Former United States President Donald Trump could be playing a risky game by backing a new decentralized finance (DeFi) project.
Trump has put his personal brand on a number of eccentric products, from gold sneakers to Bibles, silver coins and most recently watches.
The former president and business mogul is reportedly busy launching the DeFi protocol World Liberty Financial (WLFI) and its token.
Still, this foray has been met with skepticism and doubt from within the crypto industry as it could harm Trump’s candidacy as well as the crypto industry’s already less-than-stellar reputation.
The fact that a presidential candidate is diving into the DeFi sector does not impress Mark Cuban, an American businessman and open supporter of Vice President Kamala Harris’ candidacy.
Cuban told Cointelegraph that despite being a fan of DeFi, he doesn’t find anything “innovative or valuable about adding another DeFi offering” to the sector. The famous investor says this is just one more of Trump’s marketing schemes:
“The man is offering silver coins, NFTs, sneakers and now DeFi. The only thing I see is desperation.”
Others are more optimistic, David Nikzad, co-founder of DeFi.Gold, told Cointelegraph that Trump’s crypto venture into nonfungible tokens (NFTs) and DeFi is positive news for the sector as it will bring “significant attention to the crypto space.”
“Trump’s bold tactics have always been about breaking the mold, and in this case, they could help legitimize DeFi by drawing new users and attention.”
Nikzad says that Trump’s strong branding and ability to engage big audiences could help mainstream these technologies.
He pointed out that while the “marketing approach may raise some eyebrows,” it’s not unusual in the crypto sector or the US political landscape.
Trump’s crypto project risks his bid for president
One fear among the Trump-supporting crypto community is that this project could harm Trump’s candidacy.
Nic Carter, co-founder of blockchain investment firm Castle Island Ventures, called for a collective petition to stop the possible launch of WLFI.
Carter openly supports Trump and fears a potential “bad outcome” in the election if the project goes ahead. He says that, at best, it’ll be an “unnecessary distraction” and, at worst, a “huge embarrassment and source of (additional) legal trouble.”
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’ll be the juiciest DeFi target ever and it’s forked from a protocol that itself…
— nic carter (@nic__carter) September 4, 2024
Carter highlighted a potential legal threat to Trump if the project launches before the elections.
Since Gary Gensler took over the US Securities and Exchange Commission (SEC), the regulatory agency has followed a regulation-by-enforcement approach affecting many key companies including Coinbase, Kraken and Binance, among others. Carter says Trump’s DeFi platform would be “an obvious target for the SEC.”
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Anthony Scaramucci, founder and manager of investment firm SkyBridge and former Trump White House director of communications, told Cointelegraph that WLFI would only bring negative attention to his campaign, though probably not enough to affect the election outcome.
Scaramucci said that the launch of WLFI would represent a breach of norms as it would be the first time a presidential candidate has launched a token or a business weeks before election day.
He said that “the timing of the launch is intentional.” If Trump wins the upcoming US elections, “he will shield the project from legal scrutiny,” marking a possible conflict of interest for a presidential candidate.
Scaramucci, whose firm is “working alongside” Vice President Kamala Harris’ campaign in developing her policies on digital assets, said that the greater danger of Trump’s crypto project is not to his campaign, but to the crypto industry as a whole:
“World Liberty Financial is a scammy grift that threatens to undermine the legislative efforts of the legitimate side of the digital finance industry.”
Scaramucci criticized the project, saying that “the team running the WLFI project have checkered pasts in the industry, and the tokenomics are skewed heavily in the direction of the founding team.”
Co-founder of WLFI Zak Folkman explained in a Sept. 16 livestream that 20% of the tokens will go to the founding team, which includes the Trump family; 17% will be allocated for user rewards; and 63% will be available for public purchase, where there will be no pre-sales or early buy-ins for the token.
In a Sept. 18 interview at the crypto event Token2049, Scaramucci said there was speculation that the project could be a scheme to funnel campaign finances to WLFI to inflate its value.
He called WLFI a “potential pump-and-dump disaster for individual investors,” suggesting that Trump and his family would be profiting at the expense of investors.
.@WorldLibertyFi pic.twitter.com/rHEGQXl4jL
— Donald J. Trump (@realDonaldTrump) September 12, 2024
Scaramucci praised Republicans for advancing the conversation about crypto subjects, “moving the needle toward fair and propitious regulation.” However, as mentioned in Cointelegraph, he is fearful that Trump’s crypto ventures may damage those advances toward pro-crypto policies in the US.
Due to the potential backlash that WLFI could bring to Trump’s candidacy, some argue it might be wise to delay the launch until after the elections.
However, Scaramucci pointed out that “his current crop of advisers are simply scared of him and weren’t going to stand in the way.” Scaramucci said the project should be halted to protect the crypto industry’s integrity from potential harm, but he suspects the launch will proceed as planned, as “the team is counting on a Trump win.”
Nick Passino, co-founder of crypto and MAGA politics PAC Maga Meme PAC, and member of the Maga Boys, told Cointelegraph that he thinks Trump should launch WLFI now.
Passino admitted that WLFI could be a “low-hanging fruit for the SEC,” but he thinks it may be a smart move by Trump as it would force the commission to take action, and both outcomes would favor Trump.
Passino said that if the authorities decide to pursue Trump’s crypto venture, it would reinforce the perception that the “current administration has already weaponized many government agencies to pursue Trump,” and another attack to be added to the long list against the crypto industry.
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If they don’t go after Trump, Passino said there would be room for Trump’s team to become “a possible leader in the DeFi space, giving us, we the people, a fair opportunity to participate in a financial ecosystem that isn’t controlled by the big banks.”
Passino believes there is no conflict of interest concerning Trump’s presidential race because WLFI has chosen to work in a decentralized sector; he mentioned that it would be another story if they chose to participate in the memecoin sector.
World Liberty Financial’s future plans remain a mystery, as they have yet to clarify the precise function or roadmap of the protocol. In the meantime, WLFI has announced new additions to their advisory team, including Sandy Peng, co-founder of the Ethereum scaling solution Scroll, and Matt Morgan, a game developer from Mixie AI.
World Liberty Financial did not respond to Cointelegraph’s request for comment.