By Michael Scott
Congresswoman Maxine Waters declares World Liberty Financial heightening risks faced by DeFi users.
While World Liberty Financial has yet to launch, Representative Maxine Waters terms it as an illustration of the risks consumers face in decentralized finance (DeFi). The project involves a crypto lending platform that GOP candidate Donald Trump and sons support. Speaking on Capitol Hill, Representative Waters decries the project as illustrative of users’ aggravated risks in DeFi.
The Tuesday criticism of World Liberty Financial emerged after the X (formerly Twitter) accounts of Tiffany Trump and Lara Trump suffered a breach. The bad actors gained access and control of the accounts to tout a fake token associated with World Liberty Financial’s unveiling. Such constitutes an attempt to scam potential users.
World Liberty Financial Breach
Waters attributes the prominence of parties behind the World Liberty Financial project as reasons for bad actors taking advantage to scam potential users. The Congresswoman urged lawmakers to assume responsibility for integrating strong protections to avert such scams in future.
The Republican flagbearer’s son, Eric Trump, confirmed that Twitter had terminated the breached social media accounts within minutes of the discovery. Nonetheless, Waters indicated that individuals suffered harm from the compromised accounts that lured them to acquire $1.8M worth of phony tokens unrelated to the project.
Waters criticism targets Trump, who champions digital assets in his campaign trail. On several occasions, the former president had promised to integrate overtures to the owners of the digital assets into his political platform.
Promoting World Liberty Financial adds to Trump’s entrepreneurial endeavours in crypto. The rollout of the DeFi lending protocol will yield more significant consequences for the crypto ecosystem than the NFT trading cards.
Waters’ comments against the Trump crypto project emerged as lawmakers held a congressional hearing to wrap ideas regarding DeFi’s merits. In her remarks, Rep. Waters spotlighted hacks, scams, conflicting interests and unequal information as the traits that define the DeFi space.
The House Subcommittee on Digital Assets and Financial Technology hosted the hearing. The House DeFi hearing is the first of its kind, and it was established by Congress last year to provide the requisite rules for the federal regulators that oversee the crypto assets realm.
The opening remarks illustrated the stark contrast between Republican and Democratic positions on regulatory enforcement actions. The nature of enforcement has led crypto firms such as Binance, Kraken and Coinbase to battle lawsuits with the US Securities and Exchange Commission (SEC).
The subcommittee’s chair, Congressman French Hill, profiles the enforcement actions as an existential threat to DeFi. Ranking member Congressman Stephen Lynch (D-MA) indicated the industry’s survival will rely on proper legislation.
The SEC is also a victim of the same headache those promoting the World Liberty Financial encountered last week. The security watchdog had its X account compromised in January this year. The breach allowed the actors to state that the SEC approved the applications for spot Bitcoin ETFs before the official go-ahead.
Celebrity Promotion a Concern for DeFi
The House DeFi hearing follows the ratling remarks by Ethereum co-founder against DeFi. Vitalik Buterin hailed the decentralized exchanges and stablecoins, but most projects were disappointing.
The witnesses testifying during the Tuesday hearing reiterated that DeFi confronts the regulatory landscape as a huge issue. Also, the witnesses consider DeFi harbouring the potential to streamline the country’s financial system as the pinnacle of inclusion.
From Americans for Financial Reform, Mark Hays urged lawmakers to exercise caution. The policy analyst indicates that the DeFi space desires protection similar to that of the security markets.
Hays decries the pitfalls in the DeFi, aided by the celebrity promotion with World Liberty Financial sustaining the trend. The analyst illustrated the input of comedian Larry David in promoting the now-defunct crypto exchange FTX just before its sudden implosion in 2022.
Celebrity promoters earn compensation for promoting assets even with less real-world tangible value. A recent example of celebrity promotion is World Liberty Financial, which involves the Trump family. Hays considers such a promotion to be unfavourable for users.