Trump-Backed WLFI Engages in High-Risk DeFi Maneuvers, Raising FTX Comparison

World Liberty Financial (WLFI), a decentralized finance project co-founded by members of the Trump family, has been accused of engaging in a practice similar to FTX's collapse. The company issued two primary crypto assets: a governance token called WLFI and a stablecoin named USD1, which is pegged to the US dollar.

In February 2026, WLFI's treasury deposited 14 million USD1 into a DeFi lending platform called Dolomite, borrowed 11.4 million USDC, and sent those funds to a Coinbase Prime address minutes later. By April, WLFI had pledged approximately 5 billion WLFI tokens as collateral on Dolomite, borrowing roughly $75 million in stablecoins.

The structure of the transaction has drawn comparisons to Alameda Research's use of FTT as collateral on FTX before its collapse. However, one key difference is that WLFI's borrowing is happening transparently on a public blockchain. Every transaction is visible to anyone with access to Etherscan or Arkham Intelligence.

WLFI's response to the controversy was dismissive, stating that the situation is not a risk but rather how DeFi works. However, critics pointed out that the offer to 'simply supply more collateral' only deepens the circular risk, adding more WLFI tokens to a position already backed by WLFI on a platform run by a WLFI insider.