The project uses its own tokens as collateral in a protocol co-founded by one of its advisors. They accuse the platform of transferring risk to depositors to obtain liquidity. World Liberty Financial, the decentralized finance (DeFi) platform backed by President Donald Trump’s family, is facing growing rejection in the bitcoin community after revealing a controversial operation with the Dolomite lending protocol, whose co-founder is also an advisor to the company. Comments on social networks question the platform and accuse it of a «scam», after admitting the use of a circular debt strategy through which use your own tokens (illiquid) as a guarantee to borrow real money in stablecoins. The trigger for the rejection was the confirmation that wallets linked to the project deposited 5,000 million of the native token WLFI as collateral in Dolomite, where World Liberty Financial represents more than 55% of total liquidity. As reported by Criptonoticias, about 75 million dollars in USD1 (the platform’s stablecoin) were obtained. The controversy focuses in the nature of the strategy, considering the relationship between Dolomite and World Liberty Financial, which generates obvious conflicts of interest. The criticism has been overwhelming. Users and analysts describe the operation as «highly risky.» They compare the strategy with previous failed cases, known to the ecosystem, where collaterals concentrated generated cascading liquidations and losses for lenders. A situation that reminded many commentators of the case of FTX and other platforms that collapsed for taking funds from users for internal operations. «They used their governance token to borrow their own USD1 stablecoin. FTX vibes,” says @DaniREscudero on X. While @Tradingcartel_X states that “WLFI has just exposed the dark side of DeFi innovation.” “It’s exactly like printing Monopoly money and using it to get loans in real dollars. “This is not some random DeFi bug,” adds @Crypto_Jargon, for whom World Liberty Financial is exploding in real time «like a manipulated scam.»
There are already difficulties withdrawing funds
In its criticism, the community alleges that the operation has caused loan rates to skyrocket to over 13%. Additionally, by using the USD1 pool at 93%, there is little liquidity available. Therefore, those who deposited their stablecoins to earn interest can face difficulties withdrawing money. In fact, there are already users who claim that the USD1 pool is saturated «while the treasury obtains liquidity.» The questions raise numerous red flags: A possible cascade liquidation if the price of the collateral continues to fall. The creation of “bad debt” within the protocol. The extreme concentration of risk in a single operation controlled by the partners. World Liberty Financial defends the maneuver accusing his detractors of generating FUD. They affirm that the operation is amply covered (they would add more collateral if necessary). “Here’s what the FUD crowd is completely missing: By being the anchor borrower, we are generating the yield that makes WLFI Markets attractive to everyone else. Everyday users are earning disproportionate returns on stablecoins right now,” they posted on their X account. However, the community does not seem convinced. This April 11, 2026, the price of the asset associated with the project hit a new all-time lowreflecting loss of confidence in the strategy.
The platform token reached a minimum of USD 0.0077 on April 11. Source: CoinMarketCap In this way, while World Liberty Financial presents itself as an “anchor borrower” that generates yield, is the target of accusations for shifting risk to retailers. The controversy leaves open questions: Is this an innovative way to generate yield or simply value extraction disguised as DeFi? For now, the community seems to have its verdict: distrust and accusations.
