Original article | Odaily Odaily( @OdailyChina )
Author｜Golem ( @web3_golem )
The true nature of WLFI has finally been revealed to the crypto.
On April 9th, foreign media reported that World Liberty Financial (WLFI), a crypto project of the Trump family, conducted multiple collateralized lending transactions through the DeFi lending protocol Dolomite, raising concerns in the market about insider trading and USD1 liquidity risks. According to statistics, WLFI used approximately 5 billion WLFI tokens as collateral to move approximately $75 million worth of stablecoins through Dolomite and Coinbase Prime.
Coincidentally, Corey Caplan, co-founder of Dolomite, is also an advisor to WLFI. Although WLFI responded that borrowing stablecoins was creating value for the ecosystem and that there was no risk of liquidation, and that WLFI even repaid 25 million USD1 of its loan on April 11, it is clear to anyone with a discerning eye that by tracing the on-chain path of its borrowed stablecoins, Dolomite is simply a disguised channel for the WLFI team to sell its tokens.
Renowned trader Pickle Cat also believes that WLFI is using high-level buybacks to build confidence while simultaneously borrowing real money through low-level collateralization, leaving only retail investors locked in the Dolomite pool to bear the brunt of the losses. Therefore, she decisively liquidated all her WLFI spot holdings.
WLFI's price performance since its launch speaks volumes. Officially launched on September 1, 2025, with token buybacks beginning in late September of the same year, WLFI has since fallen by over 66%, and is down approximately 70% from its peak. So, where is the selling pressure coming from? It's highly likely from the Trump family and their stakeholders. Firstly, they can't possibly rely solely on Dolomite as a disguised channel for selling tokens; secondly, only they hold a large number of WLFI tokens and have the "unrestricted right to sell."
Even before WLFI's official launch, Odaily analyzed its token holding structure and selling pressure, concluding that the Trump family was the biggest source of selling pressure. Of the total 100 billion tokens, only 26.05% were pre-sold, with the remaining 73.95% controlled by the team. (Related reading: WLFI Unlock Countdown: Trump's 15.75% Whale Holdings, Can the Market Withstand "Presidential Selling Pressure"? )
Furthermore, after the official launch of the WLFI token, the team blacklisted 272 addresses, including Justin Sun address, citing the need to protect user funds and prevent large-scale sell-offs by major investors. This action was initially applauded by the community, but only now, with WLFI's continued decline, have we realized that the real purpose of freezing these major investor addresses was to facilitate their own sell-off.
But the matter didn't end there. After WLFI's actions were exposed, Justin Sun couldn't sit still any longer. The renowned "Sun the Chopper" had never suffered such a loss before. Was he allowed to sell but not others? So he confronted WLFI again.
Justin Sun confronts WLFI again
On April 12, Justin Sunposted on the X platform, condemning the WLFI team for a series of actions, including extracting fees from users, secretly implanting backdoors to control user assets, freezing investor funds, and treating the crypto community as a personal ATM. The WLFI team did not back down on Sun's accusations, responding that Justin Sun specialty is playing the victim and fabricating baseless accusations to cover up his misconduct, and stating that they would see him in court.
To understand this whole situation, we need to review the relationship between Justin Sun and WLFI.
WLFI and Justin Sun enjoyed a honeymoon period. In November 2024, Justin Sunannounced a $30 million investment in WLFI through TRON DAO, becoming WLFI's largest investor and project advisor at the time. This deal was interpreted at the time as a political donation from Justin Sun to Trump, given that Trump's election as president was already a foregone conclusion, and the crypto community wanted to cultivate a good relationship with him. Therefore, the deal was a win-win situation: WLFI received funding, and Justin Sun opened a channel to establish a relationship with the US president.
However, when the WLFI token was actually launched, the WLFI team immediately sidelined Justin Sun On September 5, 2025, World Liberty Financial (WLFI) blacklisted addresses associated with Justin Sun, involving approximately 540 million unlocked tokens and 2.4 billion locked tokens. The WLFI team's reason was straightforward: they suspected someone was dumping tokens to suppress the price, and WLFI blocked 272 addresses at once.
Although Nansen CEO Alex Svanevik later stated that Justin Sun did not dump the token, and that his transfer occurred after the WLFI token price plummeted, the truth behind the price drop was likely due to profit-taking by many retail investors and further price collapse caused by market panic. However, because WLFI used the community as a shield, Justin Sun did not directly confront them.
However, some defended Justin Sun CryptoQuant CEO Ki Young Ju argued that even if Justin Sun sold the unlocked tokens, it was justifiable, as he had the autonomy to manage his assets, and WLFI had no right to freeze user addresses. Ironically, the Trump family has repeatedly stated publicly that "de-banking" was the main reason for their entry into the crypto space, yet their assets have been frozen by the banking system multiple times. How is their act of blacklisting user addresses any different from the banks that rejected them back then? This "pseudo-decentralization" behavior deserves condemnation.
On the other hand, while Justin Sun's experience is commendable, if Justin Sun chooses to confront WLFI head-on, he may not ultimately gain anything. This is because WLFI is backed by the Trump family and a host of top-tier figures with deep roots in American politics and business. Which of these groups can Justin Sun afford to offend?
Furthermore, given Justin Sun's own regulatory experience, political situation, and past controversies, if he were to actually go to court against WLFI in the United States, let alone win the case, he might be fortunate enough to escape unscathed.
So, while Justin Sun"rights protection" can generate some buzz and he can strike a pose with retail investors, it's best to forget about taking it all the way to a US court.
The Trump family's second lesson for the crypto world
We have to admit that WLFI is the second lesson the Trump family has taught the crypto(the first lesson, of course, was Trump). Its real purpose has never been to break the restrictions of traditional banks and make DeFi better, but to make a fortune in the gray areas of financial management.
Many people were unwilling to acknowledge or ignore this in the past because the name Trump still held significant value. In a bull market, power is automatically translated into security and a protective moat. Coupled with Trump's extremely friendly attitude towards crypto during his campaign and early term, crypto users did not launch large-scale protests or experience FUD (Fear, Uncertainty, and Doubt). The Trump family profited in the crypto market, and we could also get a share of the profits.
But things are different now. In the current climate, with "Crypto Tsar" David Sacks shifting his focus to AI, and Trump preoccupied with the US-Iran conflict and unable to attend to the crypto industry, the Trump name has lost much of its value. When Trump is no longer our crypto president, what halo does his family still hold? (Related reading: "Crypto Tsar" steps down: 130-day political performance concludes, how much of Trump's crypto promise remains? )
As for the WLFI project specifically, due to its token price movement, governance controversies, and data freeze issues, this initial positive perception has been largely eroded in the minds of users. The crypto is certainly not innocent; being willing to pay for power and political backing is itself a form of speculative collusion. However, going forward, when faced with "clumsy projects" like WLFI created by the American elite in the crypto space, we should bravely say no.
