Source: The Independent
By Io Dodds
Compiled by: BitpushNews Yanan
"You can really sell anything for a billion dollars if you tell a good story because people will pay for it," Chase Herro, an online marketer and self-described "grassroots guy," said while sitting in the driver's seat of his Rolls-Royce in a YouTube video released in 2018, according to Bloomberg.
Six years later, Herro is one of the central figures in a new cryptocurrency venture backed by none other than Donald Trump and his three sons. The eldest sons, Donald Jr. and Eric, are actively promoting the venture, while the 18-year-old Barron is rumored to be the "visionary advisor" to the project.
In a live broadcast on the social platform X on Monday night, Don Jr. hailed the project called "World Liberty Financial" (WLF) as "the beginning of a financial revolution." Eric added that the project aims to challenge the status of traditional big banks and make cryptocurrencies as open to ordinary Americans as the famous hotels of the Trump family.
Eric further elaborated: “If there is one thing I hope to contribute to the cryptocurrency world, it is to make it truly user-friendly. As a country, we better embrace cryptocurrency because its future is here. Those who ignore it, are unwilling to understand it, and are unwilling to put in the effort will eventually be left behind.”
“But at the same time, our big mission is really to make people understand cryptocurrency… We have to make it intuitive, we have to make it user-friendly. And we will do that.”
However, exactly how the WLF planned to achieve this goal, and the exact nature of the WLF, remained a mystery even at the end of the two-hour live broadcast.
According to the information currently available, when The Independent interviewed experts in the crypto space, they expressed doubts about whether the Trump family can protect its users from crypto fraud. The background of this doubt is that Donald Trump, his son and the Trump Organization were ordered to pay up to $454 million in compensation by the New York Civil Court for financial fraud.
So can the Trumps and their business partners achieve what many in the industry have long sought — making cryptocurrency both easy to understand and easy to use, as Eric has advocated?
Zach Hamilton, a longtime crypto venture capitalist and founder of encrypted file storage company Cache Legal, said: “It’s a tough question… I really don’t want to speculate on whether it will succeed or not because it’s just a concept. Maybe they have a secret sauce, but I’d bet against that.”
"We have gone from being an elite class to being hated by everyone"
As Donald Jr. said, when traditional banks refused to provide services to the Trump family because of their political activities, his vision turned to the world of cryptocurrency and "decentralized finance" ( DeFi for short).
“We’ve gone from that elite class to being completely excluded, and that shift has changed our perspective dramatically,” he said on Monday. “When you look deeply at the way the founding fathers constructed the country, I think DeFi is exactly what they envisioned — not a fragmented, bureaucratic system where a bunch of middlemen get to reap the benefits without having to do any work.”
These and other statements from WLF officials, as well as leaked draft documents obtained by cryptocurrency news site CoinDesk , suggest that the group is interested in building a decentralized cryptocurrency lending system.
In the traditional financial system, transactions are executed and verified by a few powerful institutions, such as banks or credit card companies. When you send regular money (i.e., fiat currency) across borders, the money itself doesn’t actually move; instead, the sending and receiving institutions simply agree to update their records of what you hold and where it is located.
Cryptocurrencies such as Bitcoin and Ethereum are a different system. They are essentially networks of software distributed across many computers around the world that work together to process transactions by verifying each other's identities and checking mathematical operations.
In principle, this means that no government official or bank employee can interfere with or reverse cryptocurrency transactions. However, there is one important exception: cryptocurrency exchanges (such as Coinbase and Binance ), which enable conversions between fiat currencies and cryptocurrencies.
But Zach Hamilton speculates that WLF may not choose to set up an exchange because it is expensive and difficult to set up. He is more inclined to believe that WLF may modify (or "fork") existing crypto lending protocols such as Aave . The Aave protocol uses self-executing "smart contracts" to issue and recover loans without human intervention.
This idea is not new. "There are already several well-known DeFi lending platforms in the cryptocurrency field operating for many years. These platforms were founded by well-respected teams, and the robustness of their smart contracts and technologies has been tested by time and recognized by the market," said Gareth Rhodes, a lawyer and former New York market regulator who now focuses on providing consulting services to fintech startups. "Whether WLF can bring improvements in user experience or technical capabilities remains an open question."
The WLF team’s past performance is indeed unsatisfactory. In the draft white paper obtained by CoinDesk, although the four Trump family members were assigned corresponding positions, the white paper clearly stated that they did not own or manage WLF, but only might benefit financially from it.
The real masters of the situation appear to be two businessmen, Herro and Zachary Folkman, who are both listed and are well known for their previous operation of the Dough Finance DeFi lending system, which attracted millions of dollars in transactions but was hacked in July, resulting in the theft of $2 million, and is now said to have ceased operations.
According to Bloomberg, Hero earned a lot of money through a series of Internet marketing and coaching programs, but some of them seemed to violate Facebook's advertising regulations; while Folkman was a relationship guidance artist and also held a series of seminars called "Dating Hotter Girls."
When asked if they knew Herro or Folkman, Rhodes and Hamilton said they had never heard of them. More than a dozen digital asset investors interviewed by Bloomberg also said they knew nothing about them. WLF and the Trump team chose to remain silent and did not respond to media requests for comment.
However, Hamilton pointed out that WLF does have a high-quality asset. But the bigger challenge is how to attract enough people and funds to participate in this service to ensure that there is enough liquidity to make the market really work.
“The Trump Organization has the most powerful propaganda machine in the world,” Hamilton said. “Everything they do is covered relentlessly in the media. You have to get people to notice your actions and convince them to move their money over.”
However, this is only part of the challenge facing WLF.
It's all about votes, nothing else
Within 24 hours of Monday’s livestream, Alexander Urberis, a cryptocurrency lawyer and security expert, revealed a detailed list of at least 41 fake website domains that were impersonating WLF addresses. These domains are likely to be the work of criminals who are trying to use the hype to commit fraud.
Earlier this month, the social media accounts of Donald Trump’s 30-year-old daughter Tiffany and his daughter-in-law, Eric’s wife Laura, were hacked by cybercriminals who promoted a fake WLF Telegram group, offering up to $15,000 in cryptocurrency as bait (in reality, a bad check) to trick users into connecting their cryptocurrency wallets to their services.
These shenanigans undoubtedly reveal the grim reality that the crypto ecosystem is still rife with scams, fraud, and theft. According to statistics, the amount of losses reported to the FBI rose sharply from less than $4 billion to nearly $6 billion between 2022 and 2023.
Independent cryptocurrency crime investigator Rich Saunders puts it bluntly: “I am part of an industry that has not been forthcoming with governments or the public about the true scale of cybercrime.”
Criminals are drawn to cryptocurrency because it bypasses traditional middlemen. Cryptocurrency transactions are irreversible and often impossible to stop, and conducting secure transactions often requires deep technical knowledge. Unless you use a "custodial" service like Coinbase (which means they hold the cryptocurrency on your behalf, similar to a traditional bank), it can be difficult to get help if you make a mistake or get scammed. Although almost all cryptocurrency transactions are public and traceable, it is sometimes difficult to find out the true identity of a specific recipient.
So, if WLF intends to lead new users with non-technical backgrounds into this risky field, how does it plan to ensure their safety?
"In the security field, perfection does not exist. It is more like a never-ending journey," said Corey Kaplan, a consultant to WLF, in a speech on Monday. "Therefore, both I and the entire team must remain highly flexible and adaptable, and constantly absorb new knowledge like a sponge."
Both Rich Sanders and Zach Hamilton point out that there is an unreconcilable zero-sum trade-off between keeping cryptocurrencies safe for newcomers while preventing them from making mistakes and refusing to act as a middleman or custodian of user funds.
“Nothing the WLF does can change the fact that consumers will be the holders of private keys,” Sanders stressed. “They can’t provide non-custodial services and protect consumers from losses at the same time; the two cannot exist at the same time.”
However, Sanders and Hamilton also believe that this impact may be limited, as WLF is unlikely to actually attract a large number (or even any) new users. After all, anyone who chooses to use a decentralized lending protocol that cannot convert fiat currency into cryptocurrency is often already a deep participant in the field.
Instead, Sanders asserted that the entire project is just a ploy by Donald Trump to please the cryptocurrency community. "There is almost nothing worth discussing about the WLF itself; it is destined to exist in the void," he said. "It has no clear vision, no concrete plans, no real needs, and no need to exist... This is all for votes, nothing else."
Indeed, when Trump appeared at a Bitcoin bar in New York City to discuss U.S. monetary policy with cryptocurrency enthusiasts, reporters huddled together under a low but ornate tiled ceiling, the atmosphere was no different from any other campaign event.
However, this does not mean that the move will not have negative effects. Nick Carter, a well-known cryptocurrency entrepreneur who supports Trump, called on the community to try to prevent the release of WLF, arguing that any successful hacking attack or government investigation could damage the former president's campaign.
Hamilton, by contrast, is more optimistic, hoping that a controversial figure like Trump will at least get the attention of regulators, forcing them to set clear precedents and shed some light on what he describes as a still-murky legal landscape for crypto entrepreneurs.
However, he added that while the WLF hack may not cause much financial damage, it could be a severe blow to the reputation of the cryptocurrency industry. "I hope they have taken the right security measures. I hope they have done all the necessary audits," he said. Otherwise, "all of us will look a little stupid."
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