Trump’s Scammy Crypto Company Is A Disaster

Photo: Spencer Platt/Getty Images

Less than a month has passed since president-elect Donald Trump began selling digital tokens in something called World Liberty Financial, a loose-lending business that mimics the spectacular failures of the last bubble. crypto. Basic questions about business – What exactly is it? How does it work? What does NYU grad Barron Trump do as one of the company’s “Web3 Ambassadors”? – went unanswered. And if the point of World Liberty Financial is only to collect a lot of money with unregistered securities offerings, historically it is a very good business in cryptoland, even out of the way. In the first hours of trading, during the high hype, the company raised $ 12 million or more, short of its goal of $ 300 million.

This deficiency has no clear explanation. Trump has been shamelessly courting crypto investors for most of this election season. At a bitcoin conference this summer, Trump presented his “crypto-centric” vision for a second term: He would create a digital currency depository and make the US “a superpower of bitcoin of the world.” He vowed to control the Feds and ax Gary Gensler, who, as chairman of the Securities and Exchange Commission, was once a bogeyman for the industry. There has also been an increase in the value of one of his more obscure companies, the Trump Media & Technology Group, which has doubled its share price since late September and has raised more than $2 billion in Trump’s fortune (but paper).

Meanwhile, World Liberty Financial’s token sale has been plagued by problems. For a while, the site went down, making it difficult to buy tokens. But even if it worked, it was not clear how many people would have been able to buy them. The company’s Telegram team clarified that the tokens will only be sold to accredited US investors – that is, people who are professionals or very wealthy – as well as overseas investors. In other words, not just any Trump fan would buy. (Whether the company actually sticks to that is another matter. On October 11, I received an email urging me to buy them, even though I had no authorization. “We are very happy. to inform you that, as a Whitelist verified person, you are now eligible to register for the upcoming $WLFI public sale,” the e-mail said.) As of Wednesday morning, less than 3,000 people have they actually buy tokens.

Another reason this business is so unsustainable is that it is a clear way to scam people out of their money. The thing about Trump’s NFTs, or his gold sneakers, or even shares of his meme-stock social-media company, is that there is a clear market of willing buyers. Maybe they want to show how much they love Trump with their sneakers, or they think that, if he wins another term, the NFT of his image will rise in value, and they can sell it to someone who only one. This is not the case with World Liberty Financial. It is written in terms and conditions that buyers are prohibited from creating a secondary market for these tokens for at least a year, but possibly forever. “You should assume that Tokens are not transferable indefinitely,” according to the company. In other words, once you buy it, you probably won’t be able to sell it. The only reason to buy this is to use it as a way to vote on the direction of the company, the way shareholders vote by proxy measures every year for public companies. No wonder Trump’s crypto-loving supporters are out in the open.

All that said, any money Trump generates through his crypto platform will be even smaller, as more money will be needed to keep the company going. (And the money won’t go to waste in election-destroying wars, where deep-pocketed donors are doing Trump’s hard work.) Perhaps, after Trump floods the memorabilia market with shares of the company home, sneakers and NFTs, you got that. The market for his sales tactics is presented.