Trump rethinking $2.5b fund amid corruption allegations, sources say

Sources say Donald Trump is weighing whether to move forward with his controversial Anti-Weaponization Fund. (Reuters: Evan Vucci)

US President Donald Trump is considering the future of a $US1.776 billion ($2.51 billion) fund for his political allies, sources say.

His retreat is a nod to several legal setbacks and internal pushback the fund has encountered since it was announced two weeks ago.

Here's what to know about the fund that sparked backlash from all sides of politics.

The fund was established to compensate victims of "political weaponization" with taxpayer money.

It emerged out of a lawsuit Mr Trump brought against his own government over the alleged mishandling of his tax records.

The US has set up a fund to compensate Americans deemed victims of "lawfare". Democrats say it is "pure theft of public funds" to pay the president's allies.

The president had sought $US10 billion from the Internal Revenue Service (IRS), arguing the body should have done more to prevent a former contractor from leaking his tax returns to the media.

As part of a settlement, it was agreed the Department of Justice (DOJ) would set up a pool of taxpayer money controlled by his allies, from which they could dole out payments to those who claimed to have suffered "weaponization or lawfare" by the US government.

Those terms have frequently been used by Mr Trump and his allies to describe criminal cases against them, including those arising from the attack on the US Capitol on January 6, 2021.

The government said anyone could make a claim, regardless of their political allegiances, but a panel of five hand-picked commissioners oversees each claim.

Early indications suggested the likely recipients would include Trump allies who were prosecuted or investigated over alleged election interference.

At a press conference, US Vice-President JD Vance pointed to the example of Tina Peters, a Colorado county clerk who was jailed for tampering with election equipment to try to prove Mr Trump's baseless election theft claims in 2020.

"This innocent grandmother was going to spend 10 years in prison, completely disproportionate to any misdemeanour trespassing that I've ever seen," Mr Vance said.

The settlement agreement said other "well-known examples" of lawfare and weaponisation included:

Those involved in the January 6 attack on the US Capitol were set to benefit from the fund. (Reuters: Leah Millis)

There were a few reasons, but they all tie into an overarching theme of alleged corruption.

First, the fund was widely received as Mr Trump creating a way to pay off whoeve