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The FT raises concerns about auditor compliance as Trump’s Alt5 Sigma faces Nasdaq delisting due to missed filings.
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Alt5 Sigma’s $1.5B token agreement with World Liberty Financial and Trump family has caused leadership turmoil.
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Alt5 Sigma’s crypto-pivot is under pressure from overseas legal issues, governance problems, and turnover.
The Financial Times reported on a Trump crypto project that had a troubled history of compliance. This new development adds to the growing list of concerns about Nasdaq’s Nasdaq listed firm in terms of governance, leadership, and legal issues.
Red Flags Raised by an Auditor with Compliance Issues
According to the FT Alt5 Sigma hired a firm that reportedly lacked the proper license and had previously failed a peer review inspection. The firm has a history of non-compliance to professional standards, which raises questions about the quality and oversight of Alt5 Sigma’s financial operations.
It is interesting that Nasdaq recently informed Alt5 Sigma that it does not meet listing requirements because it failed to file the required quarterly report. If the problem is not resolved, Alt5 Sigma risks being delisted.
Deep Trump Family ties to the Crypto Venture
Alt5 Sigma has a close relationship with World Liberty Financial (WLF), an altcoin venture closely connected to the Trump Family. A Trump-affiliated entity owns 60% in WLF and has the right to 75% of the net proceeds from token sales.
Donald Trump, Eric Trump and Donald Trump Jr. are all titles within the larger project, giving it both political visibility as well as increased regulatory attention.
Related:Trump’s Crypto Firm Loses another CEO after $1.5 Billion Token Sale
Leadership changes follow $1.5B token deal
The latest concerns are coming months after Alt5 Sigma signed a high-profile deal in August to buy up to $1.5 Billion worth of digital tokens with World Liberty Financial. The deal attracted attention because it was expected to send more than 500 million dollars to the Trump family via token sales.
Alt5 Sigma parted with COO Ron Pitters and Acting CEO Jonathan Hugh shortly after the agreement. The company did not provide any further details but stated that the departures were not due misconduct. This is the second CEO departure in two months.
Zachary Witkoff, a Trump ally, became chairman of Alt5 Sigma’s board after the deal. Zachary Folkman, co-founder of WLFI, and Eric Trump were added as non-voting observers to the board. Donald Trump Jr. appeared with them as well at a Nasdaq ceremony to mark the partnership.
After Deal, Legal Problems Arise
Alt5 Sigma had already been in legal trouble abroad when it signed the agreement. One of its subsidiaries was found criminally responsible for money laundering in Rwanda earlier this year. Andre Beauchesne was a company executive who was also found guilty of money laundering and sentenced to prison.
SEC filings showed that Alt5 Sigma did not inform its board about the Rwanda case until late august, weeks after World Liberty Financial’s token deal was completed. Both the subsidiary and Beauchesne appealed, claiming they were victims.
Peter Tassiopoulos, the CEO of Alt5 Sigma, was suspended in October after the disclosure. This added to the turmoil within the company’s management. Alt5 Sigma has named Tony Isaac, a long-time executive, as acting CEO.
Alt5 Sigma is under increasing pressure to reshape its image through the WLFI token. There are auditor concerns, Nasdaq compliance questions, frequent leadership changes and unresolved cases.
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