World Liberty Financial’s WLFI token fell nearly 10% on April 9, hitting $0.0888 — its lowest since the token’s late-2025 debut. Two separate controversies landed in quick succession, giving sellers little reason to hold.
WLFI is simultaneously facing questions about who it does business with and what it is doing with its own treasury.
A Partner With Inconvenient History
An investigation by The Times, published April 7, found that WLFI had integrated its USD1 stablecoin with AB DAO, a Southeast Asian blockchain project. AB DAO had, until weeks before the deal, been promoting a resort linked to Cambodia’s Prince Group. US and UK authorities sanctioned Prince Group founder Chen Zhi in November, seizing $15 billion in bitcoin over alleged involvement in large-scale online fraud.
WLFI says it conducted due diligence and has no relationship with sanctioned individuals. The Times found the company was unaware of AB DAO’s prior ties when the deal was signed. The episode follows earlier allegations — denied by WLFI — of token sales to wallets linked to Iran, North Korea, and Russia.
Treasury Moves Raise Hard Questions
BeInCrypto reported on April 8 that WLFI’s treasury had deposited 3 billion tokens into Dolomite and borrowed over 50 million USD1, pushing the pool’s utilization past 100%.
On-chain data shows WLFI’s official treasury multisig — a wallet holding over $1.1 billion in assets and publicly tagged by Etherscan as “World Liberty: Multisig” — routed approximately 5 billion WLFI tokens through an intermediary wallet created specifically for this operation before depositing the full amount into Dolomite. Against the deposited collateral, the team borrowed 65.4 million USD1 and 10.3 million USDC, then sent over 40 million USD1 to Coinbase Prime.
The collateral position is now valued at $440 million as of April 9, per Dolomite’s stats page. WLFI trades with limited market depth, making forced liquidation nearly impossible without crashing the token’s own price. A cascade liquidation would leave Dolomite holding bad debt with no clean recovery path.
On-chain analyst Mlm onchain traced the transfer route from WLFI’s treasury to Dolomite. Source: Mlm onchain (Telegram)The borrowing has already caused damage. Dolomite’s USD1 lending pool has reached 100% utilization, leaving no available liquidity. Depositors cannot withdraw their funds until the loans are repaid. USD1 deposit rates have spiked to over 35% — a figure that reflects artificial scarcity created by a single insider entity rather than organic demand.
WLFI’s USD1 stablecoin has grown to over $4.6 billion in circulation. That scale gives this dispute implications that extend well beyond the WLFI token itself.
If an opportunistic actor were to aggressively short WLFI, the resulting price drop could trigger a liquidation cascade that Dolomite cannot absorb — a scenario DeFi has lived through before, most devastatingly with Terra in 2022. Unlike Terra, USD1 is backed by US Treasuries and cash equivalents, limiting the risk of a full depeg. But with $4.6 billion in USD1 now in circulation, the fallout from a Dolomite crisis would not stay quiet.
WLFI has not issued any public statement addressing the transfer or its destination.
The post Trump’s WLFI Drops 10% as Sanctions Tie and $440M Collateral Bet Collide appeared first on BeInCrypto.
Source: https://beincrypto.com/wlfi-drops-10-percent-chen-zhi-collateral-squeeze/
