Trump Based Crypto Treasury Faces WLFI Token Strategy Backlash

ALT5 Sigma Corporation, a Nasdaq-listed fintech firm that shifted its focus to a digital asset treasury based on WLFI tokens, continues to grapple with mounting challenges. A recent report highlights internal disruptions, including executive departures and warnings of potential litigation, that have coincided with a sharp decline in the company's stock value. Shares of ALT5 Sigma, trading under the ticker ALTS, have fallen approximately 80% since the August pivot to this strategy, reflecting broader investor unease in the volatile crypto sector.

The company's decision to accumulate WLFI tokens, the governance asset for the DeFi platform World Liberty Financial backed by President Donald Trump and his sons, initially aimed to ride a wave of enthusiasm for digital asset treasuries (DATs). However, that momentum has waned, leaving ALT5 Sigma exposed to regulatory questions and operational instability. As the firm holds an estimated $1.3 billion in WLFI tokens, recent leadership changes have only intensified scrutiny from shareholders and watchdogs alike. These developments underscore the risks of tying corporate fortunes to politically charged crypto ventures.

Internal Upheaval and Regulatory Shadows

In the aftermath of the WLFI announcement, ALT5 Sigma informed employees of impending legal and investigative risks, according to internal communications detailed in The Information's report. Several senior executives departed or faced termination, contributing to a sense of disarray within the organization. The company suspended its CEO in September without immediate public disclosure, only revealing the action in an October SEC filing, which has drawn questions about compliance with timely reporting requirements.

This opacity extends to other irregularities. A Rwandan court earlier this year held ALT5 Sigma criminally liable for money laundering, a ruling the board reportedly learned of after committing to the WLFI deal. While the firm maintains it has no knowledge of active U.S. investigations, the Securities and Exchange Commission and the Financial Industry Regulatory Authority previously reached out to digital asset treasuries, including ALT5 Sigma, over unusual trading patterns observed before the August 11 strategy reveal. Analysts point to evidence of atypical volume spikes in ALTS shares during that period, though no formal accusations have surfaced.

Leadership instability reached a new peak this week with the ouster of the chief financial officer and chief operating officer, marking the third CEO change in six weeks. Board member Tony Isaac now serves as acting CEO, while a special committee probing unspecified internal issues has been disbanded. Eric Trump, who joined as a director following the treasury launch, remains involved as an advisor. These shifts come as the WLFI token itself trades around $0.16, down 50% from its September peak despite recent buyback efforts by World Liberty Financial totaling nearly $10 million.

The broader digital asset treasury trend, once hailed as an innovative bridge between traditional finance and crypto, now faces criticism for potentially enabling large token holders to offload positions indirectly. ALT5 Sigma's August plan to raise $1.5 billion through a mix of WLFI token placements and cash from unnamed institutional investors and venture firms has yet to materialize fully. Instead, the firm acquired billions in WLFI tokens in a circular transaction that routed over $500 million to Trump-affiliated entities. This structure has fueled concerns about conflicts of interest, especially given World Liberty Financial's ties to the Trump family, which controls 60% of the project and receives 75% of token sale revenues.

Ties to Trump and Questionable Associations

World Liberty Financial emerged in September 2024 as a DeFi initiative explicitly linked to the Trump family, with Donald Trump Jr., Eric Trump, and Barron Trump listed as co-founders alongside real estate scion Zach Witkoff. The project launched its WLFI token through a public sale requiring KYC verification, raising over $550 million by early 2025. A Trump-affiliated entity received 22.5 billion tokens at inception, now valued at billions despite market fluctuations. The platform promotes USD1, a dollar-pegged stablecoin backed by U.S. treasuries, aiming to bolster American dominance in global crypto settlements.

Zach Witkoff, son of Trump's Middle East envoy Steve Witkoff, assumed the role of ALT5 Sigma's chair as part of the treasury deal. He positioned the partnership as a way to enhance ALT5's original payment and trading platforms by enabling cryptocurrency issuance for e-commerce and gaming. Yet, Witkoff's operational partners raise additional red flags. Co-founders Zachary Folkman, known online as Zoney, and Chase Herro bring histories tied to controversial schemes. Folkman previously operated "Date Hotter Girls," a site promoting pickup artistry tactics, while Herro, who has described himself as the "dirtbag of the internet," faced marijuana possession charges and served time in a Wisconsin prison.

These associations trace back to Dough Finance, a lending app the pair developed that suffered a $2 million hack in July 2024, eroding user trust. Herro and Folkman, introduced to the Trumps via the Witkoff family at a Miami golf club, now oversee daily operations at World Liberty Financial alongside Zach Witkoff. Critics have probed these connections, citing potential ethics violations in deals like a $2 billion UAE-backed investment involving Binance. Recent X discussions amplify these worries, with users highlighting wallet links to North Korea and Russia that have prompted delisting threats on exchanges.

Founded in 2018 by Canadian entrepreneurs, ALT5 Sigma originally built a blockchain platform processing about $1 billion in crypto transactions annually by 2023. Customers used it to trade digital assets and spend coins on online purchases or in games. The pivot to WLFI accumulation was meant to supercharge this foundation, but it has instead exposed vulnerabilities. Los Angeles investor Matt Chipman voiced his disappointment in The Information, calling the episode a "nightmare scenario" and questioning whether it served as a cash extraction for the Trump family.

As ALT5 Sigma deals with this leadership crisis, the crypto market is watching. WLFI's governance proposals, including token burns funded by trading fees, seek to stabilize value, but political scrutiny persists. With revenue down 57.9% and an Altman Z-Score signaling bankruptcy risk, the firm's path forward hinges on transparency and steady execution. For an industry built on innovation, these events serve as a warning about blending high-stakes finance with personal and political ambitions.