Written by: Eric Lipton, David Yaffe-Bellany, Ben Protess, The New York Times
Compiled by: J1N, Techub News
A few days before President Trump's inauguration, 'ZMoney' promotions appeared on the encrypted messaging app Signal.
'ZMoney' refers to Zachary Folkman, an entrepreneur who previously ran a dating software company called Date Hotter Girls and currently represents WLFI. At the time, Zachary Folkman was writing to a cryptocurrency startup in the Cayman Islands, proposing a 'partnership' where both parties would buy each other's digital currencies, which would enhance the public profile of the startup.
But The New York Times discovered a hidden clause. To gain the privilege of collaborating with the Trump family, the startup would actually have to secretly pay WLFI millions of dollars.
Zachary Folkman wrote: 'Everything we did received significant exposure and credibility,' claiming that other business partners had committed to donating between $10 million and $30 million to WLFI.
WLFI executives stated that the Cayman Islands startup rejected the proposal, as did several other companies that received similar invitations from WLFI. They deemed the deal unethical, believing WLFI was essentially selling the traffic generated by its political endorsement while concealing this from the public.
Meanwhile, WLFI executives insisted they had done nothing wrong, and their actions had not been impeded. They successfully marketed similar deals to other companies while also promoting WLFI tokens to buyers around the world, ultimately achieving over $550 million in sales, a large portion of which was distributed to the president's family.
Trump's return to the White House opened new avenues for him to profit from his power, whether through his social media company or new overseas real estate deals. However, other business activities of the Trump family have far less conflict of interest than the series of related transactions brought about by the creation of WLFI.
WLFI is primarily owned by Trump family business entities, breaking centuries of social norms regarding presidents and eliminating the boundary between private enterprise and government policy in ways unprecedented in modern American history.
Trump is now not only a significant cryptocurrency trader but also the highest policymaker in the industry. So far, during his second term, Trump has leveraged his presidential power to benefit the industry. Despite having mocked cryptocurrency as a haven for drug dealers and scammers for years, he has continually profited his company through cryptocurrency.
Members of the Trump administration team include sympathizers of the cryptocurrency cause, including the appointment of a cryptocurrency industry advisor as the SEC chairman. Additionally, the Justice Department recently disbanded a special task force on cryptocurrency crime, continuing to relax the scrutiny of the industry that was present during the Biden era.
(The New York Times) investigated WLFI's rapid rise from startup to international force, as well as Trump's transformation from a cryptocurrency skeptic to a firm supporter of the industry, highlighting a series of conflicts of interest that exist within the company:
WLFI directly benefited from actions taken by the Trump administration, such as his announcement of the establishment of a federal cryptocurrency reserve that includes digital currencies invested in by WLFI. The president's statement temporarily increased the value of the assets held by WLFI.
According to interviews and data obtained by The New York Times, WLFI has sold its cryptocurrencies to overseas investors, including those from Israel and Hong Kong, opening a new avenue for foreign businesses to win favor with Trump.
Several investors in WLFI's cryptocurrency management firm have been accused of misconduct by the federal government. This includes an executive whose fraud case was halted after investing millions of dollars in WLFI. Other investors and business partners are seeking business expansion, which requires approval from the Trump administration.
WLFI proposed cryptocurrency transactions with at least five startups, frequently demanding high compensation in Trump's name. These transactions raised the alarm among senior executives.
Andre Cronje, founder of Sonic Labs, said, 'This is a stain on our industry, and anyone who accepts this project will clearly believe they will profit because it is a project officially endorsed by Trump.'
WLFI spokesperson David Wachsman denied that any of the company's transactions constituted 'one-sided service payments.' However, he acknowledged that the company did engage in 'joint investment transactions' and stated that these transactions facilitated 'thoughtful strategic exchanges between the parties, mutually beneficial.'
David Wachsman also stated that considering investment or collaboration with WLFI as some form of political exchange is 'false, absurd, and dangerous.' He said, 'No investor or partner has ever asked for any political favoritism, nor would we ever consider such a possibility.'
Nevertheless, the deals WLFI struck still benefited the president and his family. According to the WLFI website, a business entity owned by Trump holds 60% of WLFI and is entitled to receive 75% of the revenue from token sales, which can be converted into cash.
Eric Frederick Trump, who oversees the family business, stated during an interview at the Trump Doral Golf Course in Florida this month: 'This is one of the most successful things we've done.'
He and his brother Donald John Trump are actively involved in WLFI, although they rely on three partners to oversee the project's day-to-day operations. Two of them, Zachary Folkman and Chase Herro, have mixed records in the cryptocurrency field. The other is Zach Witkoff, the son of Steve Witkoff, the U.S. special envoy to the Middle East, and one of the founders of WLFI.
In recent days, Zach Witkoff, Zachary Folkman, and Chase Herro met with Pakistan's Prime Minister Muhammad Shehbaz Sharif and other senior government officials to discuss the WLFI project. The itinerary included luxury cars, dance performances, and police escorts, perfectly blending the president's business interests with the formality of a state visit.
President Trump pointed out that the conflict of interest law does not apply to him, and that his official actions as president enjoy broad exemptions.
A spokesperson for President Trump pointed out in a statement that his 'assets are managed by a trust fund run by his children,' thus 'there is no conflict of interest.'
WLFI supporters do not care about conflict concerns. Konstantin Kuznetsov, a Russian citizen living in Miami, stated in an interview, 'Trump wants to make big money in cryptocurrency.' His company, located in Gibraltar, purchased $1 million worth of World Liberty cryptocurrency. 'We can join this wave.'
Chief Cryptocurrency Advocate
As a businessman known in the real estate field, Trump never aspired to build a digital currency empire. In fact, at the end of his first term, he expressed disdain for cryptocurrency through social media. He warned that they 'are not money.' Their 'value is extremely unstable and baseless.' By last year, his views began to shift.
On January 6, 2021, the Capitol was attacked, and the family business was ousted from the mainstream financial system. Since then, his eldest sons have become fervent supporters of cryptocurrency.
'We build, sell, and hold real estate forever. For a long time, I could reach out to everyone in the world,' Donald John Trump explained via video at a cryptocurrency conference in Washington last month. 'Suddenly, this became very difficult. I quickly realized how severe the discrimination is in ordinary financial markets.'
Meanwhile, millions of dollars in campaign donations from the cryptocurrency industry flowed into Trump's re-election campaign. During Biden's administration, the cryptocurrency industry faced nearly 100 enforcement actions from the SEC, and executives in the industry hoped to find a leader in Washington who could protect their interests.
During the campaign, Trump's doubts about cryptocurrency seemed to vanish. At a Bitcoin conference in July, he vowed to make the U.S. the 'global capital of cryptocurrency.'
Two months later, Trump completed the conceptual shift and announced that he and his son would enter the cryptocurrency market by establishing World Liberty Financial.
Trump announced this news live from his Mar-a-Lago estate in Florida, where he was joined by Eric Frederick Trump, Donald John Trump, Zachary Folkman, Chase Herro, and Zach Witkoff. 'Cryptocurrency is one of the things we must do,' Trump said. 'Whether we like it or not, I have to do it.' It is rare to choose Chase Herro and Zach Witkoff as partners for the president.
Zachary Folkman has short curly hair and tattoos, and in his twenties, he ran a company that provided guidance to down-and-out men on how to approach women. In several podcast episodes, Chase Herro recounted his path to redemption, describing his wild youth when he was charged with possession of marijuana and spent a few weeks in a Wisconsin prison.
The two have collaborated for years, selling various goods, from colon cleansers to get-rich-quick advice, later pivoting to cryptocurrency, but with inconsistent results.
In 2022, Chase Herro encouraged cryptocurrency enthusiasts to invest in TerraUSD, calling it 'one of the coolest assets in history.' A month later, TerraUSD crashed, obliterating billions of dollars in wealth. The cryptocurrency platform Chase Herro recently collaborated on with Zachary Folkman, Dough Finance, was hacked in July, resulting in $2 million being stolen.
It remains unclear how these two won the trust of the Trump family. However, Steve Witkoff stated last year that he met them through his son and then introduced them to the Trump family.
During the live introduction of World Liberty, Donald John Trump praised these individuals as top financial talents.
He said: 'You could put them in a Goldman Sachs conference room, and they would astonish everyone in the room.'
In October, Chase Herro and Zachary Folkman began working on the company's first project, selling WLFI tokens with a target sales goal of $300 million.
WLFI is different from Memecoin TRUMP; at least according to its marketing claims, anyone buying WLFI tokens can vote on business decisions just like shareholders of traditional companies. The ultimate plan is to operate in the form of a new type of internet bank, allowing customers to borrow in various digital currencies.
Trump is at the center of this promotion. The company released a 13-page 'golden book' detailing its mission and leadership team. The cover features Trump's portrait, designed to appear as if splattered with gold paint.
The report stated that he would serve as the company's 'Chief Cryptocurrency Advocate.'
When WLFI plans to launch, the Trump family and its affiliates received 22.5 billion WLFI, which currently has a paper value of at least $1.1 billion.
According to company regulations, the Trump family and other WLFI investors are prohibited from selling their coins on the public market, but the company stated that this restriction could eventually be lifted if other token holders agree.
Initially, there were few buyers. As of the end of October last year, WLFI had only sold coins worth $2.7 million, falling far short of its target.
Election day changed the situation.
A flood of investors pouring in
As voting concluded in much of the U.S., Trump was poised to win, and the WLFI account on X posted a celebratory message on November 5: 'Big things are coming.'
Soon, a large amount of investment flowed into World Liberty's cryptocurrency.
Most cryptocurrency transactions are recorded on a public ledger called the blockchain, where buyers and sellers remain largely anonymous. However, World Liberty stated that it conducted a thorough review of its cryptocurrency investors and therefore knows their identities.
On-chain data analysis firm Nansen conducted an analysis for The Times based on cryptocurrency industry data, showing that many investors live in overseas regions such as Singapore, South Korea, Hong Kong, and the United Arab Emirates.
Federal law prohibits foreigners from donating to presidential campaigns or inauguration funds, but WLFI's sale provides a new, lawful way to support Trump.
Keer Lau, Chief Strategy Officer of Orbiter Finance in Hong Kong, said: 'The main reason for buying this token is to support Trump's inauguration, as he is the first U.S. president friendly to cryptocurrency.'
Some companies managed by domestic and foreign investors violated U.S. regulations. One of them is Israeli Yoni Assia, who founded the online trading platform eToro, whose U.S. subsidiary settled with the SEC for $1.5 million last year over cryptocurrency-related violations. Puerto Rican investor Troy Murray also purchased World Liberty's cryptocurrency. Previously, he helped create BarnBridge, which agreed to pay the SEC $1.7 million by the end of 2023 to settle its own cryptocurrency-related charges.
Since Trump took office, some investors in World Liberty have been urging the government to obtain approval from regulatory agencies or prepare to interact with the government as they attempt to establish or expand their businesses in the U.S.
In March of this year, Assia's company notified the SEC of plans to go public in the U.S. The Dubai-based cryptocurrency company DWF Labs announced this month that it had spent $25 million to acquire WLFI and would open an office in New York.
Andrei Grachev, managing partner of DWF Labs, stated in an interview: 'This deal has raised our profile in the U.S. We want to have direct conversations with policymakers.'
At the end of last year, Sun Yuchen gained global attention by purchasing a banana taped to a wall for $620,000 at an art auction. Shortly after, Masayoshi Son made another headline-grabbing move by spending $75 million to buy WLFI tokens.
This investment drew widespread criticism from the community, as Sun Yuchen clearly intended to curry favor with the Trump administration. During Biden's presidency, the SEC filed a lawsuit against Sun Yuchen, claiming he fraudulently inflated the price of Tron (TRX).
Sun Yuchen denied the SEC's allegations and stated in a text to The New York Times last year that his investment in WLFI was merely a vote of confidence in the Trump family's 'excellent project.'
At the end of February, the SEC requested a federal judge to suspend the proceedings in the case against Sun Yuchen: the agency stated it was exploring 'potential solutions.' The judge approved the request.
Stars align
Sun Yuchen provided significant support to the World Liberty organization. But Trump's company wants more money. More.
Thus, the executives at World Liberty quickly announced a plan they called a 'transformative initiative' to work with and invest in the cryptocurrencies of other cryptocurrency institutions. In February, the executives stated that the strategy would leverage World Liberty's growing influence to assist lesser-known partners.
'It's like taking care of your brother in space,' Chase Herro said at a cryptocurrency event in New York that month.
However, several executives from cryptocurrency startups told The New York Times that World Liberty's public statements overlooked a crucial aspect of its private recommendations to several cryptocurrency startups. World Liberty hopes to sell its own cryptocurrency, not just invest in other cryptocurrencies. It proposed a currency swap.
According to executives from three cryptocurrency companies contacted by the firm, the deal proposed by World Liberty is as follows: these startups would spend between $10 million to $30 million to purchase a large amount of cryptocurrency from World Liberty. In return, World Liberty would buy a small amount of each startup's own cryptocurrency. The remaining funds would belong to World Liberty—at a premium of up to 20%.
The acquisition of World Liberty will send a signal to the market: Trump's company believes these startups are worth investing in. However, the market cannot know whether World Liberty received compensation for this endorsement. Industry news outlet Blockworks had previously reported some details of World Liberty's similar promotions.
'They always told us we felt very close to Trump,' said Mike Silagadze, CEO of Ether.Fi, a cryptocurrency startup that World Liberty approached.
'We immediately rejected it,' said Dominik Schiener, founder of the IOTA Foundation based in Berlin. The foundation also received the proposal and stated, 'This is a very dishonest practice.'
World Liberty spokesperson Wachsman stated in a statement that The New York Times' reporting reflects a fundamental misunderstanding of industry standard practices and described the company's business arrangements as 'common not only in the blockchain industry but also vital for building lasting economic alliances in business.'
He added, 'These arrangements create vested interests for all parties.'
(The Times) found that the benefits of collaboration were enough to attract at least five cryptocurrency companies to engage in other deals with World Liberty, but without disclosing the financial arrangements' details.
In one transaction, the U.S.-based Sui Foundation announced that World Liberty would purchase an unspecified quantity of cryptocurrency, leading to a price increase of over 10% for Sui. Two insiders revealed that as part of the agreement, the foundation would receive World Liberty's cryptocurrency in return. Due to the private negotiations involved, the two insiders requested anonymity.
Other collaborations of the World Liberty Foundation also showcase how Trump merges his public office with business activities. Last December, the company announced it would use technology designed by Lisbon-based startup Ethena Labs. The company also purchased over $5 million worth of Ethena cryptocurrency.
One of the investors in Ethena is cryptocurrency entrepreneur Arthur Hayes, who admitted in 2022 to violating the Bank Secrecy Act and was sentenced to six months of home confinement. Last month, Trump pardoned Arthur Hayes. (Spokespeople representing Ethena and Hayes declined to comment.)
Another partner of World Liberty is Ondo Finance, a New York-based startup backed by conservative billionaire Peter Thiel's venture capital firm, Founders Fund.
World Liberty first purchased Ondo's tokens in December, acquiring over 130,000 units. This transaction temporarily boosted the price of Ondo tokens and became headline news on major cryptocurrency news websites, praising World Liberty's bet.
In January of this year, Ondo donated $1 million to Trump's inauguration, ensuring an invitation to a candlelight dinner at the National Building Museum in Washington, which included several nominees for Trump's cabinet. Ondo also sponsored an inauguration event called the 'Crypto Ball.' Shortly thereafter, Donald John Trump and the World Liberty management team became the headline speakers at a conference organized in New York.
'We weren't sure if this moment would happen before,' said Ian De Bode, Chief Strategy Officer of Ondo, while on stage. 'But sometimes, things just fall into place.'
'Thank me later.'
In February of this year, Eric Trump conveyed some investment advice to his followers on X: 'In my opinion, now is a good time to buy Ethereum.'
This is the stock code for the digital currency known as 'Ethereum.' 'Thank me later,' he added, then deleted the statement.
It turned out that his advice was very prescient.
The following month, Trump announced the establishment of the 'U.S. Cryptocurrency Reserve Center,' a cryptocurrency storage facility similar to Fort Knox, aimed at supporting the industry.
Trump's statement listed the digital currencies to be included in reserves. In addition to Bitcoin, he also included Ethereum, calling it 'the core of the reserves.'
The price of Ethereum surged over 13%.
The recent surge directly benefited World Liberty. According to cryptocurrency data company Arkham, the company purchased $240 million worth of Ethereum over the past few months.
On the day the president announced the cryptocurrency reserve, assuming World Liberty had not sold any of its held Ethereum, its value increased by $33 million. But with the decline in Ethereum's value, that gain evaporated.
The same pattern emerged again in March. Trump made policy statements or released information intersecting with World Liberty's business interests.
In a video from a cryptocurrency conference held in New York, Trump called on Congress to pass legislation regulating stablecoins, a type of cryptocurrency designed to maintain a value of $1.
Both the Senate and the House have introduced bills aimed at making it easier for companies issuing stablecoins to operate in the U.S. Trump stated in a speech last month that the rise of stablecoins would 'expand the dominance of the dollar.'
A week later, World Liberty announced the launch of its own stablecoin, USD1. 'The future has arrived, it's bright!' Zach Witkoff wrote on X.
Jordi Alexander is a cryptocurrency executive who helped World Liberty formulate its plan to launch a stablecoin. In an interview, he stated that the company has received commitments of at least $1 billion from investors, who will purchase once the stablecoin is launched.
This new company will only exacerbate World Liberty's ethical conflicts. The company plans to offer stablecoins on the platform developed by Binance. This week, Zachary Folkman, Chase Herro, and Zach Witkoff met with Binance founder and former CEO Zhao Changpeng in Abu Dhabi.
According to insiders, Zhao Changpeng is serving four months in federal prison for money laundering and has been seeking a pardon from the Trump administration. Due to the sensitive nature of the topic, the insider requested anonymity.
Trump's policy statements overlapping with his business interests shocked congressional Democrats, who recently took action to amend pending stablecoin legislation to prohibit the Trump family from enacting stablecoin legislation.
The amendment failed to pass, but any concerns regarding World Liberty did not impede its momentum.
