Justin Sun criticized Trump-backed WLFI for treating users like a personal ATM after a $75 million DeFi loan. Here’s what the dispute means.
Tron founder Justin Sun publicly accused Trump-backed World Liberty Financial of treating its users like a “personal ATM” after wallets linked to the project deposited 5 billion WLFI tokens on Dolomite and borrowed $75 million in stablecoins against that collateral, draining liquidity from the lending protocol and sending the WLFI token to record lows.
Sun’s criticism, reported by secondary outlets citing his X post, described himself as WLFI’s “first and largest victim,” according to unconfirmed reports from coverage that paraphrased the original statement. The exact wording of Sun’s post was not independently verified at the time of publication.
Inside the $75 million self-collateralized loan
Blockchain data shows wallets tied to World Liberty Financial moved 5,000,000,000 WLFI tokens to Dolomite and borrowed $75 million in USD1 and USDC against that collateral. The same address still holds 75,000,000 USD1 on Etherscan.
ON-CHAIN DATA
- Address: 0x5be9…dbb
- WLFI balance: 5,000,000,000 WLFI
- USD1 balance: 75,000,000 USD1
The loan’s size relative to Dolomite is the core issue. DeFiLlama lists Dolomite’s total value locked at roughly $148 million, meaning the $75 million position consumed approximately half the protocol’s available liquidity. Pool utilization reportedly reached 100%, locking out other depositors from withdrawals.
WLFI’s token price fell to $0.08 following the controversy, a record low that intensified scrutiny over the project’s governance and risk management.
WLFI’s defense and the market fallout
On April 9, WLFI’s official X account posted that it was addressing “the FUD going around our WLFI Markets lending position.” The team did not disclose detailed loan terms or explain how the borrowed funds were deployed.
In separate reporting, WLFI told CoinDesk it would “simply supply more collateral” if markets moved against the position. That assurance did little to calm holders, as the token continued sliding after the statement.
The situation echoes broader concerns about DeFi governance transparency that have surfaced in recent months. Projects like Ethereum have faced their own debates over protocol-level decision-making, though WLFI’s case is uniquely complicated by its political ties to the Trump family.
Why this dispute matters beyond WLFI
The controversy sits at the intersection of DeFi user trust and political reputational risk. Self-collateralized borrowing, where a project uses its own token as collateral, concentrates liquidation risk in a single asset. If WLFI’s token price drops further, the collateral could become insufficient, triggering forced selling that would amplify losses for remaining holders.
TRX, the native token of Sun’s Tron network, traded at $0.3217 with a market cap of $30.5 billion at press time, up roughly 1.1% over 24 hours. Sun’s public stance against WLFI positions him as a critic of insider-favoring DeFi structures, even as his own ecosystem navigates separate scrutiny.
The broader crypto market’s Fear and Greed Index sits at 16, deep in “Extreme Fear” territory, a backdrop that amplifies the reputational damage from high-profile governance disputes. Recent ETF performance recaps and broad altcoin weakness underscore how fragile market confidence remains heading into Q2.
What traders and DeFi users should watch next
The immediate question is whether WLFI will publish full loan terms, including liquidation thresholds, interest rates, and the destination of the borrowed stablecoins. Without that transparency, the “supply more collateral” promise remains unverifiable.
Dolomite depositors face a separate concern: whether the protocol will implement position caps or governance changes to prevent a single borrower from consuming the majority of available liquidity again.
No regulator has announced an investigation or enforcement action related to the loan. The dispute remains a governance and transparency story for now, but the combination of political ties, insider borrowing, and locked user liquidity makes it a likely candidate for future regulatory attention.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency and digital asset markets carry significant risk. Always do your own research before making decisions.
