Chinese entrepreneur sued for fraud invests $30 million in Trump crypto venture

A sudden infusion of $30 million into Donald Trump's nascent cryptocurrency venture from a Chinese billionaire sued by the Securities and Exchange Commission for allegedly defrauding investors could potentially deliver an eight-figure payday to a company associated with the president-elect.

The investment has sparked new concerns about Trump's ability to potentially profit from foreign investors, and his positions on cryptocurrency following a presidential campaign in which he vowed to make the United States "the crypto capital of the planet."

Justin Sun -- a cryptocurrency billionaire famous in part for his purchase of a $6 million banana art piece last month -- announced his $30 million investment in the Trump-backed World Liberty Financial last week, making him the company's largest investor.

The influx of cash also triggered a provision that allows an entity affiliated with Trump to receive 75% of the company's net revenue, based on the terms outlined in a recent company filing.

DT Marks DEFI LLC, a company affiliated with Trump, stands to profit more than $15 million following Sun's investment, renewing concerns about the potential influence on Trump's cryptocurrency positions and the future of the SEC lawsuit against Sun and his companies for allegedly violating securities laws. Sun and his companies have denied wrongdoing.

"It's hard to have more influence when you're talking about money in politics than someone who just directly gave you eight figures," said Jordan Libowitz, a vice president at the progressive watchdog group Citizens for Responsibility and Ethics in Washington.

The investment comes as Trump recently announced a series of pro-crypto nominees for his administration, including veteran regulator and cryptocurrency advocate Paul Atkins to lead the Securities and Exchange Commission, and Silicon Valley venture capitalist David Sachs to be White House AI and crypto czar.

Trump has denied all allegations that he has profited from the presidency.

"President Trump removed himself from his multi-billion-dollar real estate empire to run for office and forewent his government salary," Trump-Vance transition spokesperson Karoline Leavitt said in a statement to ABC News. "Unlike most politicians, President Trump didn't get into politics for profit -- he's fighting because he loves the people of this country and wants to make America great again."

World Liberty Financial and Justin Sun did not respond to requests for comment.

'We have to be No. 1'

Despite once calling cryptocurrency a "scam," Trump threw his support in September behind World Liberty Financial, a decentralized finance platform that could eventually be a marketplace for borrowing and lending various cryptocurrencies.

"We have to be No. 1," Trump said at the announcement, regarding the United States' position in the crypto market. "I think AI is really important, but I think crypto is one of those things we have to do,"

World Liberty Financial makes money, at this time, through the sale of tokens, which gives investors a say in the company's governance; however, the tokens don't offer a share of the company's revenue and can't be resold.

Trump is not an officer or employee of the company, but DT Marks DEFI LLC receives a bulk of World Liberty Financial's revenue if the venture is a success, leading some ethics experts to raise concerns that the company could be a vehicle for directing funds to Trump.

"To call it an ethical problem is to understate how fundamentally corrupt it is," said Robert Weissman, the co-president of consumer advocacy group Public Citizen. "They've set up a way for people to funnel money to Donald Trump, and now it's happening."

Two months after its launch, the company failed to make much traction in the cryptocurrency space after it faced criticism about its ambiguous business plan beyond its association with Trump. According to James Butterfill, the head of research at asset management company CoinShares, the company's early marketing materials offered little more than "buzzwords."

The weak launch also suggested its founders and the Trumps would make little to no money from the venture. Because World Liberty Financial had made less than $30 million in revenue prior to Sun's investment, all of the money raised by the company would be held in a reserve to cover operating expenses while the Trumps would make nothing, according to terms in the company's so-called "gold paper."

Enter Justin Sun, the eclectic cryptocurrency billionaire who -- prior to spending millions on a banana duct-taped to a wall -- attracted headlines for spending more than half a million dollars on an NTF of a pet rock, and $4.5 million for a lunch with Warren Buffet.

His $30 million investment through Tron -- the popular cryptocurrency he founded in 2017 -- made him the largest investor in the project and fueled resurgence of interest in the once-struggling platform.

"The U.S. is becoming the blockchain hub, and Bitcoin owes it to @realDonaldTrump!" Sun wrote on X announcing his investment.

'You'd want to run away'

Last year the SEC sued Sun and his companies with securities fraud for allegedly manipulating the value of a cryptocurrency and paying celebrities including Lindsey Lohan, Ne-Yo, and Jake Paul to promote the assets without disclosing they had been paid. Sun and his companies have denied wrongdoing, and the celebrities have settled the case without admitting or denying the allegations.

Tron and other cryptocurrencies have also faced criticism for allegedly enabling criminals to make financial transactions undetected, with a report from the United Nations Office on Drugs and Crime calling Tron "a preferred choice for crypto money launderers in East and Southeast." Tron's leadership called the report's allegation "inaccurate" and said it "supports the UN's stance against malicious actors in the blockchain space."

After his $30 million investment, World Liberty Financial named Sun an adviser, saying that his "insights and experience will be instrumental" to the company's growth.

Weissman told ABC News he was concerned about the arrangement.

"It's exactly the sort of figure that you'd want to run away from if you were starting a business, and instead they're embracing it," Weissman said of World Liberty Financial and Sun.

The investment could prove to be lucrative for Sun, given Trump's association with the project and the number of cryptocurrencies that have rallied following the election. On Thursday, shares of the leading cryptocurrency bitcoin surpassed $100,000 for the first time.

"With a lot of crypto, having good PR or a good kind of voice helps a lot to get something noticed, and there's no better time for World Liberty Financial," Butterfill said. "The lines between the private endeavor that this is and the public connections that Trump has are quite blurred, and the kind of people running World Liberty Financial will probably play on that a little bit."

Trump's name and likeness are seen throughout World Liberty Financial's website and marketing materials, and Trump himself is listed as the company's "chief crypto advocate," though the firm discloses that neither Trump nor his family members are officers of the company. According to the company, World Liberty Financial is "inspired" by Trump and hopes to introduce the platform "to a broader audience that may have previously been unfamiliar or hesitant to engage with decentralized assets and cryptocurrency."

"They're trying to take advantage of President-elect Trump's popularity and the fact that he just won an election, and see if they can get this business up and running and off the ground," said Scott Amey, general counsel at the watchdog Project on Government Oversight.

'Money in the future president's hands'

Though Sun and Trump have never met, several ethics experts ABC News spoke with also raised concerns that the investment -- and Trump's possible profit from it -- could influence Trump's policy toward cryptocurrencies, including whether the Securities and Exchange Commission continues to pursue the aggressive litigation brought under the Biden administration.

"If you face charges from the SEC, it's a pretty good investment to put money in the future president's hands in order to influence who might end up making those decisions at the SEC," said Libowitz.

Steve Witkoff, Trump's longtime friend who, along with his sons, is a co-founder of World Liberty Financial, told ABC's "Good Morning America" in September that Trump's foray into crypto would not pose a conflict because he would likely place his assets into a trust -- as Trump did during his first administration when he placed his assets into a revocable trust controlled by his sons and a business associate.

But that arrangement would not fully remedy the concerns about conflicts stemming from Trump's crypto venture, according to multiple experts. Trump is still able to broadly understand the state of his assets, he can still profit from them, and he has the authority to regain control of the assets -- all of which limit the trust's effectiveness in preventing conflicts, several experts said.

"Absent divesting and stepping away from these investments totally, he still stands to profit from them," said Amey.