Warren, Reed: Trump-Backed Crypto's Gaps Enable Illicit Finance Threats

U.S. Senators Elizabeth Warren and Jack Reed have demanded a federal investigation into World Liberty Financial (WLF), a cryptocurrency firm closely tied to the Trump family, citing alleged connections to illicit actors in North Korea and Russia. The lawmakers, in a letter to Attorney General Pamela Bondi and Treasury Secretary Scott Bessent, raised national security concerns over WLF's token sales to "highly suspicious entities," including groups linked to sanctioned North Korean hacking operations and Russian sanctions evasion tools.

The letter, obtained by CNBC, highlights a September report from nonprofit watchdog Accountable.US, which alleged that WLF sold its $WLFI governance tokens to entities associated with the Lazarus Group, a North Korean state-sponsored hacking collective, and Tornado Cash, a known money laundering platform. The senators argued that the firm's lack of robust sanctions and anti-money laundering controls poses a risk of "supercharging illicit finance activity" and enabling foreign adversaries to influence WLF's governance.

WLF, which lists Eric Trump, Donald Trump Jr., and Barron Trump as co-founders, has sold $WLFI tokens to raise capital for projects including a debit card and tokenized commodity assets. However, the senators noted that DT Marks DEFI LLC, an entity affiliated with the Trump family, holds 22.5 billion $WLFI tokens valued at over $3 billion and receives 75% of proceeds from token sales. This, they contend, creates a conflict of interest for Trump administration officials, who may prioritize profit over compliance according to the probe.

The probe request comes as Congress debates new crypto regulations that could exempt governance tokens like $WLFI from existing oversight requirements. Warren and Reed emphasized the urgency of ensuring that "crypto interests do not profit at the expense of U.S. national security". WLF has not responded to requests for comment.

Separately, North Korea has escalated rhetoric against U.S. and South Korean military cooperation, warning that nuclear-powered submarine agreements will trigger a "nuclear domino effect" in the region. While unrelated to the WLF probe, the statements underscore broader geopolitical tensions that could complicate enforcement of sanctions and crypto-related regulations.

World Liberty Financial's activities have drawn scrutiny from multiple angles, including its stablecoin USD1, which was used by a UAE-backed fund to invest $2 billion in Binance. The company's ties to high-profile figures and its governance model have raised questions about transparency and accountability in an industry already grappling with regulatory uncertainty.