Trump family's crypto company World Liberty Financial seeks business on international tour

Crypto startup World Liberty Financial, partially owned by former US president Donald Trump and his family, is aiming to use an intermediary to help an investment firm funded by the United Arab Emirates put $2 billion into Binance, the world’s largest cryptocurrency exchange, according to the New York Times.

The startup, which is cofounded by Zachary Witkoff, son of the White House envoy to the Middle East, Steve Witkoff, is making the move with MGX, the investment firm. It will use USD1, a stablecoin unveiled by the startup in March, to make the investment.

The startup will then earn tens of millions of dollars from the deal and pay a portion to Trump's family, which holds a 60 percent stake in the startup through a separate entity.

"We thank MGX and Binance for their trust in us," Witkoff was quoted as saying on Thursday at crypto conference Token2049 in Dubai, where he made the announcement.

"It’s only the beginning."

USD1 is a stablecoin pegged to a one-dollar valuation by a reserve of cash and other assets. It holds a steady valuation by way of the understanding that, if ever somebody wants to redeem a coin for the dollar it represents, the issuer can draw from the reserve.

The model sees the startup receive US dollars in exchange for coins that customers can trade freely in the crypto market. It keeps some of those dollars in cash and cash-equivalents, and invests the rest into US government bonds—also called Treasuries—which yield interest.

The profits of stablecoin issuers depend partly on the going interest rate—right now, short-term Treasuries yield a little over 4 percent—but otherwise scale in a linear fashion with supply. The larger the amount of a stablecoin in circulation, the heftier the underlying reserve of assets from which the issuer can generate income.

Therefore, the deal between MGX and Binance, which will increase the USD1 supply by up to 2 billion units, stands to be immensely lucrative for the startup—and by extension, Trump and his family.

If the company were to invest the entire $2 billion in short-term US Treasuries, it would earn approximately $85 million in interest each year at current market prices.

However, the deal has raised concerns about the startup becoming embroiled in a thicket of conflicts and thorny ethical issues.

By transacting in USD1, entities affiliated with foreign powers could indirectly transfer wealth to the Trump family and purchase good favor with the sitting US president, the argument goes.

USD1 is the latest in an expanding line of crypto coins issued by Trump-related entities that critics fear could theoretically be used in this way, including a separate World Liberty Financial coin that promises a say in the company's business decisions, and a memecoin launched by the president in January.