Posted on September 5, 2024 at 6:44 p.m. EST.
Over the past week, the leaders of the Trump family’s new DeFi project World Liberty Financial (WLF) have been exposed. Their relative inexperience with cryptocurrencies has many in the industry, including Trump’s defenders, concerned that the project is vulnerable not only to financially motivated hacks, but also to politically motivated ones.
“(Trump) is putting his brand and his personality at great risk if they don’t involve the right people,” said Marshall Hayner, CEO of Metallicus, which hosts its own DeFi lending protocol. Metal Xand a Trump supporter. “DeFi lending is one of the most challenging areas in crypto because it has a lot of complex moving parts.”
Little is known so far about WLF, which was formerly called “The Defiant Ones.” However, excerpts from a white paper seen by Coindesk show that its early iterations are built on the codebase of Dough Finance, a DeFi project that has undergone a $2 Million Hack As of July, several key players are relatively inexperienced in blockchain technology, including Trump’s youngest son, Barron Trump, 18, who is cited in the white paper as WLF’s “DeFi visionary.” as well as real estate developer Steve Witkoff and his son Zack Witkoff, who lead the project’s “Institutional Investment” and “Intelligence” groups, respectively. Trump’s two other sons, Donald Trump Jr. and Eric Trump, are listed as the project’s “Web3 Ambassadors,” both of whom appear to have little experience with cryptocurrencies beyond their family affiliations with Trump’s NFT projects and personal friendships with some industry advocates.
Read more: Trump vows to ’embrace’ crypto and Bitcoin in economic policy speech
According to CoinDesk’s sources, Dough Finance’s founders are Chase Herro, a cryptocurrency entrepreneur with ties to expensive private networking clubs, and Zachary Folkman, the founder of a company called “Date Hotter Girls LLC” through which he sold “masterclasses” in dating techniques. Herro is listed in the white paper as World Liberty Financial’s head of data strategies, while Folkman is listed as its head of operations. Neither has had particularly high visibility in the cryptocurrency space in the past.
Aside from the fact that WLF apparently uses Dough Finance’s codebase, no one named as a lead in the whitepaper seen by CoinDesk has any technical development experience, implying that the project outsources its technical expertise to third parties (WFL’s press office did not respond to requests for comment for this article). thread published by WLF on Wednesday, says the company “works with” security companies including Zokyo, Fuzzland and PeckShield, and noted that ““Our code has been thoroughly reviewed by these industry leaders.”
According to Hayner, relying on third-party experts for technical development is a boon to hackers, who often seek to exploit parts of the stack that leaders entrust to third parties to build in a secure and responsible manner. DeFi projects are typically developer-led, and even some of these projects have been attacked when they relied on third parties. For example, Mango Markets was one of many protocols that fell victim to attacks manipulation of oracles in 2022“If you’re dependent on third parties and you don’t know how to build these technologies yourself, well, I guess the saying goes that you’re only as strong as your weakest link,” Hayner said.
Multiple motivations
Financial gain is usually the main motivation for hackers. According to WFL, cybercriminals have already lured over 70,000 Telegram users to a fraudulent channel pretending to be connected to WFL. The IndependentThe X accounts of Trump’s daughter Tiffany and his daughter-in-law Lara Trump were also hacked Tuesday night in order to promote a fraudulent campaign.governance token” supposedly related to WFL. While this latest case represents failures in X’s security rather than the future DeFi protocol, it demonstrates the money bad actors stand to make.
The FBI, for its part, warned This week, North Korea in particular is targeting DeFi to steal funds, often with sophisticated social engineering campaigns. The FBI said these attacks often use “affiliations, events, personal relationships, and business connections.” North Korean group Lazarus has stolen about $3 billion worth of cryptocurrency over the past seven years, according to a report report from threat intelligence firm Recorded Future.
A crypto project by a potential former president seeking a second term would also likely attract attacks from foreign states such as North Korea, Russia, China and Iran., or other hostile governments seeking to humiliate a prominent American politician and/or destabilize the American political system. Iran, for example, hacked Trump’s presidential campaign earlier this year, with the FBI claiming that the nation-state targeted “both political parties” through social engineering campaigns. Russia also reportedly attempted to interfere in the 2016 and 2020 U.S. presidential elections, though with the apparent goal of helping Trump get elected, not preventing him.
Read more: How to invest in cryptocurrencies depending on whether Trump or Harris becomes president
The divisive nature of Trump’s politics also contributes to WLF’s appeal as a target. “If you do anything in the cryptocurrency space, you’re exposed to a lot of hacks, and if you’re Trump, you have a lot of people who want to ruin and hack what you’re doing,” said Erik Finman, a prominent cryptocurrency investor and fellow Trump supporter.
Finman noted that in addition to countries like North Korea or Russia looking to sow instability, extremists in the United States on both sides of the political spectrum could be motivated to attack a Trump crypto project. “American communists in their basement, or American alt-rights in their basement, are probably much more adept at causing chaos with their hacking capabilities,” Finman said.
A back and forth on X
Several experts have reached out to X to encourage WLF to hire more experienced voices to reduce the risks from potential hackers. In response to a tweet World Liberty Financial says ‘the brightest minds in crypto are backing us’, consultant Austin Campbell urged the project of “coming to talk to me, giving me a full account of aand I’ll give you my honest opinion on what you’re doing (good/bad/ugly, where it will work, where it will fail).”
Others were more direct, criticizing the project’s stated leaders. “The brightest minds in cryptography weren’t actually supporting them,” published Ethan Kravitz, general partner at AGE Crypto Funds, on X.
Hayner, for his part, says he’s somewhat relieved to see WLF post that it’s not a “hostile fork” of Aave but rather “working with” the largest liquidity protocol. “You’d want someone like (Aave founder) Stani (Kulechov) to be there, or myself,” as experts who have built their own DeFi lending protocols from scratch and endured multiple crypto booms and busts. “They should have the ability and experience to build the internal tools they need, rather than relying on others,” Hayner noted.
World Liberty Financial appears to have heard these concerns. According to a message posted on the project’s official Telegram account on Wednesday, which was later published republished On X, the project said: “We are not taking any risks. We are working with the best security experts in the world.” And a job On Thursday, people “who have been in this space for a while” were invited to contribute to the project.
