The WLFI token of World Liberty Financial fell by about 10% to $0.0888 on April 9. This is the lowest level since the token's launch at the end of 2025. With two separate controversies occurring in succession, investors had little reason to hold the token.
WLFI currently faces simultaneous questions about whom it is trading with and how it manages its own treasury.
Partners with an uncomfortable past
According to a survey by The Times, it was revealed in a statement released on April 7 that WLFI integrated the USD1 stablecoin, based on the US dollar, into the Southeast Asian blockchain project AB DAO. AB DAO had been promoting a resort linked to the Cambodian Prince Group until a few weeks before this deal was finalized. Authorities in the US and UK sanctioned Prince Group founder Chen Zhi in November, seizing $15 billion in Bitcoin on charges related to large-scale online fraud.
WLFI has conducted due diligence and stated that there is no relationship with sanctioned individuals. The Times reported that WLFI was unaware of the past affiliations with AB DAO at the time of the transaction. This incident follows allegations of token sales to wallets linked to Iran, North Korea, and Russia, which WLFI has denied.
Serious questions raised about treasury management
BeInCrypto reported on April 8 that the WLFI treasury deposited 3 billion tokens into Dolomite and borrowed over $50 million in USD1, resulting in a utilization rate of over 100%.
According to on-chain data, the WLFI official treasury multisig is a wallet holding over $1.1 billion in assets, publicly tagged as “World Liberty: Multisig” on Etherscan. This multisig wallet has moved approximately 5 billion WLFI tokens through an intermediary wallet specially created for this operation, and then deposited the entire amount into Dolomite.
The value of the collateral position is reported to be $440 million as of April 9 according to Dolomite's statistics page. WLFI has limited market depth, making forced liquidation nearly impossible without a crash in the token's own price. If chain liquidations occur, Dolomite will be left with hard-to-recover bad debts.
Damage has already occurred due to the execution of this loan. The USD1 lending pool of Dolomite has reached a utilization rate of 100%, leaving no liquidity. Depositors cannot withdraw funds until the loan is repaid. The interest rate on USD1 deposits has exceeded 35%. This figure reflects an artificial shortage from a single internal entity rather than actual demand.
The circulation of WLFI's USD1 stablecoin has surpassed $4.6 billion. This scale indicates that the controversy can have significant effects beyond just the WLFI token dimension.
If actors looking for an opportunity aggressively short WLFI, the drop in token prices could lead to a chain liquidation. Dolomite may not be able to handle this, leading to a situation similar to the Terra incident in 2022. Unlike Terra, USD1 is backed by U.S. Treasury bonds and cash-like assets, limiting the risk of a complete peg breakdown. However, since $4.6 billion of USD1 is already in circulation, if the Dolomite crisis spreads, the repercussions could be significant.
WLFI has not made any official statements regarding previous transactions or destinations.