The Trump family-associated crypto venture World Liberty is facing mounting pressure after its WLFI token fell nearly 16 per cent over the past month, triggered by revelations that the firm borrowed $75mn against roughly $440mn worth of its own tokens. The move, disclosed in public blockchain data, has sparked concerns among traders that any forced liquidation of collateral could further depress the token’s value and deepen losses for investors.
Criticism escalated after crypto billionaire Justin Sun, one of World Liberty’s largest backers with a $75mn investment in WLFI tokens, publicly attacked the project’s governance structure. Sun, who has also invested heavily in Trump-related digital assets, accused the team of exploiting the crypto community and referred to the project as “World Tyranny.” His comments followed proposed changes to token governance rules, intensifying internal tensions within the project’s investor base.
Market analysts have warned that the structure of the loan could amplify volatility. Adam Morgan McCarthy of Kaiko Research described the recent price decline as damaging for early investors, noting that concerns about collateral liquidation were weighing on sentiment. The loan was reportedly executed through a digital lending structure linked to platforms closely associated with World Liberty, raising further scrutiny over risk management practices. The company, however, insists there is “no liquidation risk,” stating that the collateral was conservatively managed and that part of the borrowed funds, around $25mn, has already been repaid.
World Liberty has defended its strategy, saying the borrowing is part of efforts to generate yield and that it maintains sufficient financial strength to meet obligations. The firm has raised approximately $715mn through token sales and still controls a significant portion of WLFI supply. Roughly 5 per cent of total tokens were reportedly used as collateral in the loan arrangement, a detail that has alarmed some market participants due to the scale of exposure.
The controversy adds to growing scrutiny of the Trump family’s expanding crypto interests. World Liberty, launched during Donald Trump’s 2024 presidential campaign, distributes the majority of its net revenues to an entity linked to the former president. Trump has disclosed tens of millions in income from the project, while affiliated ventures and investors, including hedge funds with indirect exposure, have also drawn attention. With internal disputes, governance criticism, and a weakening token price, the project now faces its most significant reputational and financial challenge since its launch.
