Pendle Faces Scrutiny Over UAE-Linked Investment in World Liberty Financial

A U.A.E.-linked firm acquired nearly half of the Trump family’s cryptocurrency company, World Liberty Financial (WLFI), for $500 million. This investment, finalized four days before Donald Trump’s re-inauguration, has sparked congressional scrutiny over potential conflicts of interest and foreign influence in U.S. policy decisions according to reports. The investment firm, Aryam Investment 1, is backed by a powerful UAE royal and national security adviser, Sheikh Tahnoon bin Zayed Al Nahyan as detailed.

The deal provided the UAE-backed firm with a 49% stake in WLFI, with $187 million of the initial $250 million payment directed to Trump-affiliated entities. The remaining $250 million was scheduled to be paid by July 15, 2025 according to the timeline. The investment occurred just months before the Trump administration approved a controversial export of advanced artificial intelligence semiconductors to the UAE, a decision that reversed Biden-era restrictions as reported.

U.S. lawmakers, including Rep. Ro Khanna and Sen. Chris Murphy, have raised concerns about whether the deal violated the Constitution’s Emoluments Clause or federal conflict-of-interest statutes according to investigations. A congressional investigation is underway, seeking detailed documentation on the transaction, including payment structures and affiliations with the UAE government as detailed.

Was There a Conflict of Interest?

Lawmakers are examining whether the WLFI investment created a conflict of interest, particularly as the Trump administration approved AI chip exports to the UAE shortly after the transaction according to reports. The proximity of the investment to the policy decision has fueled concerns about foreign influence in national security decisions as noted.

Rep. Ro Khanna has requested detailed records from World Liberty Financial, including internal communications and due diligence materials according to reports. He has framed the inquiry around potential national security risks and whether the deal compromised the U.S. ability to compete with China as stated.

Sen. Chris Murphy has accused President Trump of “brazen, open corruption,” claiming the UAE secretly funneled $187 million to Trump family entities through the WLFI deal according to claims. He has called for accountability, suggesting that those involved may face legal consequences as reported.

What Are the Legal and Ethical Implications?

Legal analysts have highlighted potential violations of the Foreign Corrupt Practices Act (FCPA), which prohibits bribing foreign officials as reported. The key legal question is whether the investment was exchanged for specific official acts, such as the approval of technology exports according to analysis.

The Emoluments Clause of the U.S. Constitution prohibits public officials from receiving gifts from foreign governments without congressional approval as defined. Lawmakers are investigating whether the WLFI deal violated this clause by granting Trump-affiliated entities significant financial benefits from a foreign-backed firm according to investigations.

The controversy has broader implications for the regulatory landscape of DeFi and crypto projects as noted. Critics argue that the decentralized nature of these projects makes it difficult to trace fund flows and enforce traditional financial laws according to reports.

How Is the Market Reacting?

The political scrutiny of WLFI has introduced volatility into the crypto market as reported. The firm’s governance token dropped roughly 16% in a single day before partially recovering according to market data. The Official Trump meme coin has also seen a 24.7% loss in a week and a 95% decline since hitting an all-time high in January 2025 as documented.

Analysts note that political entanglements and foreign investments can amplify market risks, particularly for DeFi projects as observed. The situation underscores the need for stronger regulatory oversight and transparency in crypto transactions involving foreign capital according to analysis.

The investigation into WLFI highlights the challenges of regulating crypto in a rapidly evolving geopolitical and technological landscape as reported. As the U.S. continues to navigate issues of foreign influence, national security, and financial transparency, the outcomes of this probe may set a precedent for future crypto-related investments and policy decisions according to experts.