Warren Asks SEC To Investigate World Liberty Financial

Senator Elizabeth Warren (@SenWarren) has formally asked SEC Chair Paul Atkins (@SECPaulSAtkins) to investigate whether World Liberty Financial (@worldlibertyfi), the Trump family's crypto venture, misled investors or violated securities laws in connection with a $75 million borrowing transaction against its own tokens.

The Loan That Triggered the Call

In early April, WLF used approximately $440 million worth of its own $WLFI governance tokens as collateral to borrow on Dolomite, a decentralized lending protocol, at a time when investors had been prohibited from selling those same tokens. The firm withdrew $65.4 million in its own USD1 stablecoin and $10.3 million in USDC. The move sent $WLFI's price down 10% to a record low and temporarily prevented Dolomite depositors from withdrawing stablecoin balances due to the size of the transaction.

The scrutiny comes against a backdrop of sustained Democratic pressure on WLF. A Reuters investigation found that Trump, Donald Trump Jr., and Eric Trump are directly affiliated with WLF, which has raised over $500 million through token sales, with the Trump family holding a claim on 75% of net revenues, potentially worth as much as $400 million. Warren has set a deadline of May 26 for the SEC to respond to her inquiry.

CLARITY Act Markup Adds Political Friction

Warren's letter landed on the same day as the Senate Banking Committee's markup of the Digital Asset Market CLARITY Act, a sweeping bill that would establish a regulatory framework for the U.S. crypto industry. Democrats have been pushing for ethics guardrails related to the Trump family's crypto involvement as part of the bill's passage. Outstanding issues include whether the bill will ultimately include an ethics provision barring senior government officials from having business ties to the crypto industry.

Warren's amendments targeting Trump family crypto ties were defeated along 13-11 party lines during the markup session. During the committee meeting, Democratic senators offered amendments to address some of these issues, but all were either voted down or committee chairman Tim Scott said they were not written correctly and did not allow them to be offered. The crypto industry ultimately notched a key win as the Senate Banking Committee approved the Clarity Act, largely along party lines, 15-9, with Democratic Senators Ruben Gallego of Arizona and Angela Alsobrooks of Maryland joining all Republicans on the panel.

Lawmakers still need to resolve the sticky conflict-of-interest provision before a final version is likely to be available for a vote from the overall Senate, where 60 yes votes will be needed, necessarily including a significant number of Democrats.

Sources:
U.S. Senate Banking Committee: Warren, Waters Probe SEC on Trump Family's Crypto Company
CNBC: Crypto industry scores win as Clarity Act clears Senate hurdle
CoinDesk: Senate Banking Committee advances Clarity Act to full Senate floor