World Liberty Financial, partially owned by President Trump, is set to facilitate a $2 billion investment into Binance with their new stablecoin, USD1. This has sparked ethical issues concerning conflicts of interest and potential foreign influence. Critics argue foreign entities may use this to gain favour with President Trump. As the company promotes its stablecoin globally, legislation affecting the industry is underway.
As the crypto company World Liberty Financial—part-owned by President Donald Trump and his family—gains traction, ethical concerns loom large. During a crypto conference in Dubai on Thursday, Eric Trump, alongside Zachary Witkoff, the firm’s cofounder, announced plans for their new stablecoin, USD1, which will facilitate a staggering $2 billion investment into Binance, the largest crypto exchange globally. This deal could mean tens of millions for World Liberty Financial.
The USD1 coin, launched earlier this year, functions as a stablecoin, meaning it’s pegged to the dollar’s value through a reserve of cash and other assets. This setup is fairly straightforward: customers trade their US dollars for USD1, while the firm retains a portion of those dollars in reserves, investing the remainder in US treasury bonds which yield interest. With current rates, World Liberty’s profits could skyrocket if the USD1 supply increases significantly.
Should MGX’s investment of 2 billion units of USD1 come to fruition, World Liberty could potentially rake in around $85 million annually, if they invest those funds in short-term Treasuries. However, the situation has raised alarms about potential conflicts of interest, given that the Trump family holds a 60% stake in World Liberty. Critics argue that foreign entities might funnel money through USD1, enriching the Trump family while simultaneously gaining favour with the sitting president.
There’s a broader concern about the increasing number of crypto coins linked to Trump-related ventures, which critics fear could be exploited in similar ways. Robert Weissman from Public Citizen voiced his concerns saying, “It is foreign policy for sale and justice for sale.” Despite requests for comment, World Liberty Financial did not reply, but the White House has asserted that all Trump’s assets are managed by his children, denying any conflict of interest.
Amidst this, legislation regulating stablecoin issuers—dubbed the GENIUS Act—is speeding through the Senate, while the House is considering a parallel measure known as the STABLE Act. Senator Elizabeth Warren expressed her apprehension, arguing this could further benefit the Trump family financially.
Nevertheless, World Liberty Financial continues its global business tour, mingling with policymakers and crypto industry leaders. There’s a palpable energy in the air; as Christian Catalini of MIT notes, “The stablecoin wars are in full swing. Expect inventive maneuvers.”
On April 27, the World Liberty team posed for a photo with Binance’s founder, Changpeng Zhao, who not long ago faced legal issues in the US. With USD1 to be available on TRON, a network developed by Justin Sun, who himself has been charged by the SEC for market manipulation, the whirlwind of activity in this realm raises eyebrows.
In closing, Weissman pointed to historical precedents, stating, “Never before in American history have foreign powers so directly funneled wealth to the US president and his family.” This multifaceted situation continues to unfold, contrasting the emergence of new technologies with longstanding ethical dilemmas.
