Senators ques Trump envoy over USD1 ties, citing conflict risks
Senate Democrats have turned up the heat on Steve Witkoff, President Donald Trump’s special envoy to the Middle East, asking why his latest ethics filing still shows stakes tied to World Liberty Financial (WLFi) and related crypto vehicles.
In a letter led by Senator Adam Schiff and signed by seven colleagues, they cite WLFi’s USD1 stablecoin and affiliate entities connected to Witkoff and family members, and question why those holdings weren’t divested despite WLFi saying in May that divestment was “in process.”
Fortune notes the timing that set off alarm bells: in May, Abu Dhabi’s MGX announced a $2B investment in Binance that was paid in USD1, while Washington and Abu Dhabi advanced a separate mega‑deal on AI infrastructure.
Witkoff has offloaded a $120 million stake in his real‑estate company, but his disclosure still lists cryptocurrency for WLFi and shares in WC Digital Fi LLC, with additional interests in WC Digital SC LLC and SC Financial Technologies LLC as of August. The senators argue those links create a potential conflict with his diplomatic remit, given WLFi’s business ties in the U.A.E. Spokespeople for WLFi and the White House did not immediately comment.
The legal test is straightforward. Under 18 U.S.C. §208, federal officials generally must recuse themselves from matters that affect their financial interests (including certain spousal or affiliated holdings) or eliminate the conflict; alternatives include a qualified waiver or a blind trust. If an envoy with exposure to WLFi/USD1 engages on issues that intersect with U.A.E. counterparties, inspectors general and the Office of Government Ethics could treat it as a textbook screening problem rather than a political spat. The letter seeks clarity on status: has divestment happened, are recusals in place, and what safeguards separate public duties from private stakes?
For markets, the friction point is USD1’s trust profile. Any formal inquiry tends to nudge exchanges, market makers and corporates to reassess listings, reserve disclosures and counterparty exposures tied to the Binance–MGX conduit. The signal often shows up quietly: thinner order books in USD1 pairs, a tilt toward redemptions over issuance if uncertainty lingers, and more frequent requests for breakdowns of where reserves sit and how redemptions are handled. None of this implies misconduct; it’s the appearance risk that moves liquidity first.
Two clean outcomes would cap the impact: Witkoff documents strict recusals where required, or completes divestment and updates disclosures. A broader fight – committee hearings, extended correspondence – would keep a headline overhang on USD1 and, by extension, on the “Gulf liquidity ↔ major exchange” channel that has been a key flow story this year.
As GNcrypto has reported throughout 2025, politics and personnel often reshape crypto’s plumbing before they reshape prices. Stablecoin venues adjust risk first; listed proxies follow. In that frame, the Witkoff letter is less about one official and more about whether a politically connected stablecoin can maintain institutional‑grade optics while scrutiny is live.
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