Restrictions on purchase objects, WLFI cannot be transferred, website crashes...

By Christopher Roark

Compiled by: Tao Zhu, Golden Finance

Former U.S. President Donald Trump’s token launch was somewhat of a failure.

Former U.S. President Donald Trump launched his World Liberty Financial (WLFI) token on Oct. 16. The token’s website claims that it will allow investors to gain voting rights over future decentralized finance (DeFi) protocols.

However, after nearly a full day of trading, sales of the token have been tepid. As of 10:00 a.m. UTC on October 17, the token’s website showed that only 848.63 million WLFI (based on the pre-sale price, worth $12.7 million) had been sold, leaving 19.1 billion tokens ($287 million) unsold. The first day’s sales accounted for only 4.24% of total sales.

Number of WLFI tokens sold. Source: World Liberty Financial.

Here are five reasons to explain the token’s surprisingly poor performance.

There are restrictions on who can buy

Unlike most token presales, which are open to anyone and can be purchased anonymously, only accredited U.S. investors or non-residents can purchase Trump DeFi tokens.

When users first visit the site, they are asked whether they reside in the United States and "meet the requirements to be deemed an 'accredited investor' as defined in Regulation D under the United States Securities Act of 1933," or whether they reside outside the United States.

Users who do not fall into either category are not allowed to access the Website further.

Buyers are not allowed to obtain tokens unless they first pass a Know Your Customer (KYC) check to verify their identity. Presumably, people who claim to be U.S. residents must provide a sworn statement that they are accredited investors to pass this check.

According to Investopedia, U.S. resident investors are considered "qualified" only if they have an annual income of more than $200,000, a net worth of more than $1 million, or are a general partner, executive officer or director of a company issuing unregistered securities.

These standards effectively exclude the vast majority of Americans.

Users can bypass this requirement by clicking "I live outside the United States," but they will then have to provide proof of residency outside the United States to continue.

The fact that many of Trump’s supporters live in the United States and are not accredited investors may be the main reason for the token’s weak sale.

Normally, such requirements are easily circumvented: Cryptocurrency users outside the United States can buy tokens from the site and then sell them to U.S. residents through decentralized exchanges.

U.S. residents who purchase the tokens will identify themselves using crypto addresses, making it nearly impossible for the government to determine whether they are U.S. residents and giving sellers plausible deniability.

However, this did not happen with Trump’s WLFI token, as the token is not transferable.

WLFI is not transferable or tradeable

Unlike most cryptocurrencies, WLFI cannot be transferred from one wallet to another. This means that accredited investors cannot sell tokens to non-accredited investors, and anyone outside the United States cannot sell them to U.S. residents.

In fact, holders can’t sell their tokens at all. The only thing they can do with their tokens is wait for the DeFi protocol to launch, at which point its developers claim holders will be able to vote on proposals that affect the protocol.

The terms and conditions of the token sale clearly state that tokens cannot be transferred to other users.

WLFI Terms and Conditions of Sale. Source: World Liberty Financial.

The inability to sell tokens means that investors cannot profit by selling tokens at a higher price, and token holders will not be able to profit from upcoming DeFi protocols.

The website is down

Despite only a few hundred million tokens being sold, the site couldn’t even handle the small amount of traffic. Some users reported that they were met with a “this page isn’t working properly” message when they tried to buy tokens.

Source: Wazz

Since the site was shut down, some users may not have been able to purchase WLFI, and after considering their plans, they may have changed their minds and decided to keep their money. This may have further reduced the sale of tokens.

The WLFI team has not explained why the site went down, but they probably expected sales to be worse than they were. Therefore, they may not have prepared enough servers to handle the traffic to the site, causing the site to go down, making the situation worse.

People think it's a scam

Another reason for the weak token sale could be the widespread perception that the project is a scam or a small scam.

Some observers said they believed the lack of transferability was intentionally hidden from buyers in order to sell more tokens.

Although the token’s lack of transferability is clearly stated on its website, some believe the project doesn’t expect buyers to read the fine print.

Trump’s announcement of the token was so controversial on X that it caught the community’s attention. The note states, “In the fine print, it states that the ‘tokens’ are non-transferable and locked in a wallet, so you cannot withdraw your tokens until a time that the ‘program’ sees fit. Please read the fine print!”

Vladimir Djukic, founder of Reflecto passive income token, shared the news:

Source: Vladimir

The purchasing process is cumbersome

Another reason for the weak token sales could be that the buying process is too frustrating for many potential investors.

Some people may not know if they are an accredited investor because they may not even know what the term means.

Others may not be sure what it means to “live” in the U.S. For example, if a person visits the U.S. a few months out of the year but spends the rest of the time in another country, they may not be sure which button to push.

Even if they make it to the token sale page, they must first pass a KYC check before they can proceed to the final step of purchasing. Some users may not trust Sumsub, the company that performs the KYC check, and may not be willing to upload their passport or driver’s license.

Even if they are willing to trust a company that conducts KYC checks, they may simply not be willing to upload their documents.

The overall tedium of the buying process could be another reason many backers decide to skip token sales, even if they believe the tokens will somehow pay off in the long run.

Despite the poor token sale, Trump still has support from many in the U.S. cryptocurrency community. According to data from the U.S. Federal Election Commission, political action committees of Trump allies raised more than $7.5 million in cryptocurrency between July and September.

Trump’s opponent, Vice President Kamala Harris, is also considered a better cryptocurrency candidate than incumbent President Joe Biden, according to research from Galaxy Digital.

She recently tried to appeal to cryptocurrency voters by promising to provide sensible regulation of the asset as part of her “opportunity economy promise.”