Trump-Backed Crypto Project Duplicates FTX's Fatal Flaw

The collapse of FTX in November 2022 exposed a fatal flaw: its affiliated trading firm, Alameda Research, had borrowed billions of dollars using FTT, FTX's own proprietary token, as collateral on FTX's platform. A similar story is unfolding with World Liberty Financial (WLFI), a decentralized finance project co-founded by the Trump family in 2024.

WLFI issues two primary crypto assets: a governance token called WLFI and a stablecoin named USD1, pegged to the US dollar and backed by US Treasuries and cash equivalents. By April 2026, USD1 had grown to over $4 billion in circulation.

The controversy centers on a series of transactions documented by on-chain analytics firms Arkham Intelligence and Etherscan. In February 2026, WLFI's treasury deposited 14 million USD1 into Dolomite, borrowed 11.4 million USDC, and sent those funds to a Coinbase Prime address minutes later.

By April 2 and 7, WLFI had pledged approximately 5 billion WLFI tokens as collateral on Dolomite, borrowing roughly $75 million in stablecoins. More than $40 million of those proceeds moved to Coinbase Prime shortly after borrowing.