With World Liberty Financial, Donald Trump and his sons promise a new decentralized lending platform—but the closer look reveals recycled ideas and glaring red flags.
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NewsTranscript
00:00Today on Forbes, DeFi Trump-style, a family circus.
00:06Donald Trump is making another high-profile move into the world of cryptocurrencies.
00:11And this time, he's bringing the family along for the ride.
00:15On Monday, on a livestream on X, before 155,000 listeners, Trump rolled out World Liberty
00:21Financial, a crypto venture, quote-unquote, led by his sons, Donald Jr. and Eric.
00:29Coming from Mar-a-Lago, his country club in Palm Beach, Florida, Trump said, quote,
00:33"'We have to be at the top, no matter what we do.
00:36Crypto is one of those things we have to do, whether we like it or not.'"
00:41Apparently unaware that cryptocurrencies have been illegal in China since 2021, he added,
00:46quote, "'If we don't do it, China is going to do it.
00:49China is doing it anyway.'"
00:52The former president said it was his kids who, quote, "'opened his eyes' more than
00:56anything else."
00:58Trump said, quote, "'Barron knows so much about this.
01:01He's a young guy, but he knows.
01:03He's got four wallets or something.
01:04And I say, what is a wallet?'
01:08Railing against what they see as the inherent unfairness of the banking sector, Trump's
01:12sons and the World Liberty Financial team recycled old narratives about their new Decentralized
01:17Finance, or DeFi, project.
01:21DeFi is a term used to define bank and exchange-like products that exist entirely on blockchains
01:27and claim to be autonomous and beyond the control of any single actor or party.
01:32The promise is that DeFi could eventually become a cheaper, more private, secure and
01:36accessible replacement for traditional financial institutions, including banks and exchanges.
01:43Although few details were released during the two-and-a-half-hour stream, the project
01:47is reported to be built on DeFi lending platform Aave and will also involve stablecoins, tokens
01:53typically designed to track traditional currencies like the dollar.
01:58On lending protocols like Aave, users can borrow digital assets, such as Ether, from
02:03other depositors looking to earn yield on their holdings, typically paid in the form
02:08of more digital tokens, in the same way that someone could take out a personal loan at
02:12a bank.
02:13But these aren't banks with FDIC backing.
02:16They are risky havens for speculators because they offer yields as high as 7%.
02:22In late 2021-early 2022, rampant speculation and leverage fueled a self-perpetuating bubble
02:28on DeFi platforms and total value locked got as high as $180 billion.
02:35Today, more than $30 billion is deposited in these protocols for lending, but most of
02:40the borrowing is used by traders to gain extra leverage in digital asset markets, rather
02:45than finance tangible assets like real estate or businesses.
02:50Good Liberty Financial is betting that if it can make these DeFi platforms more user-friendly,
02:55ordinary borrowers will be more likely to use them.
02:58A leaked white paper, first seen by Coindesk, reveals Trump has appointed himself chief
03:04crypto advocate, while his sons will assume flashy titles of Web3 ambassadors.
03:09Meanwhile, 18-year-old Barron Trump, a freshman at NYU, has been labeled the quote, DeFi visionary.
03:17Other key executives include Chase Hero and Zachary Folkman, both known for their involvement
03:22in Doe Finance, a failed DeFi protocol hacked for $1.8 million in July.
03:29Folkman is listed as head of operations at World Liberty Financial.
03:33A self-proclaimed quote, dirtbag of the internet, his resume is equally colorful, having co-founded
03:39Subify, a censorship-free alternative to Patreon and OnlyFans, and registering a company called
03:45Date Hotter Girls, LLC.
03:48He also posted YouTube seminars on how to pick up women.
03:53Steve Whitkoff, longtime Trump ally and real estate investor, who was on the golf course
03:57with the former president on Sunday when a would-be assassin was thwarted, also stepped
04:02in as the quote, institutional investment lead, and his son, Zach Whitkoff, as the quote,
04:08intelligence chief.
04:10The disclaimer notes that World Liberty isn't actually quote, owned, managed, or operated
04:15by the Trump family, though they'll still be cashing in.
04:19World Liberty Financial will sell a quote, governance token, crypto parlance, for a digital
04:24asset that confers voting rights akin to a share of stock.
04:28Approximately 63% will be sold to the public, 17% will be set aside for user rewards, while
04:3520% will be allocated for quote, team compensation, including advisors and future hires, and
04:41of course, the Trump family.
04:44For full coverage, check out Nina Bambasheva and Stephen Ehrlich's piece on Forbes.com.
04:51This is Kieran Meadows from Forbes, thanks for tuning in.
05:05Transcribed by https://otter.ai