Trump-Backed Crypto Token Offering: $300 Million Goal, US Investors Lagging
Trump-Backed Crypto Token Offering: International Focus, US Participation Limited
World Liberty Financial, a decentralized finance (DeFi) initiative with ties to former President Donald Trump, has revealed that its ambitious $300 million crypto token offering is primarily targeting international investors. To date, less than 350 US investors have participated in the project, raising questions about its domestic appeal amidst a landscape of regulatory scrutiny by the US Securities and Exchange Commission (SEC).
Offshore Focus
Operating out of Wilmington, Delaware, but managed from Puerto Rico, World Liberty recently filed a notice with US regulators announcing its intent to sell only $30 million worth of tokens within the United States. Once this threshold is reached, the company plans to halt the US offering, despite having approximately $288.5 million worth of WLF tokens still available for sale.
Regulation S and Limited US Interest
Zachary Folkman, co-founder of World Liberty, indicated in a September interview that the company plans to leverage Regulation S, a provision allowing the sale of tokens to non-US investors without the usual requirements imposed by US securities laws. The limited interest from US investors could be attributed to the SEC’s stringent approach to regulating cryptocurrencies, which has led many token issuers to focus their efforts offshore.
While Trump’s involvement, along with his sons Donald Jr. and Eric, is mentioned in the company’s filings, the document clarifies that their names are included for “informational purposes” and do not imply an official endorsement of the offering.
Capital Raising in a Complex Crypto Landscape
Folkman discussed the potential for non-US sales through Regulation S but did not disclose the specific distribution of tokens between domestic and international buyers. US investors have been approached through a different regulatory pathway, Regulation D, which allows companies to raise unlimited capital from accredited investors (individuals with a net worth exceeding $1 million, excluding their primary residence).
Regulation D imposes stricter investor protections and disclosure requirements compared to Regulation S. Companies utilizing Regulation D must publicly disclose details about the offering, including the total amount raised and the number of participating investors. Folkman acknowledged the need to verify US buyers’ accredited investor status, adding complexity to the offering.
Diverging Sales Patterns
As of October 15, World Liberty reported raising $2.7 million under Regulation D by selling tokens to 348 investors. However, analytics from Kaiko show that around 17,000 unique addresses have held the WLF asset at least once, suggesting broader interest that may not be reflected in US sales alone.
The divergence between US and offshore sales could be partly attributed to the anonymity offered by Regulation S, which does not require private companies to disclose capital-raising details or verify buyer financial status. However, the regulation mandates that offerings be strictly limited to non-US persons, ensuring compliance with international investment rules.
Folkman emphasized the company’s commitment to adhering to regulatory standards, stating, “We would expect that any potential non-US token sale would be limited to non-US persons and comply with applicable restrictions under what is known as Regulation S.”