a million people tuned in to the live event on X (formerly Twitter), which was broadcast from Trump’s Mar-A-Lago residence in Florida last night, all keen to find out what exactly the new crypto project is.

What is World Liberty Financial?

Monday night’s launch event lasted 90 minutes, with four members of the Trump family and various crypto figures associated with the venture in attendance, however little was actually revealed about what World Liberty Financial is. More time was spent talking about the recent assassination attempt on Trump than the crypto project they were there to launch, though a few key details were confirmed.

The main announcement centred on a new crypto token called WLFi.

“We’re planning to sell and otherwise distribute governance tokens called WLFi in the future,” said Zak Folkman, one of the project’s leaders.

“WLFi tokens are pure governance tokens only providing the right to make proposals and vote on matters related to the platform. WLFi will be non-transferrable and do not provide any economic rights such as dividends or other distributions, and we only want eligible people who actually plan to engage in the direction of World Liberty Financial governance to purchase the token. So this means not people who are motivated simply by an expectation for resale for profit.”

Not everyone will be able to buy the token, with regulations meaning that only accredited investors in the US are allowed to purchase WLFi.

Only 63 per cent will be sold to the public, with 17 per cent set aside for user rewards and 20 per cent reserved for “team compensation” for the likes of Trump and his sons.

Other details previously offered by Eric Trump suggest it will involve some kind of “digital real estate” – referring to either the digital tokenisation of real-world assets in the form of non-fungible tokens (NFTs), or the creation of virtual property within the metaverse.

“It’s equitable. It’s collateral anyone can get access to and do so instantly,” he told the New York Post last month. “I don’t know if people realise what a shake up that is for the world of banking and finance.”

Why is it controversial?

Weeks before Trump’s unveiling of the project, World Liberty Financial was already being targeted by scammers and cyber criminals.

A fake telegram channel drew in more than 70,000 of his followers by promising cryptocurrency giveaways worth up to $15,000. In order to qualify for the fake giveaway, users were required to “connect” their crypto wallet, which would expose any funds within the wallet to the scammers.

Hackers also hijacked Tiffany and Lara Trump’s X accounts earlier this month in order to promote a similar scam that aimed to profit from the hype surrounding the venture.

During Monday night’s presentation, the hosts warned against scammers targeting the project, specifically the plans to launch a crypto token.

“If it doesn’t come from our official Twitter or Telegram accounts or our website, it is not real,” the hosts warned.

Other concerns related to the project are about whether Trump’s motivations are truly about transforming traditional finance, or just another opportunity to cash in on his followers’ willingness to buy into his ventures. His non-fungible token (NFT) collection released last year raised $7.2 million and sold out within days.

“Is there something that we, as crypto twitter, can collectively do to stop the launch of world liberty coin? I think it genuinely damages trump’s electoral prospects, especially if it gets hacked…it’s also an obvious target for the SEC,” Nic Carter, a Trump supporter and general partner at crypto asset firm Castle Island Ventures, wrote on X ahead of Monday’s event. “At best it’s an unnecessary distraction, at worst it’s a huge embarrassment and source of (additional) legal trouble.”

What does it mean for the broader crypto industry?

With the backing of a former US president and current presidential candidate, this is arguably the moment that the crypto industry has finally broken into the mainstream.

Trump’s announcement had little impact on the crypto market – the price of bitcoin and other leading cryptocurrencies moved by less than 1 per cent in the hours following World Liberty Financial’s launch – but industry leaders expect fresh scrutiny on the space as a result of his involvement. Some hope it could also result in the fast-tracking of regulation in both the US and globally.

“The debate in the US around the future role of crypto shows how mainstream the sector has become, not just in America but also globally” a spokesperson for crypto asset trade association CryptoUK told The Independent.

“The UK government must accelerate the legislation already in place, swiftly implement a supportive tax framework... and collaborate with the sector to ensure the UK remains a global fintech leader.”

George McDonaugh, co-founder and co-managing director of digital asset investment firm KR1, added: “Donald Trump’s endorsement of crypto creates pros and cons for the industry. It shows how powerful a force the crypto world has become and that it’s now a major political force that pushes US presidential hopefuls to take sides.”