World Liberty Financial (WLFI), the Trump family’s decentralized finance project, faces an unprecedented crisis of confidence. The WLFI token lost more than 80% of its value since September 2025. Investors pull their capital out of the platform. Regulators investigate possible conflicts of interest. The project’s largest backer, Justin Sun, threatens to sue the company in court.
The internal war between Justin Sun and the Trump family
Justin Sun, founder of Tron and an official advisor to WLFI, broke his silence on April 8, 2026. Sun publicly denounced that the WLFI team inserted a hidden function into the token’s smart contract. This function allows the team to freeze or confiscate any wallet without prior notice, without public explanation, and without any appeal process. Sun stated that the WLFI team itself blocked a wallet with 544 million tokens back in September 2025. Those tokens, according to the analysis firm Bubblemaps, lost more than $80 million in value while they remained frozen.
The company responded with a direct legal threat. The official WLFI account on X posted: “See you in court, pal.” WLFI representatives accused Sun of “playing the victim” while hiding his own regulatory history. The SEC filed a civil fraud lawsuit against Sun in 2023, and he settled the case last month by paying a $10 million fine. However, the company did not clarify the existence of the freezing function, nor did it explain why it blocked its own advisor’s funds.
Internal financial maneuvers raise suspicions
Less than one week before the public confrontation with Sun, the WLFI treasury performed an operation that set off alarms. The team deposited between 3,000 and 5,000 million WLFI tokens as collateral on the Dolomite lending platform. With that collateral, the company borrowed approximately $75 million in stablecoins.
The operation has two problematic sides. First, Corey Caplan, WLFI’s chief technology officer, co-founded Dolomite. This creates an obvious conflict of interest. Second, the operation drained Dolomite’s available funds to 93% utilization. This prevented other users from withdrawing their deposits from the platform. More than $40 million of that loan ended up transferred to Coinbase Prime. Critics point out that WLFI used its own tokens, which have little real value, to extract liquidity from a system that supposedly benefits all participants equally.
The token price collapses, and analysts expect more declines
The WLFI token currently trades at $0.08 per unit. Its peak price reached $0.46 in September 2025. The drop represents an 82.6% loss in less than eight months. Analysts from the on-chain data firm Lookonchain project an additional 20% decline during April 2026. If this projection holds, the token would fall to $0.066.
Blockchain data shows a consistent pattern: large holders, including some linked to the founding team, transferred millions of tokens to centralized exchanges over the past several weeks. These transfers coincide with each public announcement from the company. The Trump family reportedly pocketed 75% of the project’s initial revenues, according to documents leaked to specialized media. Small investors who trusted the political backing of the Trump brand now face multimillion-dollar losses.
Regulators apply pressure from Washington
Senator Elizabeth Warren, the top Democrat on the Senate Banking Committee, increased pressure on President Trump. Warren requested that the Office of the Comptroller of the Currency suspend its review of WLFI’s bank charter application. The senator demands that Trump and his family divest all their cryptocurrency holdings before any federal agency evaluates the project. Warren called the WLFI token a “major crypto grift” and stated that the Trump family gained $5 billion in paper value from this operation.
Additionally, Congressman Gregory W. Meeks leads 40 Democratic lawmakers in an investigation into a WLFI agreement with a company tied to the royal family of the United Arab Emirates. The agreement exceeds $500 million. The lawmakers request detailed documents about the negotiations and the final beneficiaries of the transfers. The White House issued no official comment on these investigations.
The restructuring proposal fails to convince anyone
The WLFI team presented a proposal on April 10, 2026, to restructure the unlocking of 62,300 million tokens. The proposal also includes burning 4,500 million tokens held by the treasury. Analysts see this move as a desperate attempt to stop the price decline. However, the proposal does not address the core problem: the smart contract still contains the unilateral freezing function that Justin Sun denounced.
Investors reacted with skepticism. WLFI token trading volume fell 65% in the three days following the restructuring announcement. Many holders prefer to sell their tokens at any price rather than risk an arbitrary freeze of their funds. The company also did not clarify whether the blacklist function applies to burned tokens or whether the founding team retains administrative keys that would allow it to modify the contract in the future.
A direct blow to the sector’s credibility
This case exposes a central contradiction in the world of decentralized finance. A project that promises transparency and open source code ends up operating with centralized control mechanisms. The WLFI freezing function contradicts the basic principles of blockchain technology, where immutability and censorship resistance form the core pillars.
Negative effects already spread to other projects. The price of tokens linked to political figures dropped an average of 15% in the two weeks following the WLFI scandal. Decentralized exchanges report a 40% decrease in the volume of new token launches during April 2026. Institutional investors postpone their capital allocation decisions toward the sector.
The lesson for market participants is direct. When the largest investor in a project denounces that the project froze his funds without any right to appeal, no other holder can feel safe. The WLFI token price lost more than 80% of its value. That single data point summarizes the project’s real state better than any analysis.
