Trump Family Crypto Venture Gets Legal Cover as States Rush to Legitimize DAOs

States Create Legal Framework Tailor-Made for Trump Crypto Grift

Last week, Alabama and West Virginia signed versions of the Decentralized Unincorporated Nonprofit Organization Act into law, joining Wyoming in granting legal status to DAOs—the supposedly decentralized organizations that run many cryptocurrency projects. The timing couldn't be more convenient for the Trump family's World Liberty Financial, which has been selling access and political favors through unregulated token sales.

The DUNA Act gives DAOs legal recognition, allowing them to conduct business, appear in court, and pay taxes while maintaining the fiction of decentralization. That means organizations can enjoy the legal protections of incorporation without the accountability and transparency requirements that come with it.

Miles Jennings, policy chief at venture capital firm a16z crypto, celebrated the development as "forward-looking policymaking" that will help make the US "the crypto capital of the world." What he didn't mention is how perfectly this framework serves ventures like World Liberty Financial, which has been using token sales as a vehicle for influence peddling.

The DAO Loophole

DAOs are supposed to be communities of token holders who vote on protocol decisions—a democratic alternative to top-down corporate structures. In reality, they've become vehicles for wealthy insiders to maintain control while avoiding regulatory oversight.

Until now, many crypto projects formed nonprofit foundations to give themselves legal standing. But as DL News has documented, these foundations have been plagued by "protracted internal squabbling" and erosion of trust. The DUNA Act eliminates the need for even that thin veneer of institutional oversight.

According to Jennings and his colleague Aiden Slavin, the foundation model created "opacity, inefficiencies and limited growth." Their solution? Let DAOs operate as legal entities without the transparency requirements that foundations at least theoretically provided.

Perfect Timing for Trump Family Enrichment

The Trump family launched World Liberty Financial to sell crypto tokens while Donald Trump holds the presidency—a textbook pay-to-play scheme. The venture has been marketing tokens as a way to gain access and influence with the administration, turning the presidency into a fundraising vehicle for family enrichment.

The DUNA Act gives operations like this a legal framework to conduct business, sign contracts, and manage finances while maintaining the pretense of decentralization. Token holders get "voting rights" that create the appearance of democratic governance, while the Trump family maintains effective control and pockets the proceeds.

It's regulatory arbitrage designed for the politically connected. Traditional corporations face disclosure requirements, fiduciary duties, and regulatory oversight. DAOs operating under the DUNA Act can avoid much of that scrutiny while still enjoying legal protections when convenient.

States Racing to Enable Crypto Grift

Wyoming led the way in 2024, with Alabama and West Virginia following suit this year. The rush to legitimize DAOs isn't about protecting innovation—it's about creating friendly jurisdictions for crypto ventures that don't want to play by the same rules as everyone else.

These state laws arrive as the DAO model faces increasing scrutiny over governance failures and lack of accountability. Rather than addressing those concerns, the DUNA Act codifies the problems by giving legal standing to organizations designed to avoid transparency.

The venture capital firms backing this push—like a16z crypto—have billions invested in crypto projects that benefit from regulatory ambiguity. Their policy advocacy isn't about protecting small investors or fostering innovation. It's about creating legal frameworks that let their portfolio companies operate with minimal oversight while the Trump family and other insiders cash in.

What This Means for Accountability

The DUNA Act represents a fundamental shift in how crypto ventures can operate. Instead of choosing between genuine decentralization and legal recognition, they can now have both—or more accurately, they can have legal protections while maintaining centralized control behind a facade of token-holder governance.

For ventures like World Liberty Financial, this is ideal. They can sell tokens to people seeking influence with the Trump administration, conduct business as a legal entity, and avoid the disclosure requirements that would expose the operation for what it is: a family enrichment scheme using the presidency as a marketing tool.

The states rushing to pass these laws aren't protecting innovation or empowering communities. They're creating legal cover for pay-to-play schemes and regulatory arbitrage. And the Trump family is perfectly positioned to exploit it.