Trump-linked World Liberty crypto venture faces investor revolt

PORTLAND, Oregon - World Liberty Financial, a Trump family crypto venture, is facing an investor revolt that includes billionaire backer Justin Sun, who accused the project of secretly building controls that let insiders freeze token holders’ funds.

Mr Sun, who poured tens of millions of dollars into World Liberty, called the project “a trap masquerading as a door” in a post on X on April 12.

His denunciation adds to mounting criticism over a move by the project to deposit its own WLFI tokens as collateral on a lending platform and borrow US$75 million (S$96 million) against them.

Critics say the manoeuvre could let World Liberty extract cash before a wave of tokens is unlocked, flooding the market with new supply.

World Liberty says it can top up its collateral to prevent that and has roundly rejected the criticism. 

“It would be completely false to suggest that World Liberty is ‘exiting’ any positions: Instead, we’re doubling down based on our road map,” spokesperson David Wachsman said on April 10. The project had already repaid US$25 million of the loan, he said. 

“We are committed to sound risk management and continuously evaluate our positions and collateral structure, which is why we have already paid back 33 per cent,” Mr Wachsman said.

Still, the WLFI token has dropped by more than half since a portion of its supply was unlocked for trading in 2025. 

World Liberty has said it deposited three billion of the tokens into Dolomite, a lending protocol, and borrowed US$75 million in stablecoins against them. Dolomite’s co-founder Cory Caplan also serves as World Liberty’s chief technology officer. 

If WLFI’s price drops far enough, the concern is that the position could be liquidated – dumping tokens onto the market and accelerating the very sell-off investors fear. Many posters on X have expressed concerns about the loan on Dolomite.

“As a project, using your own token as collateral for loans is very bad,” said Mr Morten Christensen, a WLFI investor who also runs AirdropAlert.com. “It puts fear, doubt and anger in investors’ mind.” 

Timing

The move is drawing particular scrutiny because of its timing. World Liberty is soon expected to post a long-awaited proposal to create a schedule to unlock 80 per cent of early investors’ WLFI token holdings.

When tokens unlock and more supply enters the market, it typically pushes prices down. 

If the position were to be liquidated through Dolomite, World Liberty would in effect be able to cash out before the rest of the sellers can, critics said.

Dolomite could also be left with bad debt.

“It’s essentially World Liberty team dumping on retail,” said NYU Stern School of Business adjunct professor Austin Campbell, a stablecoin expert. 

World Liberty says it has the financial resources to back its position.

The project is “nowhere near liquidation”, it said in a post on April 9. “And frankly, even if markets moved dramatically against us, we’d simply supply more collateral.”

The backlash extends beyond the lending manoeuvre. In March, World Liberty pushed through a governance proposal that could reduce the voting power of early investors in key decisions.

Mr Sun called the project’s votes a sham, saying key information was withheld and outcomes were predetermined. 

In 2025, Mr Sun also alleged that the project blacklisted his WLFI token wallet, preventing him from being able to access his unlocked coins. 

World Liberty did not reply to a question about Mr Sun’s blacklisting claim. Separately, the project posted on X on April 12: “We have the evidence. We have the truth.”

World Liberty Financial was founded in 2024 by US President Donald Trump, his older sons, the President’s special envoy Steve Witkoff and Mr Witkoff’s sons.

The intertwining of a presidential brand with the latest controversy raises questions that extend well beyond the industry – about disclosure, potential conflicts of interest and what happens when a political brand effectively anchors a crypto project with retail investment.

Blockchain technology does provide some clues – the Dolomite transactions, for instance, are visible on-chain.

But, unlike publicly traded companies, most crypto token projects are not subject to a comparable disclosure and governance regime requiring regular audited financial statements, public reporting of insider transactions, or exchange-style independent board oversight, making it harder for outside investors to assess what is happening. BLOOMBERG