AI Financial points to recovery path after Trump-backed WLFI bet

AI Financial Corp. has said its business outlook improved after losses tied to its WLFI token holdings. According to a Securities and Exchange Commission filing, the company said earlier going-concern risks have been substantially mitigated.

The Nasdaq-listed firm still trades below $1 after its shares fell 92% since the crypto deal.

AI Financial updates going-concern warning

AI Financial told investors in May that it might not continue as a going concern for 12 months. In Wednesday’s filing, the company said the issues behind that warning had eased. The update came after the company took large losses from a crypto purchase linked to World Liberty Financial. AI Financial was previously named Alt5 Sigma before it changed its corporate identity.

Alt5 Sigma entered a $1.5 billion transaction with World Liberty Financial in August. World Liberty Financial launched in 2024 with Eric Trump, Donald Trump Jr., and other business partners as co-founders. Through that deal, the publicly traded company acquired 7.3 billion WLFI tokens. The company expected those tokens to gain value after the purchase.

Instead, WLFI traded around 70% below Alt5’s purchase price as of Wednesday morning, according to Coinbase data. AI Financial reported a $348 million first-quarter loss on its crypto assets in a recent filing.

WLFI holdings fall from initial value

AI Financial valued its WLFI holdings at $380 million on Tuesday evening. The company said those holdings carried an initial value of about $1.4 billion. The Trump family earned about $500 million from the transaction, according to prior reporting. A spokeswoman for the Trump brothers previously said they have no visibility into AI Financial.

She also said the Trump brothers have no involvement in AI Financial. The company’s filings did not state any operating role for the Trump brothers. AI Financial cannot currently sell its WLFI holdings because lock-up agreements cover the tokens. 

The company said the restrictions differ by tranche and depend on how it acquired the tokens. The earliest sales cannot happen before mid-August under the current lock-up terms. CEO Tony Isaac said the company has no current plans to sell those tokens.

Nasdaq listing pressure remains

AI Financial trades on the Nasdaq, which requires listed companies to keep shares above $1. The company’s stock opened on Wednesday at 65 cents after a 92% decline since the WLFI deal. If AI Financial fails to regain compliance, Nasdaq could delist the company. The company faces that deadline within roughly two weeks, based on the current timeline.

The company said 3.2 billion WLFI tokens are available for loan-related use. AI Financial said it may use those tokens as collateral or for similar transactions. AI Financial valued the lendable portion of its WLFI holdings at about $180 million.

The company disclosed that figure in Wednesday’s securities filing. In early Wednesday trading, AI Financial stock rose three cents after the update. The filing said the company’s outlook improved, while WLFI’s price remained below its purchase level.