What’s Going on with World Liberty Financial

In this episode of Through the Noise, Cam Harvey returns to dive deeper into the rapidly expanding stablecoin landscape. Building on the previous discussion of Tether (USDT) and Circle (USDC), Cam unpacks USD1 - the World Liberty Financial stablecoin connected to the Trump family. He explores why nearly every major financial institution is launching a stablecoin, the critical distinction between centralized and decentralized tokens, and the long history of family conflicts of interest in politics from Billy Carter to Hunter Biden. The conversation then turns to the Justin Sun lawsuit involving 800 million locked WLF governance tokens, the surprising 60% Trump-family voting control, and the 75% revenue split flowing to a related entity. 

Transcript

SPEAKER_00 0:01

Well, I'm personally excited to be back today for this new episode of Cam Harvey's Through the Noise, where we're able to continue our conversation on stable coins. I uh went home after our last episode, and um you talked about Circle and Tether, but I also discovered that you know that the Trump-funded World Liberty Financial also has a stable coin. Is that correct?

SPEAKER_01 0:28

It does. So it's called USD1. So Circles is USDC. Uh and it is actually a fairly large uh stable coin. So um in terms of the capitalization of all crypto, uh tether is number four. So the most important uh stable coin in terms of capitalization. And then number six overall, and I'm counting Bitcoin, Ethereum, all of them uh together, uh, is USDC, which is Circle. And uh USD one is number 20 overall. So about 4.5 billion. Uh that is a sizable number. However, this is important, that it's not just world liberty financial. There are many different stable coins out there.

SPEAKER_00 1:24

So there's not a lot of barrier. If I wanted to go create my stable coin, I could go create Robert Stablecoin.

SPEAKER_01 1:30

I give my students the code to create one of these tokens. And and it's easy uh to do. So uh uh PayPal has got a stable coin. Uh Western Union is thinking of a stable coin. Every major bank in the world has got some initiative that is linked to stable coins. Okay, so so we will have stable coins all over the place. And yes, uh uh World Liberty uh Financial has got one. Uh I do want to kind of differentiate between uh a centralized and decentralized stable coin. Okay. So a uh centralized stable coin like Tether or Circle or PayPal, World Liberty Financial, these are companies where you send money to a company and then the company uh sends you tokens. Uh there are also decentralized stable coins where it is more uh like an algorithm uh that uh you're sending uh to uh like an algorithm your funds and it's sending back to you uh some tokens. Uh the decentralized stable coins are smaller, uh, but they are a very important part of the ecosystem.

SPEAKER_00 2:47

We'll have to get into decentralized versus centralized tokens for sure. The reason I brought this up is is I just want to get a sense of how we want to think about families of power, such as our president's family, being involved in highly regulated industries where um where you know it it might not seem uh so kosher.

SPEAKER_01 3:11

Yeah, so let's let's be careful here. So uh circle and world liberty liberty financial will be regulated under the Genius Act. The business model for their stable coin, at least, is very simple. And I've described it as you take uh some money, you send it to the centralized issuer, they put that in treasury bills or ultra-safe assets, and then issue you tokens. At any point, you can send uh your tokens back. As for family involvement, it is more complex than I think that uh the description in the mainstream uh media. So uh number one, uh it is it is hard to ask family members to step aside from all business uh ideas uh if your parent uh is in a position of power. It's hard to do, uh, and especially when that power is limited to four or uh eight years. Um and then this is also a bipartisan, I didn't say issue, uh, but I could say problem or challenge. I would say it's a global challenge. Yeah, globally, but even within the U.S., it wasn't that long ago that we were talking about Hunter Biden and Barisma holdings, him being on the board, um, and people thought that that was uh inappropriate. And indeed, the history goes back even further. Uh during Jimmy Carter's presidency, his brother Billy started to market a beer called Billy Beer, uh, and also was involved with Libya. So this is a problem that's not a new problem. It's an old problem. And I think that it is up to Congress to come up with guidelines as to what family members can do and cannot do. Uh and we don't have anything like that. It appears like a conflict of interest, but this is an ongoing problem uh that we actually uh face.

SPEAKER_00 5:31

But we do have there are regulations that that that these firms have to follow. Um I know that to to avoid kind of fraudulent issuances and things like that, we have lockup periods and we have other mechanisms. Can you maybe help us understand, you know, what if if I were to launch my stable coin, what uh or not stable coin, but some sort of crypto asset, what kind of what kind of rules might I have to follow?

SPEAKER_01 5:57

So those rules are being developed. So this is the Clarity Act, uh, whereas the stable coin rules are are pretty well set right now, uh given the Genius Act that was passed in uh December of 2025. And I think what you're talking about in terms of lockup is an issue with World Liberty Financial, and they have like a number of businesses, but the main thing is their token, which they call a governance token. And it was interesting to me that when those tokens were originally issued, uh they were not available for trade. So you're buying a token that you can't sell. And I thought it was very puzzling. And uh, as you know, this billionaire uh Justin's son, um, who bought a large chunk of these tokens uh and is currently in litigation with uh World Liberty of Financial. Um so again, you're buying a token you can't sell? How does that have value? Well, it turns out it had value because there was an expectation that some of the tokens would be unlocked. Okay, so uh it turns out that there was a vote of the token holders, and the token holders said, let's unlock 20% of the tokens. So is this self-imposed, this lockup? Uh it was part of the original deal. So you can see uh the deal, you're buying the token, it says very clearly that uh these are not uh like for sale. So you're buying something you can't sell. Like, can you imagine buying a stock that you couldn't sell? No. Yeah, that has no value. But again, they changed the rules, and this is in July of 25, to allow for 20% of those tokens to be unlocked. Now, look, lockup periods are common in the stock market. So there's an initial public offering, and insiders uh cannot sell for a certain period of time. So you're locked up. Or an executive within the firm uh gets an award of some stock, and there's a lockup period before you can sell. Lockups are common. In this particular case, the initial token holders, there was no lockup period. You just couldn't sell a token. Then in July, uh there was uh a change in the rules so that 20% could be sold. And there's an expectation there'd be another vote later in the future where more of these can be sold. Again, I want to emphasize this is their governance token, it has nothing to do with the stable coin, nothing to do with that whatsoever. So um Justin Sun had 800 million tokens unlocked, and what his lawsuit is about is um that the selling of those tokens has been blocked by World Liberty uh Financial. He believes that's unfair, so he has issued um a lawsuit as a result of that. And uh the details, some of the details we just don't know.

SPEAKER_00 9:25

So I'm getting confused by a lot of these um lockups and things like that. And perhaps you talked a little bit about this earlier, but maybe helped me understand. Is is what what's going on? Is that a is this decentralized or is this a centralized um uh token?

SPEAKER_01 9:40

I think Yeah, so this is interesting and it's very important to understand the difference between centralized and decentralized. Um so I've already described the circle and tether for stable coins are centralized. Um World Liberty Financial uses uh the terminology of decentralized finance. So, for example, they call their token a governance token. However, this is highly centralized. So this is a company. It is a company that is registered in Florida. They control 60% of the so-called governance. So this is not decentralized. Usually in what we call a decentralized autonomous organization, you've got the tokens spread around and and there are votes for various uh provisions. No, you've got one centralized entity determining the rules. So that July uh 20 uh because they own the votes. Because they got the majority, a clear uh majority. Um so so this is uh very clear. There's other unusual provisions, so that there is this entity called DT Marks DeFi LLC. I know that's a mouthful, but that is a Trump family uh entity that also gets 75% of the revenue from the token issuance. So that's also very uh unusual. Uh so again, for those in the space, we see this as a centralized company using the language of decentralized finance.

SPEAKER_00 11:37

So give me kind of a smoke test. If I'm trying to get engaged with these kind of tokens, how would I what are the questions I should be asking myself?

SPEAKER_01 11:45

This is really key. And this is uh this is kind of the number one lesson that investors need to uh to learn, and that is before investing in anything, you need to understand what you're investing in. So people might be describing something uh in the words of decentralized finance, but you need to look under the hood. What is actually going on here? So I'm buying a token that appears to be permanently locked up. So that is risky. Um and then some of the token is unlocked, but given that there is an entity with majority control, they can re-lock and and and refuse redemption. Uh so this is uh this is something that all investors have to do. They have to understand what the risks are when they actually invest in something. Now, I want to be careful here uh because uh uh I want to emphasize that I don't have all the information here. So Justin Sun in particular signed what's known as uh like a token agreement, a purchase agreement, a TPA, it's sometimes called. And I don't know uh all of the details of what he uh signed. So that's just another layer. So uh uh this situation is in the media, obviously, because the president's family uh is involved, um, and the CEO is actually um the uh the son of Steve Whitkop. So another official in the administration. So it's in the media focus, but I think the lessons here are really clear. So if you're buying some crypto token, you need to understand whether it's centralized or decentralized, and that impacts your ability to potentially sell uh that token. And then the second lesson yes, they're in the stablecoin uh business, but they're not alone. Uh there are so many companies in this business now. The barrier to entry is very low. Stablecoins solve an important problem. They're just one of the players. And it turns out that they're not a really small player, they are a substantial player. So, so again, this is all about understanding what you're investing in.

SPEAKER_00 14:24

Well, thank you. I mean, I I feel like what we're we're getting into is is looking at things that seem simple, discovering kind of their complexity, and trying to come up with some basic ways for us to understand this new this new space and simple questions that we can ask and simple ways we can understand. So thank you for taking the time to discuss it with us. I know this is a this is there's some tricky topics here, but I hope we address them in the right way. Thank you.