Trump’s Crypto Venture Secretly Built A Way To Freeze Your Funds, Investor Claims

bitcoinistPublished on 2026-04-13Last updated on 2026-04-13

Abstract

A major investor in World Liberty Financial (WLFI), a crypto project connected to Donald Trump, has accused it of secretly building a mechanism to freeze user funds. Tron founder Justin Sun, who invested over $100 million, claims the project has a backdoor in its smart contracts that allows the team to freeze, restrict, or block access to funds without warning. Sun revealed his own wallet was blacklisted in 2025. The allegations coincide with a separate controversy where WLFI used its own tokens as collateral to borrow millions. Blockchain analytics show WLFI deposited nearly 2 billion of its tokens into the Dolomite lending protocol to borrow over $31 million in stablecoins, accounting for 55% of Dolomite's liquidity. The project has reportedly used 5 billion self-issued tokens to obtain around $75 million in outside liquidity, a practice critics compare to circular financing. Amid the accusations, WLFI's token price has fallen more than 20% in a month, dropping below $0.08. A key lending pool is at 93% capacity, making withdrawals difficult. Sun has publicly demanded the project unlock all tokens and operate transparently. WLFI has not yet issued a formal response.

A pool with 93% utilization and shrinking exit options is one of the more uncomfortable details buried in the growing controversy around World Liberty Financial — the crypto project connected to US President Donald Trump that is now fighting accusations of deception from one of its own biggest backers.

Sun Claims His Wallet Was Frozen First

Tron founder Justin Sun, who poured more than $100 million into the project across two separate investments, went public on X with a pointed accusation: that WLFI quietly built a backdoor into its smart contract infrastructure — one that lets the team freeze, restrict, or block access to user funds without warning.

Sun said he was not just a critic watching from the outside. His own crypto wallet was blacklisted in 2025, he claimed, making him the project’s first and largest victim. He called the feature the opposite of what decentralized finance is supposed to stand for.

WLFI has not issued a formal public response to the allegations.

Borrowed Millions Against Its Own Tokens

The hidden control accusation arrived alongside a separate controversy that had already been gaining attention. According to blockchain analytics firm Arkham Intelligence, WLFI deposited close to 2 billion of its own tokens into the Dolomite lending protocol and borrowed more than $31 million in stablecoins against them.

The project now accounts for roughly 55% of Dolomite’s total liquidity — a concentration that has raised eyebrows among observers tracking the platform’s exposure.

Earlier transactions pointed in a similar direction. Reports indicate WLFI put up $14 million worth of its in-house stablecoin, USD1, to borrow $11.4 million USDC in February.

BTCUSD trading at $71,125 today. Chart: TradingView

Another $12.5 million in USD1 was moved directly to Coinbase Prime, bypassing the lending system entirely. In total, on-chain data shows the project used approximately 5 billion of its self-issued tokens to pull in around $75 million in outside liquidity — a structure critics have compared to circular financing.

Token Price Slides As Pressure Mounts

The market has not been kind. WLFI’s token dropped below $0.08 and has shed more than 20% over the past 30 days. With the USD1 lending pool running at near-full capacity, users looking to withdraw face tightening conditions.

Reports also note that 3 billion WLFI tokens were moved during the first week of April, adding to the unease.

Sun ended his public statement with a demand: unlock the tokens, and operate with transparency. Whether the team acts on that — or responds at all — remains to be seen.

Featured image from David Hume Kennerly/Getty Images, chart from TradingView

Related Questions

QWhat is the main accusation Justin Sun made against World Liberty Financial (WLFI)?

AJustin Sun accused WLFI of secretly building a backdoor into its smart contract infrastructure that allows the team to freeze, restrict, or block access to user funds without warning.

QHow much did Justin Sun claim to have invested in WLFI, and what specific action was taken against him?

AJustin Sun claimed to have invested over $100 million in WLFI and stated that his own crypto wallet was blacklisted by the project in 2025.

QWhat controversial financial activity did blockchain analytics firm Arkham Intelligence report regarding WLFI?

AArkham Intelligence reported that WLFI deposited nearly 2 billion of its own tokens into the Dolomite lending protocol and borrowed over $31 million in stablecoins against them, accounting for roughly 55% of Dolomite's total liquidity.

QWhat was the total amount of outside liquidity WLFI reportedly obtained using its self-issued tokens, and what criticism did this draw?

AOn-chain data shows WLFI used approximately 5 billion of its self-issued tokens to obtain around $75 million in outside liquidity, a structure critics compared to circular financing.

QHow has the market reacted to these controversies, as indicated by WLFI's token performance?

AWLFI's token price dropped below $0.08 and has decreased by more than 20% over the past 30 days, with its USD1 lending pool at near-full capacity, making withdrawals difficult for users.

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