Duke law lecturer argues Trump-connected World Liberty Financial issued a security

Lee Reiners, a Duke University law lecturer and former Federal Reserve examiner, contends that World Liberty Financial's (WLF) WLFI token likely constitutes an unregistered security. Reiners argues that WLFI does not fit the definition of a "digital commodity" and is subject to SEC scrutiny, despite WLF's claims of it being a pure governance token. He points to the token's presale, where approximately 25 billion WLFI were sold, suggesting buyers invested with a reasonable expectation of profits, a key element of the Howey Test. Reiners also highlights that the token was sold before the protocol was built and leveraged the Trump family name for marketing. He further questions the decentralization of World Liberty and WLFI, citing instances of alleged self-dealing, such as using WLFI as collateral to borrow stablecoins from the Dolomite lending protocol, which has ties to World Liberty advisors. Additionally, a lawsuit by Justin Sun alleging frozen tokens and blocked governance rights further suggests World Liberty's retained control. Reiners concludes by questioning the SEC's ability to independently investigate a venture with direct financial ties to the president and his family.

(Source：The Block)