Trump-Linked WLFI Faces Scrutiny After $500M UAE Investment Probe

World Liberty Financial (WLFI), a cryptocurrency platform linked to U.S. President Donald Trump’s family, is facing a congressional probe following a $500 million investment from a UAE-linked entity. The deal involves Sheikh Tahnoon bin Zayed Al Nahyan, the UAE’s National Security Adviser, who acquired a 49% stake in the platform.

Representative Ro Khanna, a California Democrat, announced the investigation Thursday, citing concerns over transparency and potential conflicts of interest. He emphasized the importance of public trust and called for a thorough review of the transaction.

Trump denied knowledge of the investment, stating that his sons and family members were handling it. The president added that WLFI receives investments from various sources. The reported deal was made four days before Trump’s inauguration.

As part of the investigation, Khanna sent a letter to WLFI CEO Zach Witkoff, requesting 16 categories of records and documents. The request included details on the investment agreement, revenue distribution, and policies addressing potential conflicts of interest. According to reports, the UAE Sheikh secretly acquired 49% of Trump's World Liberty Financial days before inauguration.

Khanna expressed concern that the transaction could have influenced U.S. policy on advanced AI chip exports to the UAE. He argued that the deal potentially undermined the country's ability to compete with the Chinese Communist Party.

WLFI has defended its legitimacy, stating that it raised capital like any other private company. A spokesperson for the firm said the scrutiny of a U.S. company based on its ownership structure was "ridiculous and un-American" according to reports.

The investment reportedly involved $187 million directed to Trump family entities and $31 million to entities tied to WLFI's co-founder Steve Witkoff. The deal occurred just days before Trump took office, adding to concerns over its timing and implications.

Senator Elizabeth Warren had previously urged the Office of the Comptroller of the Currency to delay World Liberty Financial's bank charter application until Trump divested his interest. However, the agency rejected Warren's request, stating that all applications would undergo the same rigorous review.

WLFI is also pursuing a bank charter, which would allow it to formalize its USD1 stablecoin operations under federal supervision. The platform, launched in October 2024, has expanded into stablecoin issuance and DeFi lending.

Why Did This Happen?

The probe follows broader concerns in Washington over cryptocurrency regulation. Khanna has introduced legislation to ban officials from trading crypto, citing fears of conflicts of interest and foreign influence. The current investigation reflects ongoing scrutiny of how government officials engage with the crypto industry.

The deal with the UAE came amid a period of shifting U.S. policy on AI chip exports. The Trump administration approved sales of advanced chips to the UAE, reversing previous restrictions. Khanna suggested that the investment may have played a role in those decisions.

How Did Markets React?

The broader crypto market has shown mixed signals in recent weeks. Bitcoin ETFs saw inflows for the first time in several days, but Ethereum and XRP ETFs recorded outflows. Institutional interest in Bitcoin has returned, but retail investors remain cautious.

WLFI, which is not a publicly traded company, has not seen direct market reaction. However, the political scrutiny surrounding its ownership structure could impact its regulatory path and public perception.

What Are Analysts Watching Next?

Analysts are monitoring whether the investigation will lead to legal or regulatory action against WLFI or its founders. The Office of the Comptroller of the Currency has stated it will treat the firm's bank charter application like any other, but critics argue that the deal raises unique concerns.

The outcome of the investigation could also influence broader discussions on crypto regulation and foreign investment in U.S. financial infrastructure. Khanna has called for federal prosecutors to review the deal, citing potential violations of U.S. laws.

WLFI and the White House have denied any wrongdoing. The firm stated that Trump and his family are not involved in day-to-day operations. The investigation is expected to continue into March, with further details potentially emerging as the probe unfolds.