WLFI is a confirmed scam
I’ve been warning about this kind of thing for a long time this is exactly the problem with a lot of DeFi.
WLFI borrowed $75 million in stablecoins by using its own essentially worthless token as collateral. The lending protocol involved was co-founded by one of their own advisors, making this look less like decentralized finance and more like an insider setup disguised as DeFi.
They now control 55% of that protocol’s liquidity, which effectively means they’re lending to themselves. Pool utilization has exceeded 93%, which is extremely high, locking out regular users who can no longer access their funds.
On top of that, millions were quietly routed to Coinbase Prime, raising serious concerns that this was a backdoor way to convert artificially inflated token value into real USD.
This is a clear example of how DeFi can be abused a coordinated scheme designed to extract real money using manufactured collateral.