The price of World Liberty Financial's WLFI token dropped nearly 10% on April 9, reaching a price level of 0.0888 dollars — the lowest since the token's launch at the end of 2025. Two separate scandals erupted within a short time, and sellers had little reason to hold onto their tokens.
WLFI simultaneously faces suspicions regarding both its business partners and its own cash usage.
The partner has a questionable history
A Times investigation published on April 7 showed that WLFI had integrated its own USD1 stablecoin with the Southeast Asian AB DAO blockchain project. AB DAO had previously advertised a resort connected to Cambodia's Prince Group before the contract. U.S. and U.K. authorities imposed sanctions against Prince Group founder Chen Zhita in November and seized 15 billion dollars worth of bitcoins due to an alleged large-scale online fraud.
WLFI states that it has conducted due diligence and is not dealing with sanctioned individuals. The Times reports that the company was not aware of AB DAO's previous connections at the time of signing the agreement. In addition to this case, WLFI has previously been accused of token sales to wallets suspected of having ties to Iran, North Korea, and Russia, but the company has denied these allegations.
Cash operations raise serious questions
BeInCrypto reported on April 8 that WLFI's cash was deposited into Dolomite with 3 billion tokens and borrowed over 50 million USD1, which raised the pool's utilization rate above 100 percent.
On-chain data shows that WLFI's official cash multisig wallet — marked with the Etherscan identifier “World Liberty: Multisig” and managing over 1.1 billion dollars in assets — transferred about 5 billion WLFI tokens through an intermediate wallet created specifically for this operation before the entire amount was deposited into Dolomite. In exchange for the collateral deposited, the team borrowed 65.4 million USD1 and 10.3 million USDC, and sent over 40 million USD1 to Coinbase Prime.
The collateral position is now valued at 440 million dollars as of April 9, according to the Dolomite statistics page. WLFI is traded with limited market depth, so forced liquidation would be nearly impossible without a collapse in the token's own price. If a series of liquidations were to start, Dolomite would face credit losses without a clear recovery mechanism.
Lending has already caused damage. The utilization rate in Dolomite's USD1 loan pool is now full at 100%, and no liquidity is available. Deposits cannot be withdrawn until loans are repaid. The USD1 deposit interest rate has risen above 35% — a figure reflecting artificial scarcity caused by one insider's actions rather than organic demand.
The circulating supply of WLFI's USD1 stablecoin has increased to over 4.6 billion dollars. At this scale, the dispute extends far beyond just the WLFI token.
If an opportunistic actor were to heavily short WLFI, a price drop could trigger a liquidation chain that Dolomite would not be able to withstand — DeFi has experienced such situations before, more destructively with Terra in 2022. However, USD1 is backed by U.S. Treasury investments and cash, so a complete disconnection is unlikely. Nevertheless, with 4.6 billion dollars in USD1 tokens in circulation, the impacts of the Dolomite crisis would not go unnoticed.
WLFI has not made any public statements regarding the transfer or its target.