Trump-Linked DeFi Project Unveils USD1 Stablecoin Amid Scam Warnings

USD1 Targets Institutional Adoption With Treasury-Backed Reserves

World Liberty Financial (WLFI), a decentralized finance initiative partially owned by members of former President Donald Trump’s family, announced the launch of its U.S. dollar-pegged stablecoin, USD1, slated to go live on March 25, 2025. Backed by a mix of U.S. Treasury bills, fiat deposits, and other short-term cash equivalents, USD1 is structured to maintain a fixed $1 valuation and will initially launch on Ethereum and Binance Smart Chain. WLFI intends to expand to additional blockchains over time as part of its broader adoption strategy.

The stablecoin’s reserves will be secured by BitGo, a regulated custodian known for providing institutional-grade digital asset services. BitGo’s custodianship includes insurance coverage and regulatory compliance, adding a layer of credibility as WLFI targets investors looking for transparency and security. Regular independent audits by an external accounting firm will validate USD1’s reserves, reinforcing WLFI’s push to differentiate its offering from unregulated or opaque stablecoin competitors.

Scam warnings emerged just 24 hours before the official launch date, when WLFI issued a public alert on X (formerly Twitter), warning that USD1 is not yet available for trading and cautioning users against fraudulent tokens circulating under the same name. The alert followed a social media post from former Binance CEO Changpeng Zhao (CZ), who echoed the warning and called attention to imitation tokens appearing on major networks like Solana, Ethereum, and BNB Chain. 

Dexscreener confirmed the presence of multiple unrelated projects attempting to exploit the USD1 name to deceive investors. Blockchain security firm Lookonchain also flagged suspicious activity and noted that market maker Wintermute had interacted with the verified USD1 smart contract.

The authentic USD1 contract on BNB Chain had been deployed earlier in March and was still undergoing internal testing. Despite the token not being publicly released, on-chain data revealed that over $3.5 million worth of USD1 tokens had already been minted. WLFI made it clear these tokens were not authorized for circulation or exchange, underscoring the urgency of its fraud prevention messaging.

Beyond the stablecoin rollout, WLFI has taken strategic steps to diversify its digital asset holdings. Since February 2025, the project has allocated roughly $28.6 million across six assets—Ethereum (ETH), Wrapped Bitcoin (WBTC), MOVE, SEI, Avalanche (AVAX), and Mantle (MNT). These investments, however, currently reflect an unrealized loss of $1.62 million, according to blockchain analytics firm SpotOnChain, raising questions about WLFI’s treasury management amid a volatile crypto market.

With a stablecoin sector valued at more than $233 billion, WLFI’s USD1 aims to compete with dominant players like Tether (USDT), USDC, and RLUSD. Co-founder Zach Witkoff emphasized that USD1 addresses what he views as core deficiencies in existing stablecoins—namely, the lack of transparency and regulatory alignment found in algorithmic and anonymous models. According to Witkoff, USD1 delivers a compliant, auditable alternative tailored for sovereign investors and institutional users seeking frictionless, secure cross-border transactions.

World Liberty Financial announced the USD1 launch amidst rising concerns over potential conflicts of interest linked to President Trump. Critics argue that the project could violate the Constitution’s emoluments clause, which prohibits undue influence on leaders. WLFI, reportedly controlling 60% of the project, could enable indirect gains or foreign influence over U.S. policy, especially if foreign entities engage with the stablecoin. 

Concerns escalated following WLFI's memecoin launch pre-inauguration, leading to accusations of market manipulation. Experts warn that Trump’s direct involvement in stablecoin legislation while managing a crypto project poses a serious conflict, compromising regulatory integrity and creating an uneven competitive landscape. Former SEC crypto policy expert Corey Frayer noted potential foreign leverage through USD1. 

Calls for an ethics investigation have been voiced, notably by Senator Elizabeth Warren, highlighting the risks of Trump’s financial entanglements directly affecting the volatile crypto market. With bipartisan support forming around the GENIUS Act—a framework to regulate stablecoins—stakeholders emphasize the need for robust oversight to uphold financial stability and governance principles, confronting the increasing opacity and complexities of the crypto industry.

This article has been refined and enhanced by ChatGPT.