Senator Elizabeth Warren, the top Democrat on the Senate Banking Committee, has formally asked the U.S. Securities and Exchange Commission to investigate World Liberty Financial (WLF), the cryptocurrency venture run by President Donald Trump and his sons. In a letter dated May 14 to SEC Chairman Paul Atkins, Warren urged the agency to examine whether WLF misled token investors or violated securities laws, especially in light of a controversial $75 million loan deal.
The $75 million loan and token lock-up
Warren’s concerns center on a deal executed in early April through the lending platform Dolomite, which is managed by WLF advisor and tech chief Corey Caplan. WLF borrowed $75 million, pledging 5 billion WLFI tokens—valued at $440 million at the time—as collateral. The loan was denominated mostly in WLF’s own stablecoin, USD1 ($65.4 million), with $10.3 million in USDC. Critically, the WLFI tokens held by ordinary investors cannot be sold, creating a situation where the company and its insiders had a liquidity advantage while retail participants remained locked. After the deal became public, WLFI token prices dropped by 10% to their lowest point, and Dolomite users even faced difficulties withdrawing funds.
Days later, WLF announced a new vesting schedule that prevented any token sales for at least two years. Warren argued that early investors were trapped: they can’t access 80% of their holdings and are forced to accept unfavorable terms or remain locked indefinitely under previous conditions, effectively eliminating any clear path to liquidity. She stressed that the SEC must enforce the law even when powerful political figures are involved, adding that protecting investors is as important as “shutting down the President and his family from profiting off of cryptocurrency while in office.”
CLARITY Act markup and political context
The letter landed as the Senate Banking Committee finalized markup of the Clarity Act, a major bill aimed at creating comprehensive digital asset regulations. Warren sought to include specific provisions barring senior officials and their families from profiting from crypto ventures while in office, but those measures were not adopted. The bill now faces hurdles in the full Senate, with Democratic support conditional on stronger conflict‑of‑interest and market oversight rules. Meanwhile, the legislation’s future remains uncertain, and the controversy surrounding WLF has added fuel to the debate.
Justin Sun’s fraud lawsuit
WLF is already facing legal pressure from another angle. In April, billionaire cryptocurrency investor Justin Sun filed a lawsuit in California federal court, accusing the company of fraud and unlawfully blocking him from selling WLFI tokens worth nearly $1 billion. Sun alleges that WLF tried to force him to invest hundreds of millions more into its digital dollar project, and when he refused, they froze his tokens. He also claims the firm changed sale rules without a governance vote, granting itself the power to block specific individuals from trading. Sun’s early $45 million investment helped attract other buyers, pushing total fundraising to about $550 million, but when tokens became tradable on September 1, his position was frozen, and WLFI has since lost roughly 25% of its value. WLF CEO Zach Witkoff dismissed the allegations as “entirely meritless,” while Eric Trump, co-founder, also downplayed the suit.
