{"id":1878325,"date":"2026-04-11T14:47:52","date_gmt":"2026-04-11T11:47:52","guid":{"rendered":"https:\/\/analyse.optim.biz\/?p=1878325"},"modified":"2026-04-11T14:47:52","modified_gmt":"2026-04-11T11:47:52","slug":"trumps-world-liberty-financial-makes-ftx-esque-move-borrows-against-its-own-crypto-token","status":"publish","type":"post","link":"https:\/\/analyse.optim.biz\/?p=1878325","title":{"rendered":"Trump\u2019s World Liberty Financial Makes FTX-esque Move, Borrows Against Its Own Crypto Token"},"content":{"rendered":"

[analyse_image type=”featured” src=”https:\/\/gizmodo.com\/app\/uploads\/2026\/04\/world-liberty-trump-eric-don-jr-1200×675.jpg”]<\/p>\n

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The Trump family\u2019s World Liberty Financial crypto project is drawing sharp criticism after its treasury used billions of its own WLFI governance tokens as collateral to borrow stablecoins on an affiliated DeFi lending platform. The structure has prompted comparisons to the circular borrowing that contributed to <\/span>the collapse of crypto exchange FTX in 2022<\/span>.<\/span><\/p>\n

According to <\/span>CoinDesk<\/span><\/i>, World Liberty Financial\u2019s treasury wallet has routed roughly five billion WLFI tokens to a crypto lending protocol, Dolomite. The project borrowed about $75 million in stablecoins, including $65.4 million of its own USD1 and $10.3 million in USDC. More than $40 million of the proceeds later moved to Coinbase Prime. The activity pushed Dolomite\u2019s USD1 pool utilization to around 93%, making withdrawals difficult for other depositors. Notably, Dolomite co-founder Corey Caplan also serves as chief technology officer for World Liberty Financial.<\/span><\/p>\n

World Liberty Financial\u2019s treasury collateral now accounts for roughly 55% of Dolomite\u2019s total value locked. <\/span>According to <\/span>CryptoSlate<\/span><\/i>, this concentration means a drop in WLFI\u2019s price could trigger large liquidations that create bad debt and harm other depositors on the platform. The WLFI token also has limited market depth on exchanges and decentralized markets, so any forced selling from liquidations could cause a sharp price crash that worsens the collateral shortfall.<\/span><\/p>\n

While not at the same scale, the situation mirrors how the FTX-connected trading firm Alameda Research borrowed billions against FTT tokens on FTX itself in the months before the exchange failed. FTT was the proprietary token related to the FTX exchange. That self-referential collateral created massive hidden leverage. Of course, FTX\u2019s arrangement was concealed from the public until a leaked balance sheet triggered a run on the exchange. Additionally, the WLFI situation is playing out transparently on the blockchain, meaning anyone can track the positions in real time. That transparency doesn\u2019t eliminate the risk, but it does change the nature of it. While FTX depositors had no idea what Alameda was doing with their funds, everyone can see what World Liberty Financial is doing.<\/span><\/p>\n

World Liberty Financial has responded to criticism related to their recent activities on X<\/span> by dismissing the concerns as \u201cFUD.\u201d The team described itself as an \u201canchor borrower\u201d that generates higher yields for lenders in its markets and said it remains \u201cnowhere near liquidation.\u201d Officials added that they would simply supply more WLFI tokens as collateral if prices moved against them. Despite the response, the WLFI token is down nearly 20% since Wednesday.<\/span><\/p>\n

Separately, World Liberty Financial and its associated USD1 stablecoin have been at the heart of corruption allegations around the Trump administration. Just last week, <\/span>the SEC settled a case against Justin Sun and his companies<\/span> for $10 million over allegations including selling unregistered securities, wash trading, and undisclosed celebrity endorsements. Sun holds large positions in both WLFI and the TRUMP memecoin.<\/span><\/p>\n

Democrats on the House Financial Services Committee have <\/span>alleged<\/span> pay-to-play influence in the handling of that case and others. Additionally, a UAE-linked firm led by Sheikh Tahnoon bin Zayed Al Nahyan <\/span>previously signed a $500 million deal for a 49% stake in World Liberty Financial<\/span>, with $187 million paid upfront to Trump family entities. Eric Trump signed the agreement. Critics, including Senator Chris Murphy, have called the arrangement corruption, especially after the Trump administration reversed prior national-security blocks on UAE access to Nvidia AI chips.<\/span><\/p>\n

The White House also previously pardoned Binance founder Changpeng Zhao after his conviction for Bank Secrecy Act violations, a move former DOJ pardon chief Elizabeth Oyer <\/span>labeled<\/span> \u201cunprecedented corruption\u201d due to Binance\u2019s subsequent $2 billion position in USD1. No similar relief has come for the developers of Samourai Wallet, who received longer prison sentences for <\/span>somewhat similar charges involving the operation of a non-custodial Bitcoin mixer<\/span>.<\/span><\/p>\n

Democrats have repeatedly highlighted these inconsistencies and called for stronger ethics safeguards in the pending <\/span>CLARITY Act<\/span>, which is intended to provide regulatory clarity to the U.S. crypto industry, to prevent administration officials or family members from profiting from crypto ventures while shaping regulation. The status of the legislation remains up in the air at this time due to <\/span>differences in priorities and preferences associated with the bill<\/span> from the crypto and banking lobbies.<\/span><\/p>\n<\/div>\n<\/article>\n

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The Trump family\u2019s World Liberty Financial crypto project is drawing sharp criticism after its treasury used billions of its own WLFI governance tokens as collateral to borrow stablecoins on an affiliated DeFi lending platform. The structure has prompted comparisons to the circular borrowing that contributed to <\/span>the collapse of crypto exchange FTX in 2022<\/span>.<\/span><\/p>\n

According to <\/span>CoinDesk<\/span><\/i>, World Liberty Financial\u2019s treasury wallet has routed roughly five billion WLFI tokens to a crypto lending protocol, Dolomite. The project borrowed about $75 million in stablecoins, including $65.4 million of its own USD1 and $10.3 million in USDC. More than $40 million of the proceeds later moved to Coinbase Prime. The activity pushed Dolomite\u2019s USD1 pool utilization to around 93%, making withdrawals difficult for other depositors. Notably, Dolomite co-founder Corey Caplan also serves as chief technology officer for World Liberty Financial.<\/span><\/p>\n

World Liberty Financial\u2019s treasury collateral now accounts for roughly 55% of Dolomite\u2019s total value locked. <\/span>According to <\/span>CryptoSlate<\/span><\/i>, this concentration means a drop in WLFI\u2019s price could trigger large liquidations that create bad debt and harm other depositors on the platform. The WLFI token also has limited market depth on exchanges and decentralized markets, so any forced selling from liquidations could cause a sharp price crash that worsens the collateral shortfall.<\/span><\/p>\n

While not at the same scale, the situation mirrors how the FTX-connected trading firm Alameda Research borrowed billions against FTT tokens on FTX itself in the months before the exchange failed. FTT was the proprietary token related to the FTX exchange. That self-referential collateral created massive hidden leverage. Of course, FTX\u2019s arrangement was concealed from the public until a leaked balance sheet triggered a run on the exchange. Additionally, the WLFI situation is playing out transparently on the blockchain, meaning anyone can track the positions in real time. That transparency doesn\u2019t eliminate the risk, but it does change the nature of it. While FTX depositors had no idea what Alameda was doing with their funds, everyone can see what World Liberty Financial is doing.<\/span><\/p>\n

World Liberty Financial has responded to criticism related to their recent activities on X<\/span> by dismissing the concerns as \u201cFUD.\u201d The team described itself as an \u201canchor borrower\u201d that generates higher yields for lenders in its markets and said it remains \u201cnowhere near liquidation.\u201d Officials added that they would simply supply more WLFI tokens as collateral if prices moved against them. Despite the response, the WLFI token is down nearly 20% since Wednesday.<\/span><\/p>\n

Separately, World Liberty Financial and its associated USD1 stablecoin have been at the heart of corruption allegations around the Trump administration. Just last week, <\/span>the SEC settled a case against Justin Sun and his companies<\/span> for $10 million over allegations including selling unregistered securities, wash trading, and undisclosed celebrity endorsements. Sun holds large positions in both WLFI and the TRUMP memecoin.<\/span><\/p>\n

Democrats on the House Financial Services Committee have <\/span>alleged<\/span> pay-to-play influence in the handling of that case and others. Additionally, a UAE-linked firm led by Sheikh Tahnoon bin Zayed Al Nahyan <\/span>previously signed a $500 million deal for a 49% stake in World Liberty Financial<\/span>, with $187 million paid upfront to Trump family entities. Eric Trump signed the agreement. Critics, including Senator Chris Murphy, have called the arrangement corruption, especially after the Trump administration reversed prior national-security blocks on UAE access to Nvidia AI chips.<\/span><\/p>\n

The White House also previously pardoned Binance founder Changpeng Zhao after his conviction for Bank Secrecy Act violations, a move former DOJ pardon chief Elizabeth Oyer <\/span>labeled<\/span> \u201cunprecedented corruption\u201d due to Binance\u2019s subsequent $2 billion position in USD1. No similar relief has come for the developers of Samourai Wallet, who received longer prison sentences for <\/span>somewhat similar charges involving the operation of a non-custodial Bitcoin mixer<\/span>.<\/span><\/p>\n

Democrats have repeatedly highlighted these inconsistencies and called for stronger ethics safeguards in the pending <\/span>CLARITY Act<\/span>, which is intended to provide regulatory clarity to the U.S. crypto industry, to prevent administration officials or family members from profiting from crypto ventures while shaping regulation. The status of the legislation remains up in the air at this time due to <\/span>differences in priorities and preferences associated with the bill<\/span> from the crypto and banking lobbies.<\/span><\/p>\n<\/div>\n

[analyse_source url=”https:\/\/gizmodo.com\/trumps-world-liberty-financial-makes-ftx-esque-move-borrows-against-its-own-crypto-token-2000745326″]<\/p>\n","protected":false},"excerpt":{"rendered":"

[analyse_image type=”featured” src=”https:\/\/gizmodo.com\/app\/uploads\/2026\/04\/world-liberty-trump-eric-don-jr-1200×675.jpg”] The Trump family\u2019s World Liberty Financial crypto project is drawing sharp criticism after its treasury used billions of its own WLFI governance tokens as collateral to borrow stablecoins on an affiliated DeFi lending platform. The structure has prompted comparisons to the circular borrowing that contributed to the collapse of crypto exchange FTX […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[226,53],"class_list":["post-1878325","post","type-post","status-publish","format-standard","hentry","category-politics","tag-crawlmanager","tag-gizmodo-com"],"_links":{"self":[{"href":"https:\/\/analyse.optim.biz\/index.php?rest_route=\/wp\/v2\/posts\/1878325","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/analyse.optim.biz\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/analyse.optim.biz\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/analyse.optim.biz\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/analyse.optim.biz\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1878325"}],"version-history":[{"count":0,"href":"https:\/\/analyse.optim.biz\/index.php?rest_route=\/wp\/v2\/posts\/1878325\/revisions"}],"wp:attachment":[{"href":"https:\/\/analyse.optim.biz\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1878325"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/analyse.optim.biz\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1878325"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/analyse.optim.biz\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1878325"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}