‘A huge mistake’: Trump’s crypto allies cringe over family’s startup

 

Economy

‘A huge mistake’: Trump’s crypto allies cringe over family’s startup

 

The crypto venture is attracting what appear to be hacks and attempted scams ahead of its launch.

 

By Jasper Goodman

09/06/2024 05:00 AM EDT

https://www.politico.com/news/2024/09/06/trump-family-crypto-startup-00177566

 

Donald Trump’s sons want to turn their father’s growing bromance with the cryptocurrency industry into the new family business. So far, the project’s troubled rollout has succeeded in creating only one thing: a potential political liability for the former president.

 

Trump’s eldest sons — Donald Trump Jr. and Eric Trump — have been teasing their plans to unveil a crypto startup called World Liberty Financial for weeks. But the launch has been marred in recent days by a series of apparent scams that have redirected fans to fake pages and compromised the social media accounts of other Trump relatives.

 

The incidents have begun to rattle some of Trump’s allies within the crypto world. They’re warning that his family should shelve a project that they say creates unnecessary political risks and reflects poorly on the industry.

 

“This is a huge mistake,” said Nic Carter, a Trump supporter who is a founding partner at the crypto-focused venture capital firm Castle Island Ventures. “It looks like Trump’s inner circle is just cashing in on his recent embrace of crypto in a kind of naive way, and frankly it looks like they’re burning a lot of the good will that’s been built with the industry so far.”

 

The drama illustrates the risks associated with Trump’s growing embrace of the crypto community, which he’s promised to give a sweeping set of supportive policies if elected. Government watchdogs have also warned the intertwining of politics, policy and the Trump family business poses new conflict of interest concerns as Democrats try to paint him as a “con artist” in the home stretch of the presidential campaign. It comes as major crypto firms face ongoing criticism that the market is rife with scams and consumer abuse.

 

While the details of the Trump brothers’ crypto project haven’t yet been announced, Trump began promoting World Liberty Financial’s forthcoming launch on social media last month after it opened an official channel on the messaging platform Telegram.

 

Shortly after, it appeared that fraudsters began to pounce. The X accounts of Republican National Committee Co-Chair Lara Trump and Tiffany Trump were compromised late Tuesday, when allegedly unauthorized users posted links to a hoax website for the crypto project featuring fake details about it. World Liberty wrote on its official Telegram channel that the accounts were “hacked” and warned against visiting any links from the posts. Tens of thousands of Telegram users have been lured to a separate unofficial channel posing as World Liberty Financial.

 

A representative for World Liberty, Zak Folkman, said in an interview that the group is “building a world-class decentralized finance platform with the absolute best of the best in the industry.” He said the unauthorized X posts and the fake Telegram channel were reported to the two platforms. Folkman confirmed that Lara, who is Eric Trump’s wife, and Tiffany Trump, Donald Trump’s daughter, are uninvolved in the project.

 

“We take security very seriously and put it first and foremost, above anything,” he said, adding that World Liberty works “with the top auditing firms and security specialists in the world.”

 

But experts say the way the crypto project was rolled out left it susceptible to scams.

 

“It’s a very typical playbook of smaller operators or more amateur operations in the crypto space to try to generate a lot of hype before revealing the details,” said Austin Campbell, an adjunct professor at NYU’s Stern School of Business who previously led the risk and portfolio management operation at the crypto firm Paxos. “That makes them susceptible to all sorts of nonsense.”

 

Official details about World Liberty remain scarce. The crypto news outlet CoinDesk reported this week that a white paper for the project describes “a borrowing and lending service strikingly similar to Dough Finance, a recently hacked blockchain app built by four people listed as World Liberty Financial team members.” The Trump brothers’ venture is poised to launch a new crypto token, according to CoinDesk.

 

Folkman, the World Liberty representative, said the startup is creating a “protocol that gives power to the average person to be able to take control of all of the amazing opportunities decentralized finance offers.” He declined to answer specific questions about the service.

 

The early signals haven’t reassured skeptics, including crypto advocates.

 

One crypto industry representative in Washington, granted anonymity because of sensitivities around criticizing Trump, described having “a laundry list of concerns.” A big worry is that that it could reflect poorly on the industry as it pushes for policy changes that would help legitimize the sector.

 

“Maybe it doesn’t move the needle for most people, but if this thing is hacked or regular folks lose money on it or it opens up the door for the SEC to investigate the team, it only looks like it has downside risk,” Carter said. “It looks to have very little upside risk.”