The Downfall of a Public Company: A $1.46 Billion Bet on WLFI, $540 Million Went to the Trump Family

Tokens fell 70%, stock price dropped 90%, and the only revenue-generating business is up for sale

Written by: ChandlerZ, Foresight News

According to a report by The Wall Street Journal on July 7, World Liberty Financial (WLFI) and its parent company AI Financial Corporation (Nasdaq: AIFC, formerly Alt5 Sigma) are negotiating with Tokyo-based blockchain company Perpetuals.com to sell its core payment business, Alt5 Sigma Canada, for up to $15 million.

Alt5 Sigma Canada generated approximately $25 million in revenue last year and is the only business under AI Financial that is still operating normally. The $15 million offer from Perpetuals.com includes a $5 million upfront payment in stock, with the remaining $10 million contingent on future revenue targets being met. The buyer will also assume some liabilities.

As part of the deal, Perpetuals.com has agreed to explore promoting WLFI's USD1 stablecoin in Europe and has authorized AI Financial to use its trading technology.

If the deal goes through, AI Financial's asset composition will consist of no operating revenue, approximately $700 million in nominal value but mostly locked WLFI tokens, $10.5 million in cash (which is still being consumed), and an SEC warning about its ability to continue as a going concern.

However, just 12 months ago, the company was still called Alt5 Sigma, with a stock price of $9.76, and was a normally operating NASDAQ-listed payment company.

A $1.46 Billion Token Gamble

AI Financial was formerly Alt5 Sigma, a NASDAQ-listed fintech company whose main businesses included the crypto payment gateway ALT5 Pay and the digital asset OTC trading platform ALT5 Prime, processing over $5 billion in cryptocurrency transactions, and was included in the Russell 3000E index in 2025. The company also had a biotechnology business (developing an orphan drug JAN123 for chronic pain) that was planned to be spun off into a separate entity, Alyea Therapeutics.

The company reached this point due to a transaction in August 2025.

On August 11, 2025, the Trump family's crypto project World Liberty Financial announced it would acquire a controlling stake in the NASDAQ-listed payment company then known as Alt5 Sigma through token payments, with a transaction price of $750 million in WLFI tokens.

Interestingly, AI Financial's chairman Zachary Witkoff also serves as the co-founder and CEO of WLFI, and board member Zachary Folkman is also a co-founder of WLFI. There is a high overlap between the buyer and seller at the board level.

After the acquisition, Alt5 Sigma immediately issued additional shares to external investors at a price of $7.50 per share, raising another $750 million in cash, all of which was used to purchase more WLFI tokens. In total, this public company spent approximately $1.46 billion to acquire about 7.28 billion WLFI tokens, at an average price of about $0.20.

Tokens Fell 70%, Stock Price Dropped 90%, Only $10.5 Million Left

However, the WLFI tokens continued to decline after the transaction was completed. As of July 9, 2026, the token price was approximately $0.057, down about 70% from AI Financial's $0.20 purchase cost. The 7.28 billion tokens held by AI Financial saw their book value shrink from $1.46 billion to about $706 million, resulting in an unrealized loss of over $750 million.

These tokens also face strict lock-up restrictions, with 3.53 billion tokens being non-transferable for 12 months, only allowed for collateral, staking, and lending; another 3.75 billion tokens require shareholder approval, amendments to bylaws, and resale registration to unlock. AI Financial holds tokens nominally worth $700 million, but the vast majority cannot be liquidated in the foreseeable future.

This has led to a comprehensive deterioration of AI Financial's financial data, with the company recording a net loss of $271.5 million in Q1 2026, of which $348.3 million came from unrealized losses on WLFI holdings. The company's cash balance is only $10.5 million.

On May 18, 2026, AI Financial formally issued a warning of "substantial doubt about ability to continue as a going concern" in a filing with the SEC, indicating that the company may not survive the year. The company's stock price fell from about $9.76 before the transaction to about $0.55, a drop of over 90%, with a market capitalization of approximately $77 million.

SEC filings also revealed significant deficiencies in internal controls, requiring restatement of financial data for 2024, and that Kraken, the external asset manager responsible for managing WLFI token positions, did not renew its contract after 30 days, leaving the token positions without external management.

Where Did the $540 Million Go?

The most critical flow of funds in this transaction lies in the revenue-sharing structure of WLFI token sales. According to the WLFI token sale agreement, the Trump family is entitled to 75% of the net proceeds from token sales. When AI Financial purchased WLFI tokens for $750 million in cash (from the funds raised by issuing additional shares to investors), this money flowed directly into WLFI's token sales revenue pool.

According to estimates by CNBC, Trump-related entities received approximately $540 million from this.

Recent reports by Bloomberg indicate that U.S. President Trump’s latest annual financial disclosure shows that he made at least $1.4 billion from crypto and meme coin-related businesses in 2025. Among them, the crypto company World Liberty Financial, co-founded by him, his son, and senior government official Steven Witkoff, generated over $594 million in sales revenue; his meme coin business CIC Digital LLC earned $636 million in royalty income through licensing agreements, and the company holds at least $60 million in cryptocurrency in its digital wallet; additionally, he made nearly $197 million from the sale of equity in Stablecoin Holdco.

The disclosure document shows that cryptocurrency income is Trump's largest source of income to date. This income far exceeds the $77 million he earned from Mar-a-Lago resort-related income and is also more than the $25 million he earned from the Northern Virginia golf club. The disclosure document lists over 680 pages of transaction records, including stock trades, which include shares of Amazon and Apple.

The story of AI Financial may not just be a random mistake of a company. In recent years, more and more public companies have begun to attempt to enhance their valuations by holding Bitcoin, Ethereum, or other cryptocurrencies, and the strategy has been emulated by many enterprises.

However, for token assets that lack mature market pricing, have limited liquidity, and face strict lock-up arrangements, converting a company's balance sheet into a single token exposure on a large scale, including the liquidity behind the assets, governance structure, commercial cash flow, and transparency among stakeholders, is a high-leverage trust experiment.

A slight misstep could lead to a point of no return.

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