Democrats urge SEC to retain records on Trump's crypto business amid conflict probes

Introduction

A pair of prominent Democratic lawmakers have raised concerns regarding potential conflicts of interest stemming from President Donald Trump’s cryptocurrency venture, World Liberty Financial.

Context

On April 2, Democratic Senator Elizabeth Warren and Representative Maxine Waters requested that the U.S. Securities and Exchange Commission (SEC) preserve records related to the Trump family's financial interests in the crypto project. In their letter to acting SEC Chairman Mark Uyeda, they sought to understand how these interests might influence the Commission's activities. The letter highlights the challenges Democrats face in conducting formal investigations, given the Republican majority in both the House and Senate.

Developments

The letter to the SEC does not cite legal authority compelling the agency to respond. A White House spokesperson defended President Trump, stating that his assets are managed by a trust run by his children, indicating no conflicts of interest exist.

Republicans are currently considering legislation to regulate the broader use of crypto stablecoins, an initiative identified as a legislative priority by the Trump administration. Recent reports revealed that World Liberty Financial has raised over $500 million, with significant financial control resting with the Trump family. Specifically, they claim 75% of net revenues from token sales and 60% from operations of the soon-to-launch “decentralized finance” business, amounting to approximately $400 million in fees.

In response to the lawmakers' inquiries, a spokesperson for World Liberty Financial criticized Senator Warren, calling her efforts an attempt to target the Trump family. The spokesperson described the claims in the letter as unfounded and part of a long-standing opposition to the crypto industry. Both Trump’s sons and other co-founders of the venture have not publicly commented on the matter.

The SEC indicated that Chairman Uyeda would respond directly to Congress. Lawmakers are also requesting records regarding communications between the White House and the SEC concerning World Liberty and are looking for assurances that the Trump family's financial ties will not influence regulatory decisions.

Conclusion

In January, the Trump Organization announced that the president's investments and business interests would be managed by a trust operated by his children, ensuring he has no role in daily business decisions. As the SEC navigates regulatory oversight, it is grappling with a transformed enforcement team and divergent views on cryptocurrency regulation. As the legislation on stablecoins progresses, Waters has stated her opposition to the bill unless measures are taken to prevent Trump from owning a stablecoin business through World Liberty, arguing that it could set a dangerous precedent for enriching insiders at the expense of the public.