Key takeaways
- WLFI token fell 15% to an all-time low of $0.08, down 82% from its September 2025 peak of $0.46.
- World Liberty Financial pledged 5 billion WLFI tokens on Dolomite to borrow $75 million in stablecoins, including $65.4 million in its own USD1 token.
- Dolomite co-founder Corey Caplan is also a World Liberty Financial adviser, raising conflict-of-interest concerns.
- Over $40 million of the borrowed funds were transferred to Coinbase Prime wallets, prompting questions about capital allocation.
Published: April 11, 2026 09:00 UTC
World Liberty Financial’s WLFI token crashed to a record low of $0.08 on April 10 after the Trump-backed crypto venture borrowed $75 million in stablecoins by pledging 5 billion of its own tokens on a lending platform run by one of its advisers. The move drained available liquidity from the platform’s stablecoin pool, locked out depositors, and triggered a wave of criticism from investors who called it self-dealing.
A lending protocol is a decentralized platform where users deposit crypto assets to earn interest while borrowers post collateral to take out loans, all managed by smart contracts instead of banks.
What happened with the $75 million loan
World Liberty Financial deposited 5 billion WLFI tokens as collateral on Dolomite, a decentralized lending protocol. In return, the project borrowed $65.4 million in its own USD1 stablecoin and $10.3 million in USDC. The combined $75 million position represents one of the largest single-entity borrows on the platform.
The problem: Dolomite was co-founded by Corey Caplan, who is also an adviser to World Liberty Financial. Fortune reported that blockchain analysis confirmed the company directed assets to a platform built by one of its own team members, a textbook conflict of interest in traditional finance.
The borrowing drained Dolomite’s USD1 pool so completely that other depositors could not withdraw their funds until World Liberty Financial repays or the pool is replenished. CoinDesk reported on April 9 that lenders were effectively “trapped” on the platform.
Where the money went
On-chain tracking showed that more than $40 million of the borrowed stablecoins moved to Coinbase Prime wallets. Coinbase Prime is an institutional trading and custody service, which could indicate plans to convert the funds to fiat currency or deploy them in other investments. World Liberty Financial has not disclosed what the $40 million transfer was for.
Three billion additional WLFI tokens were moved to an intermediary wallet on April 2 and April 7, a stash worth roughly $234 million at the time. That transfer added to selling pressure fears, even though the tokens have not been liquidated.
Market reaction and liquidation fears
WLFI dropped 15% in 24 hours to $0.08, an all-time low. The token has now lost 82% of its value since peaking at $0.46 in September 2025. Trading volume spiked to $318 million in 24 hours as holders rushed to exit.
The sell-off exposed a structural risk: if WLFI’s price keeps falling, the 5 billion tokens posted as collateral lose value. At some point, the Dolomite protocol would automatically liquidate the position, forcing a sale of tokens on the open market and likely pushing the price even lower.
World Liberty Financial dismissed the concerns. “Yes, we supplied WLFI as collateral and borrowed stablecoins. No, we are nowhere near liquidation,” the company posted on X. It claimed the position remains “heavily overcollateralized.” The company also called the criticism “FUD,” a crypto term for fear, uncertainty, and doubt.
Justin Sun, the Tron founder and major WLFI backer, took an $11 million paper loss on his frozen WLFI holdings as the price dropped, according to The Block.
Token unlock adds more pressure
Compounding the sell-off, World Liberty Financial announced plans to let WLFI holders vote on unlocking their tokens “in the coming weeks.” Early buyers purchased WLFI under lockup conditions and have been unable to sell.
The company said the unlock would follow “a long-term vesting and unlock schedule for retail early purchasers, a structured, phased approach.” It did not provide a specific timeline or the percentage of tokens that would be released in each phase. Any unlock, even a partial one, would increase the circulating supply and add selling pressure to a token already at record lows.
Why this matters for crypto markets
The WLFI situation tests whether politically connected crypto projects face the same scrutiny as others. World Liberty Financial was founded by a team that includes members of the Trump family, which has drawn both attention and criticism from regulators and investors. The SEC’s upcoming “Reg Crypto” framework, expected to be published after White House review, could reshape how token offerings like WLFI are governed.
For DeFi, the Dolomite incident exposes the risk of concentrated borrowing. When a single entity controls over 50% of a lending pool’s liquidity, it can effectively hold other depositors hostage. Protocol designers are increasingly debating whether concentration limits should be built into lending contracts to prevent similar situations.
USD1, World Liberty Financial’s stablecoin, now has over $4 billion in circulation. If confidence in the parent project erodes further, the stablecoin’s peg and adoption could come under pressure, though it has held steady so far.
Frequently asked questions
What is WLFI and who is behind it?
WLFI is the governance token of World Liberty Financial, a crypto venture founded in 2024 by a team that includes members of the Trump family. The token launched at $0.015 and peaked at $0.46 in September 2025 before falling 82% to its current all-time low of $0.08.
Why did WLFI crash to a record low?
WLFI fell 15% in one day after reports revealed the project borrowed $75 million from a lending platform co-founded by one of its own advisers. The conflict-of-interest concerns, combined with an upcoming token unlock vote and $40 million transferred to Coinbase Prime, triggered a sell-off.
Could WLFI face forced liquidation on Dolomite?
World Liberty Financial claims its position is “heavily overcollateralized” and nowhere near liquidation. However, if the token price continues to fall, the 5 billion tokens posted as collateral would lose value, potentially triggering an automatic liquidation by the protocol. The company has said it would supply more collateral if markets move against its position.
