A recent crypto initiative launched by U.S. President-elect Donald Trump and his newly appointed Middle East envoy, billionaire Steve Witkoff, has formed a partnership with a cryptocurrency platform that experts and authorities claim has been exploited by criminals as well as militants backed by Iran, including Hamas and Hezbollah.
World Liberty Financial Inc, established by the Witkoff family just two months prior to November’s U.S. election with Trump as a financial backer, raises ethical concerns and potential conflicts of interest, according to six specialists in U.S. government ethics.
One of their primary worries is the engagement of World Liberty with its new ally: the Tron crypto platform.
Faster and more affordable than Bitcoin, the Tron network has surpassed its competitor as a medium for crypto transfers linked to organizations deemed terrorist by Israel, the United States, and several other nations, as reported by Reuters in 2023, based on discussions with seven experts in financial crime and cryptocurrency investigations.
Last month, Tron announced it was investing $30 million into World Liberty. Justin Sun, the founder of Tron, a Chinese-born entrepreneur, will join the Trump-Witkoff venture as an advisor, according to statements made by Sun and World Liberty on social media platform X. The British Virgin Islands-registered Tron is now the largest investor in World Liberty, as noted by Sun.
Since 2021, crypto seizures publicized by Israeli security services have frequently highlighted Tron’s involvement with militants, including Hamas, which carried out an attack on Israel in 2023 that resulted in 1,200 fatalities, according to Israeli officials, and sparked the Gaza conflict.
Israel’s National Bureau for Counter Terror Financing (NBTCF), charged with these seizures, has frozen 186 Tron wallets since July 2021, alleging they were utilized by a “designated terrorist organization” or tied to a “severe terror crime.” Of those, Israeli officials associated 84 Tron wallets with Hamas or its allies, such as Islamic Jihad, 39 with Hezbollah, and 63 with unspecified terrorist groups or money changers. The latest Tron seizure was reported on March 28.
Reuters was unable to independently verify Tron’s connection to militant groups, and the NBTCF did not provide supporting evidence for its claims or reply to requests for detailed information. Requests for comments from Hamas and Hezbollah went unanswered.
Tron, which generates revenue from transaction fees on its platform, stated that its technology “has attracted both lawful users and those with illicit motives” but did not specifically address the allegations regarding its use by militants.
In response to inquiries for this report, a Tron spokesperson commented that the company “has implemented proactive steps to mitigate the risk of illicit activities on its platform,” adding that a partnership with law enforcement initiated in September froze $70 million in illicit funds. The founder, Sun, did not respond to a request for comment.
While attending a crypto conference in Abu Dhabi, Eric Trump told Reuters that the involvement of criminal groups in crypto is “everybody’s foremost concern” but added that traditional financial institutions also play a role in channeling “bad money.” He noted that “anything can be manipulated if used by the wrong people, and a crackdown is necessary,” expressing confidence that the crypto industry will effectively regulate itself regarding illicit transactions.
The U.S. Treasury Department has also confiscated Tron wallets, including an account associated with a group it claimed raised funds for Hamas following the 2023 attack on Israel. In March, the Treasury imposed sanctions on a Lebanon-based currency dealer whom it accused of providing Hezbollah officials with crypto accounts, including a Tron wallet, to facilitate fund transfers from Iran. Concerns arose about Tron’s investment in World Liberty among ethics experts.
“There are numerous red flags surrounding this situation,” remarked Kathleen Clark, a professor specializing in government ethics at Washington University in St. Louis. Her apprehensions involve the scale of Tron’s investment in World Liberty, the possibility of Trump financially benefiting from it, and the alleged connections of Tron to militants such as Hamas and Hezbollah.
She also pointed out an investigation into Tron founder Sun by the U.S. Securities and Exchange Commission. In 2023, the SEC charged Sun with fraud, claiming he artificially inflated trading volume and concealed payments made to celebrities for promoting his companies. Sun, who resides in Switzerland and holds Grenadian citizenship, asserted that the SEC charges “lack merit,” with the case still pending.
Clark questioned whether the close association between World Liberty and Sun would create a potential conflict of interest for Trump when his administration assumes control of the SEC in January.
Representatives for Trump and his transition team did not directly address queries regarding Trump’s financial connections to World Liberty, the Tron investment, and any potential conflicts. Transition spokesperson Karoline Leavitt stated, “President Trump didn’t enter politics for profit. He’s fighting because he loves the people of this country and wants to make America great again.”
Militant organizations and criminals are drawn to Tron due to its ability to allow users to hide their identities, its low transaction fees, and the ease with which it can be converted into cash, as per some cryptocurrency experts.
POTENTIAL CONFLICTS
Witkoff co-founded World Liberty and holds a stake in a company — WC Digital Fi, LLC — which is entitled to a portion of World Liberty’s revenues according to the company’s terms. He is a close ally of Trump and a contributor to his Republican presidential campaign.
He intends to place all his investments in a “blind trust,” according to an individual familiar with Witkoff’s plans who wished to remain anonymous. However, the insider stated that Witkoff would still retain ownership of his assets. Typically, in a blind trust, an external manager oversees an official’s assets, disposing of those that create a conflict and reinvesting the proceeds in investments unknown to the owner.
Witkoff opted not to provide any comments. World Liberty did not reply to inquiries regarding potential ethical concerns and Tron’s investment in the enterprise.
Even with a trust in place, World Liberty creates possible conflicts of interest, as stated by ethics specialists who spoke with Reuters.
They noted that Witkoff’s recommendations on Middle East policies could be influenced by what he believes is advantageous for World Liberty rather than what is best for the United States. They argued that even if Witkoff establishes a trust and is not involved in World Liberty’s daily operations, potential conflicts remain as long as he holds a financial stake in the company, said Richard Painter, who is ethics counsel for former President George W. Bush and a professor at the University of Minnesota. “It doesn’t matter if you’re active in managing the company or not. What matters is whether you possess a financial interest that may be directly affected by your government duties,” Painter stated.
Experts emphasized that Trump may also face potential conflicts stemming from World Liberty.
The company’s website names Trump as the “chief crypto advocate” and states he is entitled to a share of its revenues according to the company’s terms and conditions.
World Liberty offers a proprietary token that cannot be traded, as specified in those terms and conditions, unlike Bitcoin and other cryptocurrency tokens. According to the terms, Trump and other unnamed “affiliates” are entitled to 75% of certain revenues from World Liberty, suggesting that individuals might purchase World Liberty coins to gain favor with him. “Could this be an alternative means to ingratiate oneself with Trump?” Clark remarked regarding World Liberty.
Trump’s business transactions were closely examined during his first term. While in office, over 20 governments, including those of Saudi Arabia and China, collectively spent more than $7.8 million at his hotels and other properties, as indicated by a report published by congressional Democrats in January. Trump did not face legal repercussions for that expenditure.
The Trump transition team did not respond to a request regarding what measures he would implement to tackle any conflicts related to World Liberty. World Liberty’s association with Trump is prominently featured on the company’s website. A photo of Trump, with a bandaged ear following a July assassination attempt, welcomes visitors on the homepage. The initial individuals listed as members of the World Liberty team include Trump and his three sons, Don Jr., Eric, and Barron, who are referred to as “Web3 ambassadors.” Trump, along with family members and associates, introduced the business during a live event on X in September. Don Jr. and Barron did not respond to requests for comments.
Through World Liberty, Trump and his family could also gain from potential regulatory changes initiated by his administration affecting cryptocurrency, experts stated. During the campaign, Trump pledged to appoint a new SEC chairman to replace Gary Gensler, who had taken action against the crypto industry through various lawsuits. Recently, he appointed crypto-friendly attorney Paul Atkins for that position.
Witkoff’s sons, Alex and Zach, are also recognized as co-founders of World Liberty. They did not respond to requests for comments. Eric Trump informed Reuters that he is “very involved” with World Liberty.
If foreign governments or sovereign wealth funds invest in World Liberty, it could place both Witkoff and Trump in violation of the U.S. Constitution’s “emoluments” clause, which is designed to prevent corruption and improper influence over the government, said Larry Noble, a professor at American University and former general counsel of the Federal Election Commission. This clause prohibits federal officials from accepting gifts or other advantages from foreign governments without congressional approval.
Diplomats expressed surprise when Witkoff, a New York real estate investor, was appointed as the special Middle East envoy on November 12, considering his lack of experience in foreign policy. He will begin his role amid heightened regional tensions, including the Gaza conflict, unrest in Syria, and the threat of direct conflict between Israel and Iran. Witkoff contributed $250,000 to the pro-Trump super PAC MAGA Inc in December 2023. As per Forbes, his net worth is at least $1 billion.
The distinctions between Witkoff’s entrepreneurial pursuits and his diplomatic responsibilities are already becoming unclear. On Monday, Witkoff was a speaker at the Abu Dhabi cryptocurrency conference. His profile for the event described him as Trump’s special envoy to the area and also highlighted his involvement in the crypto industry. “A forward-thinking entrepreneur, Steve is now concentrating on the convergence of real estate, Bitcoin, and cryptocurrency,” the conference website indicated. Attendees paid up to $9,999 to participate in exclusive sessions that were not open to the press. Tron’s Sun was also highlighted as a speaker. Witkoff did not answer inquiries regarding the conference.
ROLE OF SPECIAL ENVOY, FEW REGULATIONS
Witkoff’s new position as special envoy lacks a legislative definition and may not require approval from the U.S. Senate. The upcoming administration could classify him as a “special government employee,” a designation intended for temporary roles, stated Scott Greytak, director of advocacy at Transparency International’s Washington office.
In this scenario, “unlike standard government employees, he can continue earning outside income without restrictions,” he explained. “However, he is obligated to submit a financial disclosure form and cannot make official moves that would financially benefit himself.”
Witkoff is also expected to enter into an agreement with the State Department ensuring that he does not engage with foreign officials regarding cryptocurrency while conducting official duties, according to Meredith McGehee, an independent ethicist and former policy director of the nonprofit watchdog, the Campaign Legal Center. “That should create a barrier. He cannot say: ‘By the way, what’s your government planning to do with crypto?’” McGehee remarked.
Special envoys appointed under Biden, former President Barack Obama, and Trump’s initial administration typically did not come from the business world, as discovered in a Reuters examination of the emissaries. However, some had significant investments in the private sector. Multimillionaire John Kerry sold off assets identified by government ethics officers as possibly conflicting with his responsibilities as Biden’s special climate envoy, based on a 2021 divestiture certificate from the U.S. Office of Government Ethics.
Trump has previously appointed a close business associate. In 2016, he selected the chief legal officer of the Trump Organization, Jason Greenblatt, as Special Representative for International Negotiations, a pivotal role in discussions regarding Israel and Palestine. Greenblatt informed Reuters that he left Trump’s company prior to assuming his position at the White House. He could not recall if he divested his investments before serving as a special envoy, but he stated he would have adhered to the relevant regulations.
Israel’s National Bureau for Counter Terror Financing (NBCTF), which manages such asset freezes, identified and froze 143 Tron wallets from July 2021 to October 2023, believing they were associated with a “designated terrorist organization” or involved in a “serious terror crime,” according to a Reuters analysis.
The October 7 attacks by Hamas on Israel resulted in approximately 1,200 fatalities. In response, Israel’s airstrikes and ground invasion of Gaza have claimed roughly 14,000 lives. As part of its retaliation, Israel has increased its scrutiny over the financing of Hamas.
In response to a summary of this article provided to Reuters, Hayward Wong, a spokesperson for Tron, a company registered in the British Virgin Islands, stated that all technologies could potentially be exploited for illicit activities, using US dollars used for money laundering as an example.
Wong commented that Tron does not control the individuals utilizing its technology and that it has no affiliation with the groups mentioned by Israel.
This year, nearly two-thirds of Israel’s Tron wallet seizures—87 in total—occurred, which includes 39 wallets that Israel claimed in June belonged to Lebanon’s Hezbollah and 26 it identified in July as linked to Palestinian Islamic Jihad, a Hamas ally that participated in the attack on Israel from Gaza.
The confiscations also comprised 56 Tron wallets that the NBCTF asserted were tied to Hamas, including 46 from March last year linked to a single money exchange firm in Gaza named Dubai Co. For Exchange.
Weeks following the Hamas attack, Israel reported its largest known seizure of cryptocurrency accounts, freezing around 600 accounts it associated with Dubai Co., without specifying the cryptocurrency networks or coins involved.
Several individuals whose funds were frozen in that operation informed Reuters that they were utilizing Tron. They explained they traded cryptocurrency to support their businesses or personal finances and refuted any link to Hamas or Islamic Jihad.
One individual, who went by Neo, mentioned it was possible they had transferred money on one occasion to someone connected with Hamas.
Israel has described Dubai Co. as a terrorist organization “for the support they provide to the Hamas terrorist group, especially its military division, in transferring funds amounting to tens of millions of dollars annually.”
A representative for Dubai Co., whose email was referenced in the seizure documentation, did not reply to requests for comment.
The military wing of Hamas, which has been raising crypto funds since at least 2019, announced in April that it would stop fundraising via Bitcoin, citing heightened efforts to block contributions. Hamas did not refer to Tron in this announcement.
Reuters was unable to independently verify whether Hamas used Tron. The NBCTF opted not to comment for this article, including its views on the transition to Tron and how it associated the wallets with the militant organizations. Hamas, Hezbollah, and Islamic Jihad did not return requests for comments.
Six individuals named in previous Tron seizure notices from Israel who spoke with Reuters denied any ties to militant groups. These individuals included residents from Venezuela, Dubai, and the West Bank city of Jenin.
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