Former President Donald Trump's cryptocurrency ventures are facing heightened scrutiny

Despite previously criticizing digital assets, Trump has emerged as a major player in crypto due to his direct influence in the industry.

House Democrats are demanding a probe into former President Donald Trump’s cryptocurrency ventures, raising alarm over potential financial misconduct, insider trading, foreign influence, and market manipulation.

The request, penned by House Financial Services Committee chairwoman Maxine Waters and addressed to Treasury Secretary Scott Bessent, focuses on Trump-backed World Liberty Financial (WLF) and Trump-branded meme coins.

“We are writing to express the Committee’s deep concerns about former President Trump’s involvement in cryptocurrency ventures, specifically World Liberty Financial (WLF) and the Trump-branded meme coins,” the letter begins.

The lawmakers highlight how WLF, launched in September 2024, offers a governance token, but critics argue it lacks tangible value.

The narrative took a turn when reports emerged of Chinese billionaire Justin Sun investing $75 million into WLF, raising concerns over foreign influence on the crypto startup.

House Democrats are also interested in the timing of Sun’s investment, which reportedly occurred shortly after WLF announced a $500 million venture capital fund focused on blockchain startups in the U.S.

In contrast to his prior criticisms of digital assets, Trump has become a major presence in crypto, largely due to his direct or indirect influence on the startup.

However, some argue that the structure of $TRUMP could facilitate pump-and-dump schemes, where a small group of individuals rapidly inflate the coin’s price.

This, in turn, could lead to substantial losses for smaller investors as the coin’s value plummets.

Early trading of $TRUMP allegedly generated millions in profits for insiders, while smaller investors reportedly lost over $2 billion following a sharp price crash.

The Democratic inquiry aims to access suspicious activity reports on Trump-linked crypto transactions, hoping to determine any potential violations of U.S. securities laws.

The SEC has been gradually relaxing its oversight on meme coins, displaying an inclination to consider these tokens as collectibles rather than assets or securities.

However, with Trump’s ventures entering the regulatory sphere, it remains to be seen how this will shape the broader landscape.

As the Biden administration and Congress grapple with the best approach to regulating crypto, lawmakers will need to decide whether Trump’s financial moves are legitimate business ventures or thinly veiled political fundraising tools.