Topline
A recent adjustment has been made to a cryptocurrency initiative backed by the Trump Organization, which has resulted in Eric Trump stepping back from his anticipated position on the board of fintech company Alt5 Sigma. This alteration occurred after consultations with Nasdaq, although specific reasons for the decision were not disclosed.
Key Facts
In August, Alt5 Sigma announced plans to raise $1.5 billion through direct and private share sales, intending to utilize the funds to acquire digital tokens from World Liberty Financial, a crypto venture co-founded by Donald Trump and his sons. Initially, the agreement stated that Eric Trump would serve as a director on the board of Alt5 Sigma, while Zak Folkman, the COO of World Liberty Financial, would act as a board observer. However, just two weeks later, an SEC filing revealed that, following discussions with Nasdaq to adhere to its listing regulations, Eric Trump would now serve as a board observer, with Folkman potentially taking his place as a director, pending shareholder approval. The filing did not clarify which Nasdaq rule influenced this change, nor did the company provide an explanation.
Why Was Eric Trump Relegated To A Board Observer?
The exact reason for Eric Trump’s change in role remains uncertain. The SEC filing indicated that the adjustment was made after discussions with Nasdaq to ensure compliance with their listing rules, but it did not detail which specific rule was relevant. Three professors specializing in securities law reviewed the filings but could not pinpoint a definitive reason for Nasdaq’s acceptance of one nominee while rejecting another. Nasdaq stipulates that a majority of board members must be independent, yet it remains ambiguous why Eric Trump would not qualify, especially when Folkman’s status is also in question. Notably, this adjustment does not seem to stem from any legal issues Eric Trump may face in New York, where he is prohibited from serving as an officer in a corporation, since Alt5 Sigma is incorporated in Nevada.
Key Background
World Liberty Financial was launched in September 2024, positioning itself as a decentralized finance platform inspired by Donald Trump’s vision. The company began offering its non-transferable $WLFI tokens to accredited and international investors, initially priced at $0.015 per token, with a subsequent round priced at $0.05. These tokens do not confer ownership but allow holders to participate in voting on protocol rule changes. In July, a vote permitted early investors to sell a portion of their tokens, although the founding members, including the Trumps, remain restricted from doing so. As of September 8, the tokens were trading at $0.2092, which is over four times the initial price for many early investors, despite a 30% decline from their peak in public trading.
Big Number
$1.5 billion—the assessed market value of Alt5 Sigma’s $WLFI holdings as of September 8, calculated based on the token’s trading price of $0.2092. The company had acquired 7.3 billion tokens at a cost of $0.18 each, signifying an appreciation of approximately $210 million within a month.
Crucial Quote
“After discussion with The Nasdaq Stock Market LLC (‘Nasdaq’), and in order to comply with Nasdaq’s listing rules, Zachary Witkoff has accepted his appointment as Chairman of the Board and is the initial nominee to the Board selected by WLF,” the SEC filing stated. “Both Eric Trump and Zachary Folkman have been designated as observers. Subject to and following the approval of the Company’s stockholders in accordance with Nasdaq’s listing rules, the Board has also approved the appointment of Zachary Folkman, the other nominee to the Board selected by WLF, as a director.”
Surprising Fact
Despite the SEC filing indicating that Eric Trump is now a board observer, Alt5 Sigma’s website continues to list him as a director on both its leadership and investor relations sections.
News Peg
Donald Trump has seen a significant increase in his wealth, with Forbes estimating his net worth at $7.3 billion, a rise from $4.3 billion in 2024. This surge is largely attributed to his cryptocurrency investments and the financial advantages accompanying a potential return to the presidency. The $3 billion increase has positioned him at No. 201 on this year’s Forbes 400 list, marking his highest ranking to date. Other family members, including Eric Trump, have also experienced boosts in their financial standings.
Tangent 1
In the same SEC filing that highlighted Eric Trump’s role transition, Alt5 Sigma disclosed that a Rwandan court had recently found its Canadian subsidiary and former principal, Andre Beauchesne, guilty of illicit enrichment and money laundering. The court has since dissolved the subsidiary, sentenced Beauchesne to prison, and ordered the forfeiture of $3.5 million. Alt5 Sigma and Beauchesne have appealed the ruling, asserting they were victims of fraud. The company noted that its board only became aware of the ruling in late August.
Tangent 2
Additionally, the same SEC filing revealed that Alt5 Sigma received a summons and complaint in August related to a bankruptcy case involving its former CFO, Virland Johnson. The complaint alleges that Johnson failed to disclose certain stock units entitling him to 330,000 shares in his bankruptcy petition filed in January 2024. U.S. trustees are seeking to recover either the shares or their equivalent value from the company, which disputes the claims made against it.
