Trump-Backed Crypto Venture Accused of Hiding Massive Leverage on Public Blockchain
The World Liberty Financial (WLFI) project has been making headlines in recent weeks due to its alleged practice of using its own governance token as collateral on a lending platform called Dolomite. The practice is eerily reminiscent of FTX's collapse in November 2022, where the exchange's affiliated trading firm, Alameda Research, used FTT as collateral on FTX, leading to billions of dollars being lost overnight.
WLFI, co-founded by members of the Trump family, including Eric Trump and Donald Trump Jr., has been issuing two primary crypto assets: a governance token called WLFI and a stablecoin named USD1. By April 2026, USD1 had grown to over $4 billion in circulation.
According to blockchain data from Etherscan and Arkham Intelligence, WLFI's treasury deposited approximately 14 million USD1 into Dolomite on February 8 and borrowed 11.4 million USDC. The following months saw additional deposits of WLFI tokens, with the total pledged collateral reaching approximately 5 billion WLFI tokens, worth around $440 million.
The project has been criticized for its conflict of interest, as Corey Caplan, co-founder of Dolomite and CTO of WLFI, advises on both platforms. This has led to concerns that WLFI is essentially borrowing its own stablecoin (USD1) from a protocol advised by its own insider, using its own governance token as collateral.
Nicolas Vaiman, CEO of blockchain analytics firm Bubblemaps, noted that roughly 5% of WLFI's entire token supply is now sitting as collateral on Dolomite. If WLFI's price drops significantly, the collateral could be force-liquidated, creating a spiral of bad debt that Dolomite's protocol cannot absorb.