The WLFI token from World Liberty Financial dropped nearly 10% on April 9, reaching a level of $0.0888 — the lowest rate since the token's debut at the end of 2025. Two separate scandals emerged one after the other, so sellers had no reason to hold the asset.
WLFI simultaneously faces questions about its business partners and what is happening with the project's treasury.
Partner with an unwanted past
An investigation by The Times published on April 7 revealed that WLFI integrated its stablecoin USD1 with AB DAO, a blockchain project from Southeast Asia. AB DAO promoted a resort linked to the Prince Group from Cambodia a few weeks before the start of the collaboration. In November, U.S. and U.K. authorities sanctioned the founder of the Prince Group, Chen Zhi, seizing $15 billion in Bitcoin for alleged involvement in large-scale online fraud.
WLFI claims it conducted due diligence and has no relationships with sanctioned individuals. The Times found that the company was unaware of previous ties to AB DAO when signing the agreement. This situation arose after earlier allegations — denied by WLFI — of selling tokens to wallets linked to Iran, North Korea, and Russia.
The treasury movements raise difficult questions
BeInCrypto reported on April 8 that the WLFI treasury deposited 3 billion tokens in Dolomite and borrowed over 50 million USD1, causing the pool utilization to exceed 100%.
On-chain data shows that the official WLFI treasury – multisig – wallet with over 1.1 billion USD in assets, publicly labeled on Etherscan as 'World Liberty: Multisig' – transferred about 5 billion WLFI tokens through an intermediary wallet created solely for this purpose before depositing the entire amount in Dolomite. Against the collateral of the deposited funds, the team borrowed 65.4 million USD1 and 10.3 million USDC, then transferred over 40 million USD1 to Coinbase Prime.
The collateral position is currently valued at 440 million USD as of April 9, according to the Dolomite statistics page. WLFI has shallow liquidity, so forced liquidation is virtually impossible without a collapse in the token's price. If a cascade of liquidations were to occur, Dolomite would be left with bad debt without a real chance of recovering the funds.
The withdrawal of funds has already caused damage. The USD1 loan pool in Dolomite reached 100% utilization, so there is no available liquidity. Depositors cannot withdraw their funds until the loans are repaid. USD1 deposit interest rates have risen to over 35% — this reflects an artificial shortage created by one internal party, not true market demand.
The WLFI USD1 stablecoin has already reached over 4.6 billion USD in circulation. The scale of this phenomenon means that the problem extends far beyond the WLFI token itself.
If someone were aggressively shorting WLFI, a price drop could trigger a cascade of liquidations that Dolomite would not be able to sustain — DeFi has experienced this before, most severely during the Terra collapse in 2022. Unlike Terra, USD1 is backed by US bonds and cash equivalents, which limits the risk of a total loss of peg to USD. However, with 4.6 billion USD in circulation of USD1, the consequences of the Dolomite crisis could be very serious.
WLFI has not issued any statement regarding the transfer of funds or their intended use.