World

Liberty

DeFi

World Liberty Financial

Dolomite

World Liberty Financial (WLFI), a blockchain-focused financial platform, is under increasing scrutiny after moving $5 billion of its own tokens into the DeFi lending protocol Dolomite, triggering a series of events that left everyday users unable to access their stablecoin deposits. WLFI operates as a blockchain-based financial ecosystem targeting retail and institutional clients, with its flagship <a href="https://en.coin-turk.com/arthur-hayes-encourages-investors-to-embrace-memecoins-following-bitcoins-strong-performance/" rel="noopener noreferrer nofollow">token</a> aiming to facilitate digital asset lending, trading, and payments.
The situation escalated after WLFI deposited the large sum as collateral and promptly borrowed $75 million in stablecoins from Dolomite. Afterward, $40 million was transferred to <a href="https://en.coin-turk.com/gemini-returns-customer-assets-after-genesis-bankruptcy/" rel="noopener noreferrer nofollow">Coinbase</a> Prime, overshadowing concerns about the interlinked management structures and potential conflicts of interest between both entities.
<h2 id="wlfi-dolomite-deal-raises-conflict-of-interest-and-triggers-withdrawal-freeze">WLFI-Dolomite deal raises conflict of interest and triggers withdrawal freeze</h2>
Dolomite’s lending operations came under immediate pressure after the WLFI transaction. The protocol’s utilization rate surged to 100%, effectively locking up user funds. Although users could still see their stablecoin balances, they were unable to make withdrawals.
Industry participants noted that Dolomite had been co-founded by Corey Caplan, who also serves as an advisor to World Liberty Financial. As a result, control over both the deposited collateral and lending decisions have been questioned, heightening skepticism around impartiality and user protection in the protocol’s operations.
The maneuver has sparked a steep increase in online discussion and social media mentions for WLFI, with the LunarCrush analytics platform highlighting heightened user engagement and trading activity connected to the ongoing controversy.
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 Social engagement for WLFI is reaching new highs, as the <a href="https://en.coin-turk.com/grayscale-makes-strategic-sec-move-as-crypto-markets-surge/" rel="noopener noreferrer nofollow">crypto</a> community dissects the mechanics of the $5 billion deposit and associated stablecoin borrowing, especially given the ties between top Dolomite figures and WLFI’s leadership.
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With 600,000 wallets reportedly impacted, current estimates put user losses at $3.87 billion—while related entities are understood to have amassed $350 million in fees during this period.
<h2 id="justin-sun-claims-107m-frozen-as-blacklist-powers-exposed">Justin Sun claims $107M frozen as blacklist powers exposed</h2>
The controversy intensified when Justin Sun, founder of the blockchain platform TRON, accused WLFI of freezing $107 million in his wallet. Sun claims that a backdoor function in WLFI’s smart contract enabled them to blacklist his address and lock up his holdings without notification.
This allegation prompted widespread concern about WLFI’s governance and the degree of centralized control in a system presented as decentralized finance. The capacity to freeze funds at the protocol level is generally viewed as incompatible with core DeFi values, which emphasize open, trustless transactions.
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 Justin Sun argued that WLFI’s ability to freeze wallets through smart contract backdoors undermines user trust and contradicts DeFi principles, putting investor assets at risk of sudden, unilateral action.
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On top of escalating governance issues, WLFI’s price dropped by 18% this week and has fallen 67% since its peak in September. At the same time, token supply surged to 31.7 billion, further straining the project’s market value.
The situation is compounded by the ongoing controversy over fees, as entities affiliated with the Trump family reportedly collected $350 million in connection with WLFI activity, even as investors recorded billion-dollar losses.
Questions continue to surface over the transparency of WLFI’s practices, use of backdoor smart contracts, and the broader implications for protocol integrity in decentralized finance platforms.
The post <a href="https://en.coin-turk.com/wlfis-5b-token-move-freezes-withdrawals-justin-sun-funds-blacklisted/" rel="noopener noreferrer nofollow">WLFI’s $5B token move freezes withdrawals, Justin Sun funds blacklisted</a> appeared first on <a href="https://en.coin-turk.com" rel="noopener noreferrer nofollow">COINTURK NEWS</a>.

WLFI’s $5B token move freezes withdrawals, Justin Sun funds blacklisted

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