WLFI, the native token of the Donald Trump-backed crypto platform World Liberty Financial, cratered to an all-time low on Friday as investors digested news reports that the company had lent out tokens on a platform tied to one of its executives. As of mid-day, WLFI was trading at $0.08, a roughly 82% drop from its all-time high last September when it traded at $0.46.
The drop coincides with news that Corey Caplan, the CTO of World Liberty Financial, which was founded in 2024 by a team including multiple members of the Trump family, used the project’s reserve of WLFI tokens to make loans on a third-party crypto platform he co-founded.
Blockchain data shows wallets controlled by World Liberty Financial lent WLFI tokens worth hundreds of millions of dollars to a decentralized platform named Dolomite, borrowing a mixture of stablecoins in return. Dolomite is just the 13th-largest crypto lending platform, according to DeFiLlama data, making it perhaps an unlikely place for World Liberty Financial to lend its tokens.
After CoinDesk first reported on the Dolomite loans Thursday, WLFI’s price tumbled nearly 15%.
The size of World Liberty Financial’s loans on Dolomite pose a risk to the token’s price, Nicolas Vaiman, CEO at crypto analytics firm Bubblemaps, told Fortune. Roughly 5% of WLFI’s supply is now collateral on Dolomite, so if WLFI declines significantly in value, the collateral could be liquidated, Vaiman said. This would likely force World Liberty to sell WLFI tokens to repay the loan, exerting additional downward pressure on the token’s price.
World Liberty Financial acknowledged its lending activities in a post to its X account but tried to quell investor worries, asserting that its loan positions are “nowhere near liquidation.” World Liberty called itself the “anchor borrower” for WLFI, arguing that it is “generating the yield that makes WLFI Markets compelling for everyone else.”
Hedge funds and foundations exposed to WLFI
Multiple crypto foundations may have purchased WLFI tokens following token swap agreements cut by World Liberty Financial. Nasdaq-listed Alt5 Sigma also raised $1.5 billion to purchase WLFI tokens last summer, drawing investment from institutional buyers including Point72 and ExodusPoint.
Some investor worries also stem from the amount of World Liberty Financial’s USD1 stablecoin that the team borrowed against its WLFI. World Liberty Financial borrowed so much USD1 from Dolomite that there is little left to borrow, meaning users who previously deposited the stablecoin on Dolomite may have trouble withdrawing, Vaiman said.
Still, World Liberty Financial projected confidence on social media Thursday.
Even “if markets moved dramatically against us, we’d simply supply more collateral,” World Liberty Financial wrote. “That’s not a risk. That’s how this works.”
