USDWLFI Faces Backlash Over Unlock Plan and Treasury Borrowing
Token lockup dispute deepens as leverage fears hit market confidence
TL;DR
- World Liberty Financial said it will submit a governance proposal next week for a phased WLFI unlock for early retail buyers.
- WLFI fell 14%, erased $427 million in market value, and remains down more than 75% from its September 2025 peak.
- The sell-off followed scrutiny of a $75 million stablecoin borrowing position backed by WLFI collateral and renewed focus on locked holdings.
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World Liberty Financial is trying to contain a growing WLFI crisis after saying it will bring a governance proposal next week for a phased unlock of tokens sold to early retail buyers, while the market digests a sharp price decline, treasury borrowing backed by WLFI collateral, and rising frustration from holders whose tokens remain locked. The current dispute centers on whether the project can restore confidence while most of the token supply is still restricted and recent treasury activity has intensified fears around liquidity, concentration, and sell pressure.
World Liberty Financial said Friday that the forthcoming proposal would first be opened for community input and described the plan as a “structured, long-term vesting plan” rather than an immediate full unlock. That language matters because WLFI’s original sale materials said the token was non-transferable and that any unlock could occur only through a governance vote no earlier than 12 months after the token sale. The public sale began in mid-October 2024, and World Liberty Financial has said it raised at least $550 million across two rounds, which was reportedly tied to 85,000 participants.
The token’s supply structure has become a central fault line in the backlash. According to Tokenomist data, WLFI has a 100 billion token supply, with about 24.67% released and 75.33% still locked or pending future unlock decisions, leaving a large share of early buyers unable to trade.
Public complaints from self-identified presale buyers have sharpened pressure on the project, with at least one saying legal notices had been sent and claims were being pursued in the United States and the Netherlands, though that claimed litigation had not been independently verified.
Borrowing position and market reaction
The immediate market pressure followed scrutiny of treasury activity on Dolomite, where World Liberty Financial used WLFI as collateral to borrow stablecoins. Onchain data tracked by CoinDesk cited about 5 billion WLFI tokens pledged against roughly $75 million borrowed.
World Liberty Financial rejected liquidation concerns directly, writing, “We are one of the largest suppliers and borrowers on WLFI Markets. Yes, we supplied WLFI as collateral and borrowed stablecoins. No, we are nowhere near liquidation.” The project added, “Even if markets moved dramatically against us, we’d simply supply more collateral,” and said its role as an anchor borrower allows users to earn “outsized stablecoin yields.”
That borrowing position fed a broader sell-off in WLFI. The token fell 14%, erased $427 million in market value, and remained down more than 75% from its September 2025 peak near $0.32, with the sell-off taking the token to around $0.08. Separate coverage tied the market reaction directly to fears around a possible unlock, collateralized borrowing, and the risk that thin liquidity could magnify any forced or anticipated selling. The project sought to counter that narrative by highlighting treasury actions and revenue claims rather than announcing a full immediate release.
World Liberty Financial said it had repurchased 435.3 million WLFI at an average price of $0.1507 over six months for a total of $65.58 million in open-market buybacks. The project also said USD1 was running at an annualized revenue rate of $159.5 million and had been upgraded with gasless transfers and support for AI agent payment protocols. Those statements arrived as the project was trying to reassure the market that its treasury position was manageable and that its broader ecosystem was still expanding despite the price decline and holder anger.
The trust problem extends beyond the latest borrowing controversy. A Justin Sun-affiliated address labeled “TRON DAO” on Etherscan was blacklisted in September 2025, with World Liberty saying the address was “suspected of misappropriation of other holders’ funds.” The frozen stash totaled about 544 million tokens that were worth roughly $119 million at $0.22 at the time and about $49 million at roughly $0.09 later, implying a paper loss of around $70 million.
FAQ
What is World Liberty Financial proposing?
A phased WLFI unlock for early retail buyers through a governance proposal next week.
How much of WLFI remains restricted?
About 75.33% remains locked or pending future unlock decisions.
What triggered the latest market pressure?
Scrutiny of a $75 million stablecoin borrowing position backed by WLFI collateral.
How far has WLFI fallen from its peak?
More than 75% from its September 2025 peak near $0.32.
This article has been refined and enhanced by ChatGPT.
