Trump family’s World Liberty crypto venture faces investor backlash

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The Trump family’s World Liberty crypto venture faces a backlash after provoking criticism of its governance from one of its largest backers, the crypto tycoon Justin Sun, and taking out a loan tied to its token.

The WLFI token issued by the company, which counts Donald Trump Jr and Eric Trump as co-founders, has fallen nearly 16 per cent over the past month.

Its price dropped sharply after the company’s decision to borrow against the token was publicised on social media in recent weeks.

World Liberty borrowed the equivalent of $75mn against roughly $440mn worth of the WLFI token in recent months, according to public data analysed by crypto analytics firm Kaiko Research.

Some traders are concerned that in a scenario where the loan became stretched and the tokens pledged as collateral had to be sold it could further damage WLFI’s price.

Adam Morgan McCarthy, crypto analyst at Kaiko Research, said the slide in the token’s price was “a kick in the teeth to people who bought in . . . Could you have predicted this? Probably.”

World Liberty has sought to contain the fallout, stating publicly last week that the lending deal presents “no liquidation risk” for holders of the token.

The company said it had “conservatively” pledged the tokens as collateral and had ample resources to pay back the loan. It added that it had already repaid $25mn of the borrowed funds.

“We are incredibly confident in what we are building at World Liberty and the value of the WLFI,” the crypto group said.

The difficulties facing World Liberty increased a week ago after one of its largest backers launched a social media attack on the project.

Crypto billionaire Sun purchased $75mn worth of WLFI tokens following Donald Trump’s election in late 2024.

US securities regulators later settled a fraud case and dropped certain charges against Sun, one of several friendly moves towards the crypto industry since Trump’s re-election.

Sun has also bought at least $100mn worth of a Trump memecoin, which granted him a seat at a dinner with the president.

“I have always been a staunch supporter of President Trump and his crypto-friendly policies,” Sun said on X.

But he turned on World Liberty over proposals to change the token’s governance rules, calling the project “World Tyranny”.

Sun accused the “WLFI team” of “treating the crypto community as a personal ATM”.

World Liberty said on X that Sun’s posts contained “baseless allegations”. On Wednesday, World Liberty followed up with a proposal for further governance changes, including a path for early token holders such as Sun to sell coins that are currently locked.

World Liberty was launched in the run-up to the 2024 presidential election in 2024 as Donald Trump campaigned on his support for crypto.

In total, it has raised about $715mn from token sales, according to crypto fundraising tracker ICO Drops. World Liberty still holds a cache of its tokens, some of which it pledged to take out the loan in dollar-pegged stablecoins.

The transactions on digital asset lending platform Dolomite, which has close ties to World Liberty, sparked particular concern among holders since the group used about 5 per cent of the total supply of WLFI as collateral.

Dolomite chief executive Corey Caplan is also chief technology officer at World Liberty, and Dolomite’s technology serves as the architecture for World Liberty’s lending offering.

World Liberty’s reasons for the borrowing are unclear, though the firm has said it is “generating yield”, or deriving income from the move.

Its founding team also includes Zach Witkoff and Alex Witkoff, who are the sons of the US special envoy to the Middle East and a Trump ally Steve Witkoff.

Roughly 75 per cent of the net revenues from the World Liberty protocol are owed to an entity called DT Marks DEFI. Donald Trump is described in company documents as one of the “owners and principals” of the entity.

The president declared a personal income of $57.3mn from World Liberty in his latest financial disclosure, which only covers the 2024 calendar year.

Big hedge funds such as Point72 and ExodusPoint also have small exposures through ALT5 Sigma, a related Las Vegas-based recycling company turned blockchain group that agreed to buy $1.5bn of the WLFI token. Point72 and ExodusPoint declined to comment.

World Liberty attracted significant scrutiny earlier this year after acknowledging that it sold just under half its equity for $500mn to a group of investors backed by an Abu Dhabi royal days before Donald Trump’s inauguration.

The company denied that the investment had anything to do with an agreement struck later in the year to grant the United Arab Emirates access to US AI chips.

The Trump family also have other crypto ventures, including a $TRUMP memecoin, which has offered holders access to the president at certain events.