World Liberty Financial, a decentralized finance (DeFi) initiative endorsed by former President Donald Trump, has disclosed that its ambitious $300 million crypto token offering is largely aimed at international investors.
To date, fewer than 350 US investors have engaged with the project, raising questions about its domestic appeal amidst a landscape of regulatory scrutiny led by the US Securities and Exchange Commission (SEC).
World Liberty Financial’s Offshore Focus
Operating out of Wilmington, Delaware, yet managed from Puerto Rico, World Liberty recently filed a notice with American regulatory bodies, announcing its intent to sell only $30 million worth of tokens within the United States.
Once this threshold is reached, the crypto venture company plans to halt the US offering, despite having approximately $288.5 million worth of WLF tokens still available for sale.
Related Reading
Zachary Folkman, co-founder of World Liberty, indicated in a September interview streamed on X (formerly Twitter), that the company plans to leverage Regulation S—a provision that allows the sale of tokens to non-US investors without requirements typically imposed by US securities laws.
The limited interest from US investors may stem from the SEC’s rigorous approach to regulating cryptocurrencies, which has prompted many token issuers to focus their efforts offshore.
Trump’s involvement, along with that of his sons, Donald Jr. and Eric, is highlighted in the company’s filings. However, the document clarifies that their names are included for “informational purposes” and do not imply an official endorsement of the offering.
Capital Raising In A Complex Crypto Landscape
During the September interview, Folkman discussed the potential for non-US sales through Regulation S, but he refrained from detailing the distribution of tokens between domestic and international buyers.
US investors have been approached through a different regulatory pathway—Regulation D—which allows companies to raise unlimited capital from accredited investors, defined as individuals with a net worth exceeding $1 million, excluding their primary residence.
Both Regulation D and Regulation S are designed to streamline capital-raising processes for companies. However, Regulation D imposes stricter investor protections and disclosure requirements.
For instance, companies utilizing Regulation D must publicly disclose details about the offering, including the total amount raised and the number of participating investors. Folkman noted the necessity of verifying that US buyers meet accredited investor criteria, a process that adds another layer of complexity to the offering.
As of October 15, World Liberty reported raising $2.7 million under Regulation D by selling tokens to 348 investors. In contrast, analytics from Kaiko show that around 17,000 unique addresses have held the asset at least once, suggesting broader interest that may not be reflected in US sales alone.
Related Reading
The divergence between US and offshore sales could be partially attributed to the anonymity afforded by Regulation S, which does not require private companies to disclose capital-raising details or verify the financial status of buyers.
Nevertheless, the regulation mandates that offerings be limited strictly to non-US persons, ensuring compliance with international investment rules.
Folkman emphasized the company’s commitment to adhering to regulatory standards during his interview, stating, “We would expect that any potential non-US token sale would be limited to non-US persons and comply with applicable restrictions under what is known as Regulation S.”
Featured image from DALL-E, chart from TradingView.com
Comments (No)