In 6 weeks, 3 auditors changed, Alt5 Sigma's financial report is delayed, facing delisting crisis

Original Author: Zhao Ying

Original Source: Wall Street Journal

"Trump's Crypto Asset" Alt5 Sigma is facing chaotic financial reporting and potential delisting risks, having changed three auditing firms in six weeks, with company executives also resigning in succession recently.

On Tuesday, the Financial Times reported that the auditing firm Victor Mokuolu CPA PLLC, hired by Alt5 Sigma earlier this month and associated with the Trump family, had its license expire in August. After the Financial Times inquired about this issue, Alt5 Sigma fired the auditing firm on Christmas Day and appointed LJ Soldinger Associates as its third auditing firm.

The Las Vegas-based company reached a deal with the Trump family's World Liberty Financial in August to purchase and hold a large amount of $WLFI tokens, with Eric Trump subsequently joining the board as an observer. However, since the announcement of the deal, the company has failed to timely release its quarterly financial reports and is facing delisting threats from Nasdaq.

The chaotic state of Alt5 Sigma is not only reflected in the frequent changes of auditors but also in the recent resignations of company executives, including Chief Financial Officer Jonathan Hugh, who joined during the Trump deal and left three months later, and Chief Executive Officer Peter Tassiopoulos, who departed in October.

Expired Auditor License Triggers Chain Reaction

The fired auditing firm Victor Mokuolu CPA PLLC had its license in Texas expire in August. According to state regulations, the firm was prohibited from conducting audit work until its license was renewed. Although the firm's founder, Victor Mokuolu, updated his personal CPA license on August 31, as of December 26, the firm's license had not been renewed by the Texas State Board of Public Accountancy (TSBPA).

The auditing firm had previously faced regulatory penalties for failing to submit regulatory documents on time. The Public Company Accounting Oversight Board (PCAOB) fined it $30,000 in 2023 for failing to notify regulators of its completed audits of six public 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 the 2023 peer review of the accounting industry and has been struggling to correct related deficiencies for over two years. According to recent regulatory filings, the firm listed 30 small-cap audit clients.

Turbulent Period After Trump Deal

During the period when Alt5 Sigma appointed and subsequently fired Victor Mokuolu CPA PLLC on December 8, the company was in a state of severe turmoil. The company currently defines itself as "a fintech company with a pioneering $WLFI digital asset portfolio strategy."

The Trump deal in August committed the company to purchase and hold a large amount of World Liberty Financial's WLFI tokens, and this cryptocurrency project has also become an investor in Alt5 Sigma. As of December 8, Alt5 Sigma held approximately 7.3 billion WLFI tokens, valued at about $1.1 billion, and this cryptocurrency project has also become an investor in Alt5 Sigma.

Since the Trump deal, the chairman of Alt5 Sigma has been Zack Witkoff, a co-founder of World Liberty Financial and the son of Trump peace negotiator Steve Witkoff.

There have been significant changes in the company's senior management in recent months, with Chief Financial Officer Jonathan Hugh, who joined during the Trump deal, leaving three months later, and Chief Executive Officer Peter Tassiopoulos departing in October. Board member David Danziger resigned last month, leading to the company violating requirements regarding the size of the audit committee and accounting expertise.

Delayed Financial Reports and Delisting Threats

Alt5 Sigma is facing delisting threats from Nasdaq for failing to timely submit its quarterly financial report for the period ending September. The company attributed part of the delay to the "timeliness and responsiveness" of its former auditor, who officially resigned in November.

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

Alt5 Sigma stated that the company 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 the group's former head were found guilty by a Rwandan court in May 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 is still under judicial review. Both Alt5 Sigma Canada and Beauchesne deny any wrongdoing and assert that they are victims of fraud.