Key Takeaways
- House Democrats have launched a formal investigation into a $500 million UAE-linked investment in WLFI.
- The deal was signed just days before Donald Trump’s second inauguration and routed millions to Trump-affiliated entities.
- The probe has added fresh volatility to crypto markets, weighing on Bitcoin and politically linked tokens.
A $500 million crypto deal signed days before Donald Trump’s return to the White House is now under congressional scrutiny.
House Democrats have launched a formal investigation into World Liberty Financial (WLFI), a cryptocurrency project tied to the Trump family, following revelations that a UAE-linked entity quietly acquired a major stake in the firm just days before Trump’s second inauguration.
Lawmakers say the timing, structure, and beneficiaries of the transaction raise serious concerns about conflicts of interest and foreign influence.
The probe, initiated on Feb. 4 by Rep. Ro Khanna , ranking member of the House Select Committee, follows a Wall Street Journal report that detailed the previously undisclosed deal and its ties to senior figures in the United Arab Emirates.
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A Deal Signed on the Eve of Power
At the center of the investigation is a Jan. 16, 2025 agreement that granted a 49% stake in WLFI to Aryam Investment 1, an entity registered in both Delaware and Abu Dhabi.
The deal was signed just four days before Donald Trump’s second presidential inauguration.
Aryam Investment 1 is backed by Sheikh Tahnoon bin Zayed Al Nahyan, a powerful UAE royal who serves as the country’s national security adviser and oversees a sprawling investment empire spanning artificial intelligence, surveillance, and global finance.
Under the agreement, Aryam paid $250 million upfront, with the remaining $250 million due by July 15, 2025.
Of the initial payment, roughly $187 million flowed directly to Trump-affiliated entities, including DT Marks DEFI LLC and DT Marks SC LLC.
Nearly $31 million went to firms tied to the Witkoff family, WLFI’s co-founders, while another $31 million was distributed to co-founders Zak Folkman and Chase Herro.
Eric Trump signed the agreement on WLFI’s behalf.
Notably, the deal excluded rights to future sales of WLFI’s governance token, limiting the UAE investor’s exposure to equity ownership rather than token upside.
WLFI: A Crypto Firm With Big Valuations and Few Products
WLFI launched in September 2024 as a decentralized finance platform promoting a U.S. dollar-pegged stablecoin known as USD1.
Despite raising roughly $82 million through token sales, the company had yet to launch a fully operational product at the time of the UAE investment.
The deal valued WLFI at approximately $1 billion, slashing the Trump family’s ownership stake from about 75% to roughly 38%.
Following the investment, senior executives from Sheikh Tahnoon’s AI firm G42 — including CEO Peng Xiao and general counsel Martin Edelman — joined WLFI’s board alongside Eric Trump and Zach Witkoff, the son of WLFI co-founder Steve Witkoff.
The origins of the transaction trace back to December 2024, when Steve Witkoff, later appointed Trump’s Middle East envoy, visited the UAE and met Sheikh Tahnoon.
Around the same time, Eric Trump appeared at a crypto conference in Abu Dhabi, publicly praising the country.
WLFI spokesperson David Wachsman has defended the deal as a routine business transaction designed to accelerate the firm’s growth, rejecting claims that it warranted heightened scrutiny.
WLFI’s Foreign Investment Meets U.S. Policy
The WLFI deal did not occur in isolation. It unfolded alongside a series of high-level diplomatic and commercial exchanges between Washington and Abu Dhabi.
In March 2025, Sheikh Tahnoon visited the White House and pledged $1.4 trillion in UAE investments into the U.S. economy over the next decade.
Two months later, the U.S. approved the sale of 35,000 advanced AI chips to G42, despite earlier Biden-era restrictions tied to concerns about potential technology transfers to China.
Separately, MGX — an investment firm controlled by Sheikh Tahnoon — used WLFI’s USD1 stablecoin to facilitate a $2 billion investment in Binance, further entangling WLFI with global crypto power players.
What Lawmakers Are Demanding
In his letter to WLFI CEO Zach Witkoff, Khanna requested extensive documentation by March 1, 2026, including full details of the payment structure, beneficial ownership, and any affiliations with UAE government or royal family members.
The inquiry also seeks clarity on WLFI’s involvement in U.S. export control discussions, the appointment of G42 executives to its board, and the use of USD1 in the MGX-Binance transaction.
Additionally, the investigation is examining WLFI’s role in President Trump’s October 2025 pardon of Binance founder Changpeng Zhao, which Khanna described as “unprecedented self-dealing.”
The committee is requesting records related to revenue sharing, profit distributions, and due diligence on G42’s past ties to China.
Lawmakers have instructed WLFI to preserve all relevant documents, including electronic communications.
Khanna has warned that the deal may violate federal conflict-of-interest statutes and the Constitution’s Emoluments Clause.
Other Democrats have echoed those concerns, calling for hearings before House Oversight and Senate Banking committees.
WLFI and the White House have denied any wrongdoing, maintaining that the transaction was a private business matter subject to appropriate review.
Crypto Markets React to WLFI Probe
The investigation has already rattled crypto markets, which were struggling through a prolonged downturn even before the probe was announced.
Bitcoin fell below its 2021 peak of $63,000, sliding to around $60,000, while politically linked and niche tokens posted sharper losses.
WLFI’s governance token dropped roughly 16% in a single day amid fears of insider selling and regulatory fallout, before rebounding by as much as 15% as details of the UAE stake emerged.
Analysts say the episode underscores how political scrutiny can amplify volatility, particularly for DeFi projects entangled with foreign capital and national security issues. S
tablecoins like USD1 may face heightened anti-money laundering and compliance scrutiny, while broader legislative efforts — including crypto framework bills such as the CLARITY Act — could face delays.
As lawmakers await documents over the coming months, investors are bracing for continued turbulence — not just for Trump-linked crypto ventures, but for a sector increasingly caught at the crossroads of politics, regulation, and global power.
