Regulators' Scrutiny Casts Shadow Over Trump-Linked Crypto Deal

ALT5 Sigma has dismissed recent reports suggesting that its former consultant, Jon Isaac, is the subject of an investigation by the U.S. Securities and Exchange Commission (SEC) regarding alleged earnings inflation and insider share sales. The rumors, first reported by The Information, resurfaced on Tuesday amid the company’s $1.5 billion deal with World Liberty Financial (WLF), a cryptocurrency project backed by Donald Trump’s family business. In response, ALT5 Sigma issued a statement on social media denying that Isaac held a leadership or advisory role and had no knowledge of any ongoing SEC investigation [1].

The company’s share price experienced a sharp decline following the reports, with ALTS dropping 10.5% to $10.48 during regular trading hours and further falling to $5.39 in after-hours trading [1]. This marked a reversal of gains made since the company announced the $1.5 billion fundraising on August 12. The controversy has heightened scrutiny around WLF and its associated ventures, which have faced prior allegations of insider trading and market manipulation. ALT5 Sigma’s stock has since traded below its pre-announcement level, adding to investor uncertainty [1].

Jon Isaac, while distancing himself from the rumors, acknowledged his historical involvement with ALT5 Sigma. He confirmed that he took control of JanOne Inc., the predecessor to ALT5 Sigma, but exited before the company’s 2024 U.S. listing and rebranding. Currently, he serves as CEO of Live Ventures, an investment firm closely tied to ALT5 Sigma, and retains over 1 million shares in the company. Isaac emphasized his continued support for ALT5 Sigma and noted that he regularly buys shares [1]. Corporate records, however, show that Tony Isaac, Jon’s father, is listed as the current president and chairman of ALT5 Sigma [1].

An SEC filing from December 2024 revealed that Jon Isaac had signed a two-year consulting agreement with ALT5 Sigma in March 2024, where he provided strategic advice on business development, financial restructuring, and market research. Under the terms of the agreement, he converted a $540,000 promissory note—plus accrued interest—into 465,753 ALT5 shares in late 2024 [1]. This background has raised questions about Isaac’s role and potential regulatory exposure, particularly given his past dealings with the SEC.

Jon Isaac has faced prior legal scrutiny from the SEC. In 2021, the agency filed a civil complaint against Isaac, Live Ventures, and his former firm JanOne, alleging financial and disclosure fraud, including earnings inflation, backdating contracts, and concealing stock sales. Isaac and the companies denied the allegations, and the case remains active in federal court in Nevada [1].

The ongoing investigation rumors and broader regulatory focus on token-linked securities transactions have added complexity to the market environment for ALT5 Sigma and WLF. The $1.5 billion deal involves a registered direct offering, a private placement of pre-funded warrants, and an at-the-market program, allowing ALT5 to become a major institutional holder of WLFI tokens. The transaction also brought leadership changes, with Eric Trump joining the board and Zach Witkoff becoming chairman [2].

As the regulatory landscape for crypto-linked assets continues to evolve, the SEC’s scrutiny of earnings accuracy and stock sale timing remains a key concern for companies like ALT5 Sigma. Given the high-profile nature of the deal and the involvement of Trump-affiliated entities, any regulatory action—whether formal or not—could significantly impact investor sentiment and market dynamics. The outcome of the rumored investigation, if confirmed, may also serve as a test of how regulators handle tokenized securities and the intersection of political influence with financial markets [3].

Source: [1] Trump-tied crypto company ALT5 Sigma denies SEC probe ... (https://cointelegraph.com/news/alt5-sigma-jon-isaac-deny-sec-probe-amid-wlf-deal) [2] Trump-Backed Crypto Token WLFI Has a Treasury ... (https://www.investopedia.com/trump-backed-crypto-token-wlfi-has-a-treasury-company-here-s-what-that-means-11790255) [3] Trump-Backed Alt5 Sigma Under SEC Watch—Next Ripple ... (https://www.ccn.com/education/crypto/alt5-sigma-sec-investigation-wlfi-deal-next-ripple/)