Turmoil inside World Liberty-based crypto treasury includes investigations, firings and Rwandan money laundering conviction
ALT5 Sigma Corporation, the Nasdaq-listed fintech that morphed into a digital asset treasury (DAT) committed to accumulating World Liberty Financial tokens, has been dealing with significant internal turmoil alongside its stock's collapse, according to a new report from The Information published Wednesday.
The company's shares, ticker ALTS, are down about 80% since ALT5 Sigma pivoted to its DAT strategy in August, according to Yahoo Finance.
In the weeks after announcing it had adopted a strategy of accumulating WLFI tokens — the governance token of the DeFi project World Liberty, which is backed by President Donald Trump and his sons Donald Jr., Eric, and Barron — ALT5 Sigma reportedly "warned staff it would likely face litigation and regulatory investigations" as several senior executives either quit or were fired, according to The Information.
It's unclear at the moment what type of regulatory investigations, if any, may be looming.
In September, The Wall Street Journal reported that both the U.S. Securities and Exchange Commission and the Financial Industry Regulatory Authority (FINRA) had contacted multiple DATs with questions about irregular patterns of trading volume and share price movements. While ALT5 Sigma is not being accused of any wrongdoing, there's some evidence of unusual trading activity in its shares before the official announcement of the WLFI strategy on Aug. 11.
ALT5 Sigma didn't immediately respond to a request for comment. A spokesperson for World Liberty told The Block: "As the USD1 ecosystem continues to grow, World Liberty Financial is excited about the future of our partnership with ALT5."
Both ALT5 Sigma's communications, both internal and public, have been somewhat irregular in recent months. The company ed its staff in September that the company's CEO had been suspended, apparently without publicly disclosing the suspension until October, the report also said.
In another twist, The Information reports that a Rwandan court found ALT5 Sigma criminally liable for money laundering earlier this year. The conviction was apparently not disclosed to the company's board "at the time of the World Liberty deal," according to Wednesday's report.
Overall, the story paints a picture of a company experiencing intense turmoil since opting for its digital asset treasury strategy. In August, seeking to capitalize on a DAT boom that has since begun to fizzle, ALT5 Sigma announced plans to raise a whopping $1.5 billion to pursue its WLFI token treasury strategy.
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Shareholder feels 'betrayed'
ALT5 Sigma said at the time of its crypto treasury launch that it would raise the money through a private placement of WLFI tokens contributed by World Liberty, in addition to capital from some of the "world’s largest institutional investors and prominent" crypto venture capital firms. ALT5 Sigma failed to name any potential investors.
The DAT trend in general is beginning to face criticism for allegedly providing an off-ramp for large token holders looking to exit their positions without selling directly into the market.
In Wednesday's story, one ALT5 Sigma investor explained his frustrations with what has become of the company. "I feel betrayed,” Los Angeles–based shareholder Matt Chipman said. “I hope it wasn’t just a money grab for the Trump family. This has been a nightmare scenario in the last three months."
Before becoming a WLFI treasury ALT5 Sigma described itself as a fintech providing blockchain-powered technology for tokenization, trading, clearing, settlement, payments, and safekeeping. The company was founded in 2018.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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