Warren Calls for SEC Probe into Trump‑Linked Crypto Loan Backed by $440 Million in Tokens

World Liberty Financial, a crypto project tied to former President Donald Trump and his family, arranged a loan through the decentralized lending platform Dolomite. It pledged roughly $440 million worth of its WLFI governance tokens as security, receiving about $65 million in its own USD1 stablecoin and $10 million in USDC. The loan was executed while regular token holders remained under a contractual lock‑up that prevented them from selling their holdings. Shortly after the funds were drawn, the WLFI price dropped nearly 10 % to a record low, highlighting the mismatch between insider access and public market constraints.

The collateral used in the Dolomite loan amounted to about $440 million of WLFI tokens for a $75 million borrowing, representing an over‑collateralization ratio of roughly 6‑to‑1. Senator Warren’s letter to SEC Chair Paul Atkins, dated May 14, requests an investigation into possible investor deception or securities‑law violations related to the WLFI token, with a reply required by May 26. Reports indicate that Trump‑affiliated entities are slated to receive 75 % of the net proceeds from any future WLFI token sales after expenses are deducted, while public investors face the lock‑up restrictions described above.

The Warren letter intensifies scrutiny on how crypto projects intertwine insider allocations with public token offerings. If the SEC finds that World Liberty Financial omitted material facts about the loan structure or the skewed profit split, it could pursue enforcement actions that affect not only this project but also similar arrangements across the sector. The outcome may shape how regulators treat collateralized loans that rely heavily on a project’s own tokens, especially when retail investors face lock‑up periods. It also adds pressure on the SEC as Congress debates the CLARITY Act, a broad crypto‑focused bill that seeks to clarify investor protections and market integrity. Market participants will watch whether the SEC issues a formal response by the May 26 deadline and whether it opens an investigation that could lead to sanctions, required disclosures, or changes to how token‑backed loans are structured.