From Treasury Bet to Liquidity Squeeze: How AI Financial's WLFI Strategy Unravelled

When the company – then known as ALT5 Sigma – launched its treasury strategy based on WLFI in August 2025, it was making a bet not only on the token, but on the protocol that issued it, a protocol that the leadership of ALT5 Sigma itself helped control. The native token of World Liberty Financial, WLFI, had only recently won community approval to become transferable and had yet to establish a meaningful public trading history. Trading officially began on 1 Sep 2025 across exchanges. However, AI Financial had already moved to accumulate more than 7.28bn WLFI tokens through direct agreements with the WLFI Foundation in August, according to regulatory filings.

In investor materials released that September, the company valued its 7.28bn WLFI holdings using a token price of roughly $0.18 and estimated the company’s digital asset treasury at approximately $1.31bn. It also promoted a framework tying treasury value directly to shareholder value, arguing that each share represented exposure to a growing pool of WLFI assets.

Locked tokens limit liquidity

WLFI is the governance token of World Liberty Financial, a decentralized finance (DeFi) protocol with ties to the Trump family. Unlike more liquid treasury assets, WLFI had a structural challenge: liquidity.

As crypto markets weakened through late 2025 and altcoins broadly sold off, WLFI also began to lose momentum. The token traded around $0.125 in Oct 2025 and has since fallen to roughly $0.062, according to CoinMarketCap data – well below AI Financial’s acquisition price of around $0.20 per token.

According to the company’s latest quarterly filing, all 7.28bn WLFI tokens are subject to contractual lock-up provisions. Roughly 3.53bn tokens cannot be transferred for 12 months other than limited uses including collateral, staking and lending, while another 3.75bn token tranche remains locked for 12 months and additionally requires shareholder approval and registration-related conditions before release.

The filing, however, also introduced a notable tension. Management described the WLFI treasury as a significant financial resource and said the company could potentially redeem or monetize portions of its holdings to support liquidity needs.

AI Financial doubles down despite risks

The liquidity issues started to arise in early 2026. In January, the company disclosed it had drawn a $15mn loan from World Liberty Financial. According to disclosures, proceeds were intended for share buybacks, additional WLFI purchases and general corporate purposes.

By the end of that month, AI Financial doubled down on its treasury strategy. On 29 Jan, the company announced board approval for a stock repurchase programme of up to $100mn and authorized additional WLFI purchases. To help launch the initiative, it cited the $15mn financing agreement with WLFI, describing the partnership as "absolutely spectacular" and calling its treasury strategy a major source of shareholder value.

The financing arrangement attracted attention because of the companies’ overlapping leadership structures. WLFI co-founder Zachary Witkoff chaired AI Financial’s board, while another WLFI co-founder, Zachary Folkman, served as a director.

AI Financial rebranded from ALT5 Sigma to AI Financial in April 2026.

Dolomite borrowing deepens concerns

Scrutiny deepened around the same time when World Liberty Financial deposited roughly 5bn WLFI tokens into Dolomite, a decentralized borrowing and lending protocol on Arbitrum, and borrowed about $75mn in stablecoins against the position across transactions. The structure created a way to extract liquidity from locked assets without requiring direct token sales.

News of the capital extraction caused a backlash by holders and was followed by another leg lower in WLFI prices as questions intensified over whether the ecosystem’s greatest challenge had shifted from growth to capital access.

Pressure broadened again in May after WLFI proposed a new framework governing more than 62bn locked tokens. The proposal introduced a two-year cliff followed by a two-year linear vesting schedule for early supporters, while founders, team members, advisers and partners faced a longer structure consisting of a two-year cliff followed by a three-year vest, alongside a potential 10% token burn. The measure replaced indefinite lock-ups with structured release periods for holders who opted into the framework.

Tron (TRX) founder Justin Sun, one of the earlier supporters of the project, emerged as one of WLFI’s most vocal critics, claiming the decision to deposit WLFI tokens to extract $75mn in stablecoins was not put to a community vote.

For AI Financial, what began as a long-term treasury strategy built around appreciation has increasingly become a liquidity test, centred on whether billions of dollars in locked governance assets can be converted into usable capital without placing additional pressure on the system itself.

AI Financial’s stock (AIFC) also moved sharply lower as the WLFI thesis came under pressure. Shares traded around $7.88 on 29 August 2025, near the launch of the company’s WLFI treasury strategy, and fell to approximately $0.89 as of 22 May 2026, a decline of nearly 89%. Year to date, the stock is down roughly 27%.