"The Trump family pocketed $500 million through crypto"... investors face bankruptcy

[Financial News]  

CNBC reported on the 9th that the Trump family had made $500 million, or about 760 billion won, from a cryptocurrency venture.
The report said the family reaped huge profits after World Liberty Financial, the crypto company led by the Trump family, struck a large token deal with listed company Alt5 Sigma, now AI Financial, in August last year.
By contrast, hedge funds and retail investors who bought heavily into Alt5 Sigma shares amid the Trump family's aggressive promotion were pushed to the brink of bankruptcy as the stock price plunged 93%.
The Trump side dismissed criticism that it was using political power for personal gain, saying, "The assets are held in a trust, so there is no conflict of interest."

According to CNBC, World Liberty Financial, run by the Trump family, signed a $1.5 billion token deal with listed company Alt5 Sigma in August last year. Under the agreement, Alt5 Sigma would buy $1.5 billion worth of WLFI tokens issued by World Liberty Financial.
News that the Trump family was entering the crypto business drew hedge funds and retail investors to Alt5 Sigma. They bought $750 million worth of Alt5 Sigma shares, expecting the company to purchase the Trump family's cryptocurrency.
Alt5 Sigma carried out the $1.5 billion purchase using proceeds from the stock sale and its own shares.
About 75%, or $500 million, of the profits generated in the process was allocated to President Trump and his family.
The Trump family also mounted an active promotional campaign.
Donald Trump Jr., the eldest son, and Eric Trump, the younger son, visited the NASDAQ exchange in New York and took part in a bell-ringing ceremony, heavily promoting the partnership between World Liberty Financial and Alt5 Sigma.

While the Trump family pocketed $500 million, investors were left on the verge of bankruptcy.
The stock, which closed at $8.97 on Aug. 8 last year, just before the companies announced the deal, ended at $0.66 on the 8th. That marked a 93% plunge in 10 months.
Alt5 Sigma, renamed AI Financial, has now been reduced to a penny stock and is on the verge of delisting. If it fails to lift its share price within 15 trading days, it will be removed from the NASDAQ. Further declines appear inevitable.
Retail investors who bet on Trump's election victory and the family's business expansion have been left stranded.

Since returning to power for a second term in January last year, Trump has faced criticism for openly using political power to enrich himself.
The nonpartisan ethics watchdog Democracy Defenders Fund (DDF) sent a letter urging the U.S. Securities and Exchange Commission (SEC) to investigate. It asked the agency to examine where all the money from retail investors went and to look into possible disclosure failures and conflicts of interest involving the president's family.
Matthew J. Platkin, the former attorney general of New Jersey, criticized AI Financial for failing to disclose serious warning signs in a timely manner. He said the company had been slow to inform shareholders about risks that could have prompted regulatory scrutiny, including the money-laundering conviction of its Canadian subsidiary and its chief executive in Rwanda, a series of CEO changes, and successive resignations by accounting firms.
CNBC also criticized Trump for gaining a strong shield after reaching a recent "de-weaponization" agreement with the Internal Revenue Service (IRS), which exempted him from tax audits. It said the vague terms of the deal could prevent regulators such as the SEC from investigating companies linked to the Trump family, including AI Financial.
The White House said the president's assets are held in a trust managed by his children, so there is no conflict of interest. His sons also said they had no responsibility, insisting they were not involved in AI Financial's management or board, CNBC reported.


dympna@fnnews.com Song Kyung-jae Reporter