Duke Expert: Trump-Linked WLFI Likely an Unregistered Security

Lee Reiners, a lecturing fellow at Duke University, wrote that World Liberty Financial’s WLFI token, linked to the Trump family, may meet the U.S. Securities and Exchange Commission’s criteria for an unregistered security under the agency’s recent token taxonomy.

Reiners said WLFI was launched in October 2024 and promoted in a project “Gold Paper” as a governance-only voting token. World Liberty stated the token carried no equity, dividend or profit rights, yet the project sold about 25 billion WLFI tokens in public presale rounds from a total supply of 100 billion before the protocol was built, according to Reiners.

Reiners framed his analysis around the Howey Test, which the SEC uses to identify investment contracts. He argued that marketing materials, the timing of presales and the use of the Trump family name could create a reasonable expectation of profit for buyers. He wrote, “WLFI is not a decentralized commodity. It is a Trump‑branded governance token sold to finance a centrally controlled crypto business. If the SEC’s interpretation means anything, it should apply here.”

The blog raised questions about decentralization and potential self-dealing. Reiners pointed to an arrangement with the Dolomite lending protocol in which 5 billion WLFI were used as collateral to borrow about $75 million in stablecoins. He noted Dolomite’s co-founder, Corey Caplan, is listed as a World Liberty adviser and that some borrowed funds were USD1, the stablecoin issued by World Liberty.

Reiners highlighted a lawsuit filed by blockchain entrepreneur Justin Sun, who alleges World Liberty froze his tokens and blocked his governance rights despite being an early supporter. In his post, Reiners wrote that Sun’s allegations, if true, indicate World Liberty retained sweeping unilateral control over WLFI and raise the question of whether the token was an unregistered security.

Late last month, World Liberty opened a governance process intended to clarify token supply that would release billions of presale tokens over roughly four years. Several presale investors objected, saying they had limited influence in the governance process and opposing the terms and mechanics of the proposed release.

The project’s ownership and commercial ties are part of the record. A Trump-affiliated entity, DT Marks DEFI LLC, is believed to own about 38% of World Liberty following an early 2026 transaction in which a UAE-linked entity tied to Sheikh Tahnoon bin Zayed Al Nahyan bought 49% of the protocol for about $500 million. World Liberty’s public materials state DT Marks DEFI LLC is entitled to 75% of net proceeds from WLFI token sales. Separately, Abu Dhabi-based investment firm MGX used the USD1 stablecoin to fund a $2 billion investment in the crypto exchange Binance.

Reiners wrote that the SEC has legal authority to investigate World Liberty but questioned whether the agency could act independently in a matter involving the president’s family. The SEC is led by Chair Paul Atkins, who was nominated by President Donald Trump, a detail Reiners included in his analysis.

Reiners has previously testified against the SEC’s new interpretive guidance for blockchain-based tokens. In his blog, he applied the SEC’s token taxonomy to WLFI’s presale structure, governance arrangements and transactions and argued those features warrant regulatory scrutiny.