World Liberty Financial — the crypto project headed by Donald Trump and his family — is facing scrutiny after a series of revelations about internal lending arrangements, a disputed token freeze, and significant losses for outside investors.
Justin Sun, one of the project's most prominent investors, went public against WLFI on April 12 after his tokens were frozen. Sun had poured at least $75 million into the project and was named an advisor. The investment has since fallen in value by more than $80 million and is now worth around $43 million, according to a Bubblemaps analysis cited by NBC News.
When Sun attempted to move his tokens, they were blocked. He then publicly claimed, citing blockchain records, that a single individual at WLFI holds the authority to freeze wallets at administrator level. Reuters was unable to independently confirm or deny the claim. WLFI has threatened Sun with legal action.
WLFI confirms in its own risk disclosures that the project reserves the right to freeze wallets connected to illegal activity or violations of its terms of service. When the first freeze occurred in September 2025, WLFI stated it was responding to «malicious or high-risk behavior.» Sun disputes that characterization.
When a crypto project launches, it publishes code — called a smart contract — that governs how tokens can be moved and who can do what. This code is public and readable by anyone. The blockchain analyst known as «banteg» examined WLFI's original code from September 2024 and documented that it contained no function to freeze tokens. That capability was added in an update in August 2025 — one week before tokens became available for public trading. Investors who bought in early therefore had no reason to believe anyone could block their wallet. The capability was quietly added after the fact.
In February 2026, WLFI borrowed $75 million from the lending protocol Dolomite, using five percent of the total WLFI token supply as collateral. The founder of Dolomite also serves as WLFI's chief technology officer. Around $25 million has since been repaid, and over $40 million has been withdrawn in stablecoins via Coinbase.
An analysis by Bankless found that WLFI accounts for 82.7 percent of total value locked in Dolomite and 85.3 percent of total borrowed funds. The figures were confirmed by risk analysis firm Chaos Labs. Bankless warned that a coordinated exit from the protocol could push the utilization rate to 100 percent, locking lenders out of their own funds entirely. WLFI dismissed the concerns as FUD.
On April 9, the WLFI team proposed a gradual unlocking of tokens for retail investors. The proposal was widely met with skepticism.
WLFI's stablecoin USD1 now ranks among the ten most widely used stablecoins globally. According to analyses, the project employed a looping strategy — borrowing, depositing, and borrowing again — to artificially inflate supply.
While outside investors have suffered significant losses, revenues to the Trump family's company have been substantial. According to a Reuters analysis, WLFI generated over $460 million in revenues for the Trump family in the first half of 2025 alone. The corporate structure ensures that the Trump family's company receives 75 percent of token sale revenues after operating costs. Trump's own financial disclosure for 2025 listed over $57 million in income from the project.
The WLFI token is down 74 percent since August 2025 and trades around $0.08.
Austin Campbell, a finance professor at NYU, told NBC News that similar behavior in traditional markets would have created legal problems.
