A comprehensive new analysis, Political Capital: How the Trump Family’s Crypto Ventures Are Distorting the Market, from Democracy Defenders Fund and Lee A. Reiners, a lecturing fellow at Duke University, exposes how World Liberty Financial (WLFI) and its stablecoin, USD1, have disrupted the crypto market by leveraging a combination of political influence, foreign cash, and deregulatory actions.

It’s widely known that the Trump family business has a significant financial stake in WLFI, a venture started just before the 2024 election. Less than two years after its launch, USD1 has emerged as the third-largest U.S. dollar–denominated stablecoin, surpassing or rivaling products issued by firms with far greater experience, capitalization, regulatory sophistication, and global brand recognition. This includes stablecoins launched by Paxos, which has operated in crypto markets for more than a decade, as well as PayPal’s PYUSD, which benefits from one of the largest and most entrenched payment networks in the world.

"This is not a story about innovation or a great business idea that suddenly took off," said Virginia Canter, chief counsel for ethics and anti-corruption at Democracy Defenders Fund. "This is a story about a brand-new company that was handed a half a billion dollar check from a foreign government, given preferential treatment by the world's largest crypto exchange, and shielded from regulatory scrutiny by agencies that are supposed to oversee them. No other company in America could get that."

The report finds USD1’s market domination was fueled by a series of seemingly corrupt bargains made possible by President Trump’s return to power: an infusion of cash from companies operated by a foreign government; a sweetheart deal from a crypto exchange whose convicted felon founder was pardoned by the president; and a collapse of federal oversight. This confluence of events has created a new playbook for presidential self-enrichment where the company with the best connections to the White House wins, regardless of merit.

The report outlines the unprecedented series of events that allowed the stablecoin to vault past established competitors like PayPal's PYUSD and Circle’s CRCL including:

• A foreign investment jumpstarts World Liberty Financial: Just days before the inauguration, a United Arab Emirates state-backed investment fund purchased a 49 percent stake in WLFI for $500 million. Months later, it used WLFI's newly created stablecoin, USD1, to settle a $2 billion investment in Binance. That single transaction instantly vaulted USD1 to the third largest stablecoin by market cap and  is estimated to generate tens of millions in annual income for the business.

• What does a pardon have to do with it?: Binance, the world's largest crypto exchange, deployed a team of engineers to build the technology behind USD1 and now offers customers 20 percent annual returns to hold the coin, a rate far above what the underlying assets can sustain. This aggressive promotion came after President Trump pardoned Binance's founder, Changpeng Zhao, who had pleaded guilty to failing to establish appropriate anti-money laundering safeguards at Binance. Binance is now estimated to hold 86% of all USD1.

• Regulators stepped aside. The Securities and Exchange Commission, which had pending enforcement actions against many of the firms now supporting USD1, has dismissed, eased, or paused more than 60 percent of its crypto cases. The Commodity Futures Trading Commission has cut its enforcement staff to the bone and has unilaterally expanded its authority to permit crypto products that benefit politically connected firms. As DDF highlighted in a complaint filed earlier this year, the former Acting Chair who led these efforts later took a job at a crypto firm with ties to Trump ventures.

• A way to pay to play?: Pakistan recently signed a deal to integrate USD1 into its national payments infrastructure, a decision with apparently no basis in the coin's technological merits. Meanwhile, the country continues to court favorable treatment from the Trump administration.

For context, the report compares USD1's trajectory to that of PayPal's stablecoin, PYUSD. Launched in 2023 with access to hundreds of millions of users and a global payments network, PYUSD has struggled to gain significant market share. USD1, with no comparable infrastructure, surpassed it in months.

"The Trump family has replaced the ideal of success due to hard work with success based on access to the White House,” Reiners said. “The president has dismantled the very rules meant to prevent this kind of self-dealing, and his family is cashing in big time."

Read the report HERE, and visit DDF's crypto landing page HERE

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Democracy Defenders Fund brings together a nonpartisan team to work with national, state, and local allies across the country to defend in real-time the foundations of our democracy.