World Liberty Financial, a cryptocurrency venture co-founded by members of the Trump family and Steve Witkoff, has been accused of secretly embedding controls that let insiders freeze investors’ funds. Billionaire backer Justin Sun, who poured tens of millions of dollars into World Liberty in its infancy, called the project “a trap masquerading as a door” in a post on X on Sunday. Investors are fuming at the Trump family’s crypto operation over a move they say secretly set them up to potentially get ripped off. The WLFI token has already lost more than half its value since a portion of its supply was freed up for trading last year.
The token price has collapsed by around 80 percent from its all-time high price as a result of the collateral saga. “I have always been a staunch supporter of President Trump and his crypto-friendly policies,” Sun, who attended a dinner with the president last year, said on Sunday. He claimed it was “never disclosed to me or any investor” that World Liberty allegedly “secretly embedded a backdoor blacklist function in the smart contract deploying the WLFI token.” “This is the antithesis of decentralization. It is a trap masquerading as a door,” he said, accusing World Liberty of “treating the crypto community as a personal ATM” in a follow-up post.
In response, WLFI appeared to threaten Sun with legal action. Responding on X, the company posted: “Does anyone still believe @justinsuntron?” “Justin’s favorite move is playing the victim while making baseless allegations to cover up his own misconduct. Same playbook, different target. WLFI isn’t the first. We have the contracts. We have the evidence. We have the truth. See you in court pal.” “As a project, using your own token as collateral for loans is very bad,” said Morten Christensen, a backer who also runs AirdropAlert.com. “It puts fear, doubt and anger in investors’ mind.”
Crypto influencer Nick O’Neill described the issue in layman’s terms in a video posted to X on April 10. “Trump’s crypto project just used its own made-up token to drain $150 million from investors,” he said. He said the apparent ploy makes it “nearly impossible for regular depositors to withdraw their money.” O’Neill added that World Liberty deposited 3 billion of the tokens into Dolomite, a lending protocol. Dolomite’s co-founder, Cory Caplan, also serves as World Liberty’s chief technology officer.
“To make matters worse, Dolomite is not some random platform. It’s co-founded by a literal advisor to World Liberty Fi, and their depositors getting locked out, mostly everyday users who lent real dollars expecting to earn yield and leave whenever they want,” O’Neill explained. “The Trump family literally drained the entire pool using their made up token.” “The whole operation was akin to a presidential scale extraction scheme.” WLFI spokesperson David Wachsman pushed back on concerns. “It would be completely false to suggest that World Liberty is ‘exiting’ any positions: instead, we’re doubling down based on our roadmap,” 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 percent,” Wachsman said.
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