The Trump-endorsed WLFI token is facing a sharp 10% correction after its development team defended a high-risk $75 million stablecoin loan that used WLFI itself as collateral, draining the Dolomite lending pool. The controversial deal—where the team supplied 5 billion WLFI tokens as collateral—has sparked immediate scrutiny over potential price manipulation and ethical conflicts, with critics warning any forced liquidation could crash the token's thinly traded market and leave the DeFi protocol exposed to bad debt.
Let's talk about the FUD going around our WLFI Markets lending position.
It's wrong. Here's what's actually happening — and why the real story is a lot more interesting.
— WLFI (@worldlibertyfi) April 9, 2026
As the situation escalates, the center of the issue is that WLFI is likely to face continued downside pressure unless key resistance levels are reclaimed. However, ongoing distribution, bearish indicators, and negative sentiment show that sellers remain in control.
Meanwhile, whether the anchor borrower strategy generates sustainable yield or concentrates system risk in a single insider position also remains another central question for depositors still locked in the pool. The borrowing pushed Dolomite’s USD1 pool utilization above 93%, making timely withdrawals difficult for ordinary depositors.
On the other hand, this issue arises alongside separate scrutiny after an investigation found that WLFI had integrated its USD1 stablecoin with a Southeast Asia blockchain project linked to a founder sanctioned by UK and U.S. authorities. The investigations also uncovered that WLFI’s advisor, Corey Caplan, is a co-founder at Dolomite.
Notably, a related-party transaction of this scale in traditional finance typically requires disclosure and independent board approval. However, WLFI has dismissed market concerns about its collateral position in Dolomite as FUD, despite the token losing nearly 17% weekly and up to 16% monthly.
On-chain data also shows that the WLFI project sent more than $40 million of the $75 million loan directly to Coinbase Prime. The $40 million will typically be used for institutional OTC conversions. However, $15 million was subsequently repaid.
Meanwhile, Arkham’s data previously showed that WLFI moved 11.45 million USDC to a deposit address linked to Coinbase Prime. The project further sent another 12.5 million USD1 directly from its treasury to a separate Coinbase Prime deposit address. However, that 12.5 million USD1 was not part of the loan borrowed from Dolomite. That means WLFI sent its own stablecoin straight to a fiat off-ramp.
The World Liberty Finance treasury also previously deposited 890 million WLFI tokens into Dolomite and received a loan of 20 million USD1 against it. Another 1.1 billion WLFI followed almost a month later, bringing the total WLFI tokens sitting in Dolomite as collateral to 1.99 billion WLFI tokens. The project’s treasury received approximately 31.4 million in stablecoins from Dolomite across both instances.
Activity escalated in April through a different route when the treasury sent 2 billion WLFI to a Gnosis Safe proxy wallet address. It sent an additional 1 billion WLFI five days later.
However, neither transfer went directly to Dolomite, and on-chain data does not yet show where those tokens ended up. As of publication, the 3 billion WLFI tokens are worth approximately $266 million at the current price of $0.08195 per WLFI.
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