Trump’s USD1 stablecoin deepens concerns over conflicts of interest
World Liberty Financial (WLFI), the Trump family’s crypto project, is planning to release a stablecoin, raising concern over the US president’s exposure to the digital asset industry.
The project released a memecoin immediately prior to President Donald Trump’s inauguration, the price of which skyrocketed and crashed soon after, causing many to accuse WLFI of a pump-and-dump scheme.
WLFI also made multimillion-dollar purchases of crypto tokens immediately prior to important crypto-related events the president has attended or announcements influencing the industry. WLFI purchased $20 million of various tokens ahead of the March 7 White House Crypto Summit.
As World Liberty Financial’s portfolio grows and regulator oversight disappears from the crypto industry, observers and legal scholars are becoming increasingly concerned over conflicts of interest within the Trump administration.
Son Eric Trump pumps his father’s memecoin ahead of the inauguration. Source: Eric Trump
Trump’s stablecoin, USD1, riddled with liabilities
WLFI announced on March 25 that it will launch the new stablecoin USD1, “100% backed by short-term US government treasuries, US dollar deposits, and other cash equivalents.”
WLFI co-founder Zach Witkoff said in the announcement that the coin can be used for “seamless, secure cross-border transactions.”
News of USD1’s forthcoming release came just days after WLFI secured more than $500 million through the sale of its own WLFI tokens.
Observers have already begun to raise the alarm about the possible security risks posed by a stablecoin connected to the president. There are also concerns over the possibility of market manipulation and violations of the emoluments clause of the US Constitution — a section of the document that protects against undue influence over American leaders.
As regards the latter, cyber and digital media attorney Andrew Rossow told Cointelegraph that the stablecoin is “a direct affront to constitutional safeguards meant to prevent conflicts of interest.”
“With Trump and his family controlling 60% of World Liberty’s equity interests, the USD1 stablecoin could facilitate indirect financial gains or undue foreign influence over US policy, particularly if foreign entities invest in or use the stablecoin.”
WLFI makes up a sizeable chunk of Trump’s estimated net worth. Source: Fortune
Corey Frayer, who worked on crypto policy at the Securities and Exchange Commission under former President Joe Biden, said that the project’s emphasis on cross-border payments was particularly worrisome and that foreign entities may invest as a way to gain favor with Trump.
“There’s a lot of opacity around this marketplace, and prior relationships with illicit finance,” Frayer told The New York Times.
US policymakers have already noted the possibility for foreign influence following the launch of Trump’s eponymous memecoin in January.
At the time, Democratic Representative Maxine Waters — a top Democrat on the House Financial Services Committee — wrote that “anyone globally, even individuals who have been sanctioned by the U.S. or banned from our capital markets, can now trade and profit off of $TRUMP through various unregulated platforms.”
Related: Congress repealed the IRS broker rule, but can it regulate DeFi?
In addition to potential foreign influence, observers are concerned that Trump’s crypto ventures could threaten market stability and integrity and open up global markets to manipulation.
Referencing USD1, Heath Mayo, founder of the Trump-alternative conservative movement Principles First, said that a sitting president issuing an instrument backed by public debt should be illegal, adding that the project had “terrible incentives and corrupt use of US taxpayer credit.”
Rossow said that the president’s role in a stablecoin project while at the same time working to craft stablecoin legislation in the form of the GENIUS Act is “a constitutional violation that could destabilize regulatory integrity.”
Trump’s influence over the industry and ability to drop enforcement actions against crypto executives who support him create “an uneven playing field, disadvantaging competitors and violating principles of equal protection under the law.”
Options for Trump’s crypto conflicts of interest
Trump, who has long stated an affinity with former President Andrew Jackson, seems to be holding to the latter’s strategy of acknowledging judicial rulings — and then doing what he wants regardless.
The presidential administration has already shown that it is willing to defy orders from federal judges when, earlier this month, it ignored a verbal order from a federal judge to turn around two planes full of alleged gang members bound for the Terrorism Confinement Center in El Salvador.
Regarding crypto, Senator Elizabeth Warren has already called for an ethics probe into Trump’s crypto activities. She said that the president’s memecoin “massively enriched Trump personally, enabled a mechanism for the crypto industry to funnel cash to him, and created a volatile financial asset that allows anyone in the world to financially speculate on Trump’s political fortunes.”
Warren, a longtime crypto critic, has taken aim at WLFI. Source: Senate Banking Committee
The probe, if it had a chance to begin with, doesn’t appear to have gone anywhere, and Congressional Republicans are busy working on the GENIUS Act, which even has the support of a handful of Democrats.
What, if anything, can be done?
Rossow said that, despite changes in SEC leadership, other agencies like the Financial Crime Enforcement Network could still pursue investigations.
He also noted that state-level action from local regulators and attorneys general is “not just possible but imperative, especially in states with robust consumer protection laws.”
He added that international regulatory bodies could exert pressure, stating that the “global nature” of crypto means that foreign governments could work for better oversight and more robust regulations.
Related: Who’s running in Trump’s race to make US a ‘Bitcoin superpower?’
In any case, he said that the current situation demands multifaceted action, as there is currently a need to “safeguard the principles of fair governance and maintain the US’s credibility in the global financial system.”
Some in the crypto industry see no problem at all and believe the president’s involvement is just another sign of how the industry is reaching mainstream appeal.
Chris Barrett, senior director of communications at Chainlink, congratulated the project, stating that “the global financial world runs on the U.S. dollar, and stablecoins are about to make that even harder to change.”
Arnoud Star Busmann, CEO of European stablecoin issuer Quantoz Payments, told Cointelegraph that USD1 is reflective of “increasing validation from world-leading brands that stablecoins are carving the path for the mainstream financial industry to access crypto assets and tokenized real-world assets.”
The Blockchain Association — an industry lobby group — declined Cointelegraph’s request for comment.
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The government has published witness statements submitted by a senior official connected to the collapse of a trial involving two men accused of spying for China.
Here are three big questions that flow from them:
1. Why weren’t these statements enough for the Crown Prosecution Service (CPS) to carry on with the trial?
For this prosecution to go ahead, the CPS needed evidence that China was a “threat to national security”.
The deputy national security adviser Matthew Collins doesn’t explicitly use this form of words in his evidence. But he comes pretty close.
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In the February 2025 witness statement, he calls China “the biggest state-based threat to the UK’s economic security”.
Six months later, he says China’s espionage operations “harm the interests and security of the UK”.
Yes, he does quote the language of the Tory government at the time of the alleged offences, naming China as an “epoch-defining and systemic challenge”.
But he also provides examples of malicious cyber activity and the targeting of individuals in government during the two-year period that the alleged Chinese spies are said to have been operating.
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Witness statements published in China spy trial
In short, you can see why some MPs and ex-security chiefs are wondering why this wasn’t enough.
Former MI6 head Sir Richard Dearlove told Sky News this morning that “it seems to be there was enough” and added that the CPS could have called other witnesses – such as sitting intelligence directors – to back up the claim that China was a threat.
Expect the current director of public prosecutions (DPP) Stephen Parkinson to be called before MPs to answer all these questions.
2. Why didn’t the government give the CPS the extra evidence it needed?
The DPP, Stephen Parkinson, spoke to senior MPs yesterday and apparently told them he had 95% of the evidence he needed to bring the case.
The government has said it’s for the DPP to explain what that extra 5% was.
He’s already said the missing link was that he needed evidence to show China was a “threat to national security”, and the government did not give him that.
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What does China spy row involve?
The newly published witness statements show they came close.
But if what was needed was that explicit form of words, why was the government reticent to jump through that hoop?
The defence from ministers is that the previous Conservative administration defined China as a “challenge”, rather than a “threat” (despite the numerous examples from the time of China being a threat).
The attack from the Tories is that Labour is seeking closer economic ties with China and so didn’t want to brand them an explicit threat.
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Is China an enemy to the UK?
3. Why do these statements contain current Labour policy?
Sir Keir Starmer says the key reason for the collapse of this trial is the position held by the previous Tory government on China.
But the witness statements from Matthew Collins do contain explicit references to current Labour policy. The most eye-catching is the final paragraph of the third witness statement provided by the Deputy National Security Adviser, where he quotes directly from Labour’s 2024 manifesto.
He writes: “It is important for me to emphasise… the government’s position is that we will co-operate where we can; compete where we need to; and challenge where we must, including on issues of national security.”
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In full: Starmer and Badenoch clash over China spy trial
Did these warmer words towards China influence the DPP’s decision to drop the case?
Why did Matthew Collins feel it so important to include this statement?
Was he simply covering his back by inserting the current government’s approach, or was he instructed to put this section in?
A complicated relationship
Everyone agrees that the UK-China relationship is a complicated one.
There is ample evidence to suggest that China poses a threat to the UK’s national security. But that doesn’t mean the government here shouldn’t try and work with the country economically and on issues like climate change.
It appears the multi-faceted nature of these links struggled to fit the legal specificity required to bring a successful prosecution.
But there are still plenty of questions about why the government and the CPS weren’t able or willing to do more to square these circles.
The Trump family’s crypto ventures have generated over $1 billion in profit, led by World Liberty Financial and memecoins including TRUMP and MELANIA.
SEC Chair Paul Atkins said the US is a decade behind on crypto and that building a regulatory framework to attract innovation is “job one” for the agency.
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