Sun Blasts Trump-Backed WLFI Over Risky $261mn Borrow, Centralized Controls

The Tron founder and major WLFI investor criticized the move in a detailed X post on 12 Apr. He accused the project of embedding a backdoor blacklisting function in its smart contract that allows unilateral freezing or confiscation of token holder assets without notice or recourse. Sun also questioned the project's governance structure. He pointed out that a single externally owned account holds the power to blacklist addresses, while a 3-of-5 multisig wallet controls other critical functions.

$261mn self-collateralized loan drains liquidity

World Liberty Financial deposited nearly 5bn WLFI tokens across multiple wallets on Dolomite, a DeFi lending protocol that powers its World Liberty Markets product launched in January. The project borrowed roughly $261mn in stablecoins, primarily through looping tactics that recycled borrowed funds back into the protocol.

The position dominates the platform, accounting for about 78% of supplied liquidity in the USD1 pool and collateral valued near $415mn. Utilization in the USD1 pool spiked near full capacity, pushing deposit rates as high as 36% and borrowing rates to 30%. Many depositors reported delays and friction when trying to withdraw funds.

WLFI has underperformed sharply. The token dropped 19% between 8 and 10 Apr, hitting a record low of $0.077 on 11 Apr before recovering slightly to around $0.08 on 13 Apr.

World Liberty Financial defended the transaction as a yield-generating strategy that benefits other participants and described itself as the protocol's "anchor borrower". It said the position sits "nowhere near" liquidation levels due to over-collateralization, and pledged to supply more tokens if needed. Similar self-collateralization approaches have appeared in DeFi, with mixed results.

Dolomite co-founder Corey Caplan serves as an advisor to World Liberty Financial, raising questions about potential conflicts in the lending arrangement.

Centralized power draws governance scrutiny

Sun extended his criticism to the WLFI smart contract architecture. He highlighted that a single guardian account can unilaterally blacklist addresses, while a 3-of-5 multisig controls key functions. In a follow-up post on 13 Apr, Sun demanded public disclosure of who controls these keys.

"Every investor has the right to know who holds the power to freeze their assets," Sun wrote.

The day before, World Liberty Financial had questioned Sun's credibility in an X post, saying "see you in court, pal".

US lawmakers have separately questioned the project's structure and whether the Trump family's political connections are being leveraged to promote WLFI. The venture has organized private meetups with President Trump and his family for its top 100 token holders, an opportunity Sun attended.

The escalating feud strains Sun's previously close alliance with the Trump family. He has been a vocal supporter of the president's crypto policies and invested heavily in the project.

Sun recently resolved long-running US regulatory issues. In March 2026, his associated entity Rainberry paid a $10mn settlement, after which the Securities and Exchange Commission (SEC) dismissed all personal claims against him related to unregistered offerings of BitTorrent (BTT) tokens.

The episode occurs against the backdrop of the Trump administration's broader push for fair and open access to banking services for digital asset participants, as outlined in the August 2025 executive order Guaranteeing Fair Banking for All Americans.

World Liberty Financial is a decentralized finance platform associated with the Trump family that offers lending, borrowing and other crypto services, including its native WLFI governance token and USD1 stablecoin. Dolomite is a DeFi lending protocol that allows users to supply and borrow digital assets.