According to Lee Reiners, a lecturing fellow at Duke University and former Federal Reserve Bank of New York examiner, World Liberty Financial’s WLFI token may constitute an unregistered security, based on analysis published on Friday, May 8. Citing the SEC’s recent token taxonomy, Reiners argues that WLFI does not qualify as a pure digital commodity and is likely subject to SEC scrutiny, despite World Liberty’s claims that it is a pure governance token. The project sold approximately 25 billion WLFI tokens out of a 100 billion total supply in public presale rounds before the protocol was fully built. Reiners contends that buyers likely invested with a reasonable expectation of profits, satisfying the Howey Test used by the SEC to determine if an asset is a security. He noted that World Liberty leveraged the Trump family name in marketing and that token holders have limited governance control, citing a lawsuit filed by Justin Sun alleging token freezes and blocked governance rights.
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