Calls for investigation into Trump’s WLFI for taking sanctioned crypto investments

Democratic Senators Elizabeth Warren and Jack Reed asked the Justice Department and the Treasury Department to investigate World Liberty Financial after a watchdog alleged that WLFI token sales touched wallets tied to North Korea’s Lazarus Group, a Russia-linked ruble token, an Iranian exchange, and prior Tornado Cash users.

The senators’ referral arrived after Accountable US published wallet-level claims in September, naming specific interactions and timelines for dozens of buyers across those categories.

WLFI’s own pages state that Trump-affiliated DT Marks DeFi LLC and certain family members hold 22.5 billion WLFI and receive 75% of net token-sale proceeds through a services agreement. According to World Liberty Financial, that structure is part of the project’s economic model and disclosures.

The concentration of both token holdings and sale economics now sits at the center of the senators’ request because any sanctions exposure could route directly into entities tied to former President Donald Trump’s business network.

Emerging sanctions risks sharpen scrutiny of WLFI’s buyer activity and controls

The watchdog’s September report asserted that one buyer interacted with a Lazarus-associated wallet, another was active on Iran’s Nobitex exchange, some activity involved an A7A5 ruble-backed token, and 62 buyers also used Tornado Cash at some point. According to Accountable US, those associations map across presale and early sale periods.

WLFI has publicly stated that it vets buyers through KYC and AML screening, a claim that, if accurate, will focus Treasury’s review on control effectiveness rather than on policy presence, since OFAC applies a strict-liability standard to civil sanctions.

According to OFAC’s compliance framework, companies dealing in virtual currency are expected to implement screening, geofencing, escalation, and audit trails that can withstand post-transaction scrutiny.

The policy backdrop complicates one part of the narrative. The United States lifted sanctions on Tornado Cash on March 21, 2025, following prior court battles.

Activity involving Tornado Cash during the period when it was sanctioned remains within OFAC’s purview, and dealings tied to still-blocked counterparties, including DPRK actors, are unaffected by the Tornado change. That means the timing and counterparties of the alleged WLFI buyer interactions matter more than a generic label about “Tornado users.”

The national-security context is acute. The FBI has attributed the $1.5 billion Bybit hack earlier this year to North Korea, keeping DPRK crypto theft at the front of sanctions and AML policy. The Bybit event is one of the largest on record and part of a trend that has driven elevated enforcement.

The senators’ letter is framed within that pattern, in which even unintentional interactions with sanctioned parties can trigger civil exposure and in which remedial controls are evaluated for efficacy, not intent.

The market and fundraising profile set the scale. Reuters reported in June that a UAE-based fund committed $100 million to WLFI tokens, and a separate 2025 report estimated that more than $550 million had been raised earlier in the year.

If Treasury or DOJ identifies sanctionable flows within those sales, blocking orders and penalties could reach not only project wallets but also distributions owed under the services agreement. The economic split disclosed by WLFI, with 75% of net sale proceeds to DT Marks DeFi LLC, makes that pathway direct.

Enforcement paths now under discussion break into four tracks.

First, OFAC civil action is the most common tool, triggered by sales to or for the benefit of blocked persons, with potential civil penalties, blocking of tainted wallets, and remedial undertakings such as enhanced screening and monitored upgrades, according to OFAC guidance.

Second, DOJ criminal exposure is less common in token-sale contexts and typically turns on willful evasion or false statements; recent mixer and laundering cases illustrate that posture, according to Reuters.

Third, FinCEN can exert “311-style” pressure through special measures targeting convertible virtual currency mixing, which, if applied to flows involving WLFI counterparties, would raise reporting and diligence expectations for banks and exchanges that handle those transactions.

Fourth, the SEC could revisit the structure if WLFI token distributions meet investment-contract criteria, which could drive disclosure or rescission demands for U.S. distributions even as market-structure bills evolve.

Policy shifts and operations widen WLFI’s exposure

Policy debate in 2025 adds another layer. The GENIUS Act established a federal framework for stablecoins, and the House advanced market-structure legislation through the Digital Asset Market Clarity Act.

According to Steptoe’s analysis, these developments do not exempt governance tokens from sanctions or Bank Secrecy Act duties, and they will not insulate prior distributions from legacy securities analysis. The direction of travel on decentralization does not alter the enforcement of strict liability sanctions.

A separate operational thread will draw the investigators’ attention. WLFI has acknowledged freezing and reallocating specific wallets following phishing incidents, with a plan to KYC rightful owners and use contract logic to move balances.

Public posts and September coverage described hundreds of wallets blacklisted during post-launch turmoil, and subsequent communications laid out bulk remediation. Those actions indicate the presence of admin keys and centralized controls that can freeze and reassign assets.

That capability can help victims and also tell regulators that WLFI has the discretion and infrastructure to implement sanctions and AML controls that meet VASP-level expectations. The question for Treasury and DOJ is whether those controls were in place, tuned, and enforced during the periods when the alleged high-risk buyers purchased tokens.

In September, we reported that WLFI block-listed Justin Sun’s wallet, which held approximately 595 million WLFI tokens (roughly US$104 million), amid allegations that an exchange linked to Sun used user tokens to suppress WLFI’s price through sales.

In addition to this high-profile freeze, WLFI, within its first week of public trading, block-listed some 272 other wallet addresses, an action that raised fresh concerns about the project’s governance and decentralization.

For those sizing potential exposure, a simple scenario set, anchored in public figures and industry priors on the prevalence of tainted flow, helps frame the ranges.

If WLFI raised $650 million to $800 million life-to-date, and if tainted buyers represent 0.5% to 5% of sale volume, the tainted slice would be $3.25 million to $40 million.

Given WLFI’s disclosure that 75% of sale proceeds flow to DT Marks DeFi LLC, the cash flow at risk to freeze, penalty, or remediation could be $2.4 million to $30 million under OFAC outcomes.

These are scenarios, not assertions, and they hinge on Treasury validating the specific wallet links described by Accountable US and any additional flows surfaced by government analysis.

Adversarial clusters elevate governance risk

Governance integrity will also be a focal point if Treasury believes adversarial holders are clustered in size. Governance tokens can influence protocol parameters, treasury disbursements, and roadmap choices.

If flagged wallets equate to a material share of voting power under WLFI’s quorum math, even a minority bloc could sway close votes when combined with one or two whales. That becomes relevant for U.S. venues reviewing listing and governance-enablement, and for banks that must assess customer exposure to blocked property or influence.

WLFI is likely to argue that it screened, rejected non-compliant buyers, and tightened controls as new information emerged. A stress test of that claim sits in the logs: dated lists of blocked addresses, vendor attestations, timestamps that precede the relevant sales, and consistency across high-profile and retail wallets.

Treasury will also separate the timing of Tornado Cash usage from any live sanctions exposure to Lazarus-linked wallets and blocked jurisdictions. Remediation typically involves a combination of blocked-property management, disgorgement, and prospective undertakings, which may include independent monitors.

Cross-market spillovers are now a practical concern. If OFAC validates clusters tied to WLFI flows, U.S. venues would move to disable governance functions or pause integrations pending clarity, and offshore venues would enhance screening, reflecting steps taken after prior DPRK-attributed hacks.

Stablecoin rails governed by the GENIUS Act could ring-fence WLFI-adjacent flows if issuers and partner banks see exposure to blocked property through bridges or smart contract interactions.

Warren and Reed framed their request around national security risks and potential conflicts associated with a project linked to a former president. According to Reuters, the UAE fund commitment and earlier raises underscore the scale of funds that could be implicated if enforcement touches treasury assets or future unlocks.

OFAC documentation states that civil sanctions do not require proof of intent, and that the agency can impose penalties and blocking orders on a strict-liability basis.

Could Democrats push for impeachment or prosecution?

While the senators’ referral alone doesn’t create impeachment exposure, Democrats could frame any confirmed sanctions-related flows into Trump-affiliated WLFI entities as a potential conflict of interest, particularly if official presidential actions intersect with the Treasury or the DOJ’s handling of the matter.

Impeachment does not require a statutory crime; it turns on abuse of power, corruption, or violations of public trust.

If investigators found evidence that the president sought to influence enforcement, shield WLFI from scrutiny, or otherwise used his office to protect financial interests tied to the project, that could give House Democrats a plausible narrative for articles of impeachment.

Absent such conduct, however, civil OFAC exposure from tainted WLFI buyers would not, on its own, constitute an impeachable offense.

Strict-liability sanctions issues within a private business become politically relevant only if they are shown to overlap with presidential decision-making or foreign-benefit concerns.

The impeachment risk, therefore, hinges less on the allegations about WLFI’s buyer pool and more on what Trump, as president, did, or is perceived to have done, in response.

However, should the investigation uncover criminal activity, the Supreme Court’s 2024 immunity ruling does not provide Trump with blanket protection from criminal exposure.

Immunity attaches only to official acts; private, political, and business conduct remains chargeable. In the WLFI context, potential crimes would turn on proof of willfulness or quid-pro-quo intent, for example, willful sanctions evasion under IEEPA, money-laundering, securities fraud, or bribery tied to an “official act.”

By contrast, unknowing sanctions issues typically lead to civil OFAC penalties, not criminal counts. The ruling could still complicate prosecutions by limiting the use of “official-act” evidence (e.g., contacts with Treasury/DOJ). Still, it doesn’t insulate private financial ventures from liability if prosecutors can show the requisite intent.

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