Three auditor changes in 6 weeks! "Trump’s crypto asset" Alt5 Sigma falls into financial trouble?

“Trump’s crypto asset” Alt5 Sigma is facing chaotic financial reporting and potential delisting risks, having changed three audit firms in six weeks and seen a string of management resignations recently. On Tuesday, according to the Financial Times, the audit firm Victor Mokuolu CPA PLLC, hired by Alt5 Sigma earlier this month, had its license expire in August. After the Financial Times inquired about this issue, Alt5 Sigma fired the audit firm on Christmas Day and appointed LJ Soldinger Associates as its third auditor. This Las Vegas-based company reached a deal in August with the Trump family’s World Liberty Financial, agreeing to purchase and hold a large amount of $WLFI tokens. Eric Trump subsequently joined the board as an observer. However, since the deal was announced, the company failed to issue its quarterly financial reports on time, facing the threat of being delisted from Nasdaq. Alt5 Sigma’s troubled state is reflected not only in frequent auditor changes but also in a recent series of executive departures. These include CFO Jonathan Hugh, who joined at the time of the Trump deal and left after three months, and CEO Peter Tassiopoulos, who resigned in October. Auditor’s License Expiration Triggers Chain Reactions The dismissed firm, Victor Mokuolu CPA PLLC, had its Texas license expire in August. According to state regulations, the company was barred from conducting audit work until the license was renewed. Although the firm’s founder, Victor Mokuolu, renewed his personal CPA license on August 31, as of December 26, the company’s license had not yet been renewed by the Texas State Board of Public Accountancy (TSBPA). The audit firm had previously been penalized for repeatedly failing to file regulatory documents on time. In 2023, the U.S. Public Company Accounting Oversight Board (PCAOB) fined it $30,000 for failing to notify regulators of its completion of audits for six listed companies within the required 35 days. Texas regulators imposed an additional $15,000 fine last year for similar violations. The firm received a failing grade in its 2023 peer review and has been working for more than two years to rectify related deficiencies. According to recent regulatory filings, it listed 30 small-cap auditing clients. Period of Turbulence After Trump Deal During the period from December 8 when Alt5 Sigma appointed and subsequently dismissed Victor Mokuolu CPA PLLC, the company was undergoing intense turmoil. It now describes itself as “a fintech company with an innovative $WLFI digital asset library strategy.” The August Trump deal promised that the company would purchase and hold a large number of World Liberty Financial’s WLFI tokens, making Trump’s crypto project an investor in Alt5Sigma. As of December 8, Alt5Sigma held about 7.3 billion WLFI tokens (worth about $1.1 billion), and Trump’s crypto project also became an investor in Alt5Sigma. Since the Trump deal, chairman Zack Witkoff has led the company; he is co-founder of World Liberty Financial and son of Trump’s peace envoy Steve Witkoff. Senior management saw major changes in recent months: CFO Jonathan Hugh, who joined at the time of the Trump deal, left after three months; CEO Peter Tassiopoulos departed in October. Board member David Danziger resigned last month, causing the company to violate requirements regarding the size and accounting expertise of its audit committee. Delayed Financial Reporting and Delisting Threat Alt5 Sigma faces the threat of being delisted from Nasdaq for failing to submit quarterly financial reports as of the end of September on time. The company partially blamed its previous auditor’s “timeliness and responsiveness,” which resigned in November. Alt5 Sigma was restructured in July 2024 by biotech company JanOne, which previously focused on developing "innovative solutions to end the opioid crisis." JanOne merged with Alt5 Sigma and renamed in the same month. JanOne had previously changed its name in September 2019, and before that was known as Appliance Recycling Centers of America. Alt5 Sigma states that it provides financial infrastructure to enable traditional financial institutions to integrate with the digital asset economy. In August, Alt5 Sigma disclosed to U.S. regulators that its Canadian subsidiary and former group head were convicted by a Rwandan court in May for “crimes including illicit enrichment and money laundering.” Alt5 Sigma Canada and Andre Beauchesne appealed to the Kigali High Court in June, with the case still under judicial review. Both Alt5 Sigma Canada and Beauchesne deny any wrongdoing and insist they are victims of fraud. Risk warning and disclaimer The market has risks, investment needs caution. 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