The US Senate’s Permanent Subcommittee on Investigations (PSI), led by Democrat Richard Blumenthal, has launched a formal inquiry into President Donald Trump’s crypto ventures.
The probe, detailed in two letters from Blumenthal, centers on potential conflicts of interest and violations of federal ethics laws. It involves the Official Trump (TRUMP) token and the World Liberty Financial (WLFI) project.
TRUMP Meme Coin and World Liberty Financial Face Senate Scrutiny
The letters sent on May 6 were addressed to Bill Zanker of Fight Fight Fight LLC, the entity behind the TRUMP meme coin, and Zach Witkoff, co-founder of Trump-backed WLFI.
“The Permanent Subcommittee on Investigations (“PSI” or “the Subcommittee”) is conducting a preliminary inquiry into potential conflicts of interest and violations of the lawfrom President Trump’s cryptocurrency ventures,” both letters read.
The inquiry comes in response to growing concerns that both firms could be facilitating violations of government ethics rules. Reports suggest that WLFI and Fight Fight Fight LLC have engaged in questionable practices. This includes enabling foreign governments and individuals under federal investigation to invest in their operations.
These activities could also violate the foreign emoluments clause of the US Constitution. The clause prohibits US officials from accepting payments or gifts from foreign governments without congressional approval.
Starting with the Fight Fight Fight LLC’s TRUMP cryptocurrency, the letter stressed that the meme coin saw its value skyrocket after President Trump’s endorsement. However, it soon plummeted.
“This activity mirrors a common pattern in the cryptocurrency market known as a ‘pump and dump,’ ‘rug pull,’ or ‘rug, ‘ whereby a select group of insiders makes a large profit off of a new crypto before the price collapses,” Blumenthal noted.
The letter detailed that the firm promoted a “Dinner with Trump” initiative to revive interest. This again spurred a sharp increase in the coin’s price.
However, the promotion has further fueled concerns about insider trading and potential exploitation of the President’s influence to benefit his family and business associates.
“President Trump’s financial entanglements to the TRUMP coin, as well as the attempted use of the White House to host competitions to prop up the value of TRUMP, represents an unprecedent, pay-to-play scheme to provide access to the Presidency to the highest bidder,” the letter added.
Meanwhile, WLFI is also in the spotlight. The firm’s website lists President Trump as its “Chief Crypto Advocate.” His sons, Eric, Donald Jr., and Barron, are the DeFi project’s “Web3 Ambassadors.”
“President Trump’s financial ties to WLFI allow and invite anyone in the world, including foreign governments and unscrupulous individuals, to directly enrich the President and his family, while hiding potential payoffs in the pseudonymity of the blockchain. This threat is not hypothetical,” Blumenthal claimed.
Despite WLFI’s promise to drive the mass adoption of stablecoins and decentralized finance, it has been pointed out for getting large investments from foreign nationals.
According to the letter, the project has received $75 million from TRON founder Justin Sun. Sun is facing allegations of market manipulation in an ongoing civil fraud case with the SEC. WLFI’s stablecoin USD1’s involvement in the $2 billion Binance and Abu Dhabi-based MGX collaboration has also sparked concerns. In January 2023, Binance admitted to intentionally violating anti-money laundering, sanctions, banking, and financial crimes laws.
Additionally, DWF Labs has invested $25 million. However, the letter revealed that the firm is linked to market manipulation. Moreover, it has ties to Russian banks, bypassing sanctions.
“WLFI’s financial entanglements with President, his family, and the Trump Administration present unprecedented conflicts of interest and national security risks, including potential violations of the foreign emoluments clause,” the letter stated.
The Subcommittee is now investigating both companies’ financial operations and foreign dealings. The PSI has requested detailed records from both Fight Fight Fight LLC and WLFI regarding their ownership structures, financial relationships with Trump-affiliated entities, and communications with foreign governments.
Additionally, the Subcommittee is probing whether either firm has implemented sufficient policies to prevent insider trading, foreign influence, and violations of US sanctions and anti-money laundering laws.
Senator Murphy Slams TRUMP Crypto as ‘Corrupt’ and ‘Unethical’
Meanwhile, the latest move adds to the growing measures to address Trump’s crypto involvement. Senator Chris Murphy and Congressman Sam Liccardo of California recently introduced the Modern Emoluments and Malfeasance Enforcement (MEME) Act.
This bill prohibits the President, Vice President, Members of Congress, senior Executive Branch officials, and their immediate families from issuing, sponsoring, or endorsing digital assets, including meme coins.
In the latest post, Murphy directly targeted the TRUMP meme coin. He described it as “the most unethical, the most corrupt thing a President of the US has done.
“It’s essentially a way for any corporate CEO, any Saudi prince, any foreign oligarch who has business before the Trump administration to send Trump money privately, secretly, and then whisper to the Trump administration about how much money they have sent in the favour that they need,” the Senator said.
Blumenthal’s investigation and the MEME Act signal a broader push by Democratic lawmakers to address ethical concerns surrounding cryptocurrency in politics. The White House has not yet responded to inquiries regarding the investigation or the proposed legislation.
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