ALT5 Sigma, a fintech firm listed on Nasdaq and supported by the Trump family’s World Liberty Financial, has refuted rumors regarding a possible regulatory investigation involving one of its associates.
Summary
- ALT5 Sigma rejected speculation about a supposed SEC inquiry into venture capitalist Jon Isaac’s association with the company.
- Previous SEC filings reveal that Isaac held a consulting position at the firm for two years.
- ALT5’s stock saw a decline of over 10% following the speculations.
The center of the alleged inquiry revolves around venture capitalist Jon Isaac, whose name emerged in reports suggesting that the U.S. Securities and Exchange Commission (SEC) had launched an investigation into earnings inflation and insider share sales related to ALT5’s recent $1.5 billion treasury transaction.
Nevertheless, the fintech company promptly clarified that Isaac was neither a current nor former president of ALT5, nor an adviser, and stated it was unaware of any ongoing regulatory investigation into its operations. The company labeled the claims as misleading and inaccurate.
An article in The Information published on Tuesday stoked the rumors, alleging that Isaac had attracted the SEC’s attention.
Discussions on social media quickly shifted to whether regulators were investigating ALT5’s fundraising arrangement with World Liberty Financial, the Trump family’s crypto enterprise.
Speculation focused on potential irregularities in the $1.5 billion raise, which was conducted through a combination of a registered direct sale and a private placement valued at $7.50 per share. Detractors contended that Isaac helped inflate company earnings while concurrently benefiting from insider share sales.
ALT5 was quick to counter, clarifying that Isaac was not part of its leadership and outright denying the accusations.
“We are not aware of any SEC investigation into our activities,” the firm stated, distancing itself from claims linking Isaac to its leadership.
Following this, Isaac took to X to refute the claims, stating that he was not ALT5’s president and was not under investigation by the SEC.
“These reports seem to contain significant factual inaccuracies regarding my role and current regulatory situation,” he wrote. Isaac also expressed his continued support for ALT5 as a shareholder and stated, “wants nothing but the best for the company.”
SEC filing indicates consulting role
SEC records, however, show that Isaac had an official role with ALT5 despite his public denials. A December filing indicated that ALT5 engaged Isaac under a two-year consulting agreement commencing in March 2024.
Under this agreement, Isaac was expected to provide advice on growth strategy, financial restructuring, client acquisition, and product development, including weekly update calls with management.
The filing also stated that Isaac’s consulting arrangement included a $540,000 promissory note.
He later converted this note, along with accrued interest, into 465,753 ALT5 Sigma shares in December of that year.
However, these conflicting narratives unsettled ALT5 shareholders. Shares of ALT5 dropped 10.5% on Tuesday to $10.48, according to Yahoo Finance data, and further declined in after-hours trading to $5.39.
ALT5’s Trump connections raise concerns
ALT5’s affiliation with the Trump family has been a prominent topic in political circles.
Following the August funding round, Eric Trump joined the company’s board and promoted WLFI co-founder Zach Witkoff to chairman. This arrangement left ALT5 with approximately 7.5% of the WLFI token supply, linking 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 while calling for a more in-depth examination of the Trump family’s crypto endeavors, especially concerning its connections with ALT5.
