ALT5 Sigma, a Nasdaq-listed fintech firm backed by the Trump family’s World Liberty Financial, has denied rumors of a potential regulatory investigation involving one of its associates.
Summary
- ALT5 Sigma dismissed speculation about a rumored SEC probe into venture capitalist Jon Isaac’s role at the company.
- Past SEC filings show Isaac held a two-year consulting role at the company.
- ALT5’s stock dropped over 10% following the rumors.
At the centre of the alleged probe was venture capitalist Jon Isaac, whose name surfaced in reports claiming the U.S. Securities and Exchange Commission (SEC) had opened an inquiry into earnings inflation and insider share sales tied to ALT5’s recent $1.5 billion treasury deal.
However, the fintech company quickly moved to clarify that Isaac was neither a current nor former president of ALT5 nor an adviser, and that it was unaware of any ongoing regulatory investigation into its activities. The company called the claims misleading and inaccurate.
An article in The Information on Tuesday fueled the rumors, alleging Isaac had drawn the SEC’s attention.
Community chatter on social media quickly turned to whether regulators were looking into ALT5’s fundraising deal with World Liberty Financial, the Trump family’s crypto venture.
Speculation centered on possible irregularities in the $1.5 billion raise, carried out through a mix of a registered direct sale and a private placement priced at $7.50 per share. Critics argued that Isaac helped inflate company earnings and, at the same time, profited from insider share sales.
ALT5 wasted little time pushing back, making clear Isaac was not part of its leadership and flatly denying the allegations.
“We are not aware of any SEC investigation into our activities,” the firm stated, while distancing itself from claims tying Isaac to its leadership.
Subsequently, Isaac took to X to deny the claims himself, writing that he wasn’t ALT5’s president and faced no probe from the SEC.
“These reports appear to contain significant factual errors regarding my role and current regulatory status,” he wrote. Isaac added that he continues to support ALT5 as a shareholder and “wants nothing but the best for the company.”
SEC filing shows consulting role
SEC records, however, indicate Isaac had an official role with ALT5 despite his public denials. According to a December filing, ALT5 brought Isaac on under a two-year consulting agreement starting in March 2024.
As part of the agreement, Isaac was expected to advise on growth strategy, financial restructuring, client acquisition, and product development, with weekly update calls to management.
The filing added that Isaac’s consulting agreement included a $540,000 promissory note.
He subsequently converted the note, plus the interest it had accrued, into 465,753 ALT5 Sigma shares in December that year.
The conflicting narratives, however, managed to rattle ALT5 shareholders. ALT5’s shares fell 10.5% on Tuesday to $10.48, according to Yahoo Finance data, and slipped further in after-hours trading to $5.39.
ALT5’s Trump ties raises questions
For ALT5, its relationship with the Trump family has been a talking point within political circles.
After the August funding round, Eric Trump joined the company’s board and elevated WLFI co-founder Zach Witkoff to chairman. The arrangement left ALT5 holding about 7.5% of the WLFI token supply and tied the company’s balance sheet to the Trump family’s crypto venture.
Democratic lawmakers, including Elizabeth Warren and Alexandria Ocasio-Cortez, have argued that the partnership raises questions about conflicts of interest and potential self-dealing and have called for closer examination of the Trump family’s crypto businesses, especially its ties to ALT5.
Source: https://crypto.news/alt5-sigma-slams-sec-probe-rumors-stock-sinks-10/
