Alt5 Sigma faces delisting crisis after changing auditors three times in six weeks and struggling to produce its financial report.

Original author: Zhao Ying

Original source: Wall Street News

Alt5 Sigma, dubbed "Trump's cryptocurrency asset," is facing financial reporting chaos and potential delisting risks. It has changed auditing firms three times in six weeks, and its senior executives have also recently resigned one after another.

On Tuesday, the Financial Times reported that the auditing firm Victor Mokuolu CPA PLLC, hired earlier this month by Alt5 Sigma, a cryptocurrency company linked to the Trump family, had its license expire in August. Following inquiries from the Financial Times, Alt5 Sigma dismissed the auditing firm on Christmas Day and appointed LJ Soldinger Associates as its third auditing firm.

The Las Vegas-based company entered into a deal in August with World Liberty Financial, owned by the Trump family, to purchase and hold a significant amount of $WLFI tokens. Eric Trump subsequently joined the board as an observer. However, since the deal was announced, the company has failed to release quarterly earnings reports on time and faces the threat of delisting from Nasdaq.

Alt5 Sigma's chaotic state is not only reflected in the frequent changes of auditors, but also in the recent departures of senior executives, including CFO Jonathan Hugh, who joined during the Trump deal, and CEO Peter Tassiopoulos, who left in October.

Auditor's license revocation triggers a chain of problems

The Texas-based auditing firm Victor Mokuolu CPA PLLC, whose license expired in August, was prohibited from conducting audits under state law until its license was renewed. Although founder Victor Mokuolu renewed his individual certified public accountant license on August 31, the firm's license had not been renewed by the Texas Board of Public Accountants (TSBPA) as of December 26.

The auditing firm had previously been penalized by regulators for repeatedly failing to file regulatory documents on time. In 2023, the Public Company Accounting Oversight Board (PCAOB) fined it $30,000 for failing to notify regulators of its completed audits of six publicly traded companies within the required 35-day period. Texas regulators imposed an additional $15,000 fine last year for the same violation.

The auditing firm received a failing grade in a 2023 accounting industry peer review and has been working to correct the deficiencies for over two years. According to recent regulatory filings, the firm lists 30 small-cap audit clients.

The Turmoil Following the Trump Deal

Alt5 Sigma was in a period of significant upheaval following the appointment and subsequent dismissal of Victor Mokuolu, CPA PLLC, on December 8. The company currently defines itself as "a fintech company with a groundbreaking $WLFI digital asset treasury strategy."

In August, the Trump deal promised the company to purchase and hold a significant amount of World Liberty Financial's WLFI tokens, making this cryptocurrency project an investor in Alt5Sigma. As of December 8, Alt5Sigma held approximately 7.3 billion WLFI tokens, worth about $1.1 billion, and this cryptocurrency project under Trump's umbrella also became an investor in Alt5Sigma.

Since the Trump deal, Zack Witkoff, co-founder of World Liberty Financial and son of Steve Witkoff, Trump’s special envoy for peace negotiations, has served as chairman of Alt5 Sigma.

The company has undergone significant reshuffling in recent months. Chief Financial Officer Jonathan Hugh, who joined during the Trump deal, left after three months, and CEO Peter Tassiopoulos resigned in October. Board member David Danziger resigned last month, causing the company to breach requirements regarding the size of its audit committee and the accounting professional experience required.

Financial reporting delays and the threat of delisting

Alt5 Sigma faces delisting from Nasdaq after failing to file its quarterly earnings report for the period ending September. The company attributed the delay in part to the "timeliness and responsiveness" of its former auditor, who resigned in November.

Alt5 Sigma was formed in July 2024 through the restructuring of biotechnology company JanOne, which previously focused on developing "innovative solutions to end the opioid epidemic." JanOne merged with Alt5 Sigma and changed its name that same month. JanOne had previously changed its name in September 2019; before that, the company was known as Appliance Recycling Centers of America.

Alt5 Sigma states that the company provides financial infrastructure that enables traditional financial institutions to integrate with the digital asset economy.

In August, Alt5 Sigma disclosed to U.S. regulators that its Canadian subsidiary and its former executives were convicted in May by a Rwandan court of "crimes including illegal enrichment and money laundering." Alt5 Sigma Canada and Andre Beauchesne appealed to the Kigali High Court in Rwanda in June, and the case remains under judicial review. Both Alt5 Sigma Canada and Beauchesne deny any wrongdoing and maintain they are victims of fraud.