Original | Odaily Planet Daily (@OdailyChina)

Author | Golem (@web3_golem)

The true nature of WLFI has finally been seen through by the cryptocurrency community.

On April 9, foreign media reported that the Trump family's crypto project World Liberty Financial (WLFI) had conducted multiple collateralized loans through the DeFi lending protocol Dolomite, raising concerns in the market about insider trading and USD1 liquidity risks. According to statistics, WLFI used approximately 5 billion WLFI tokens as collateral, mobilizing about 75 million US dollars in stablecoins through Dolomite and Coinbase Prime.

Coincidentally, Corey Caplan, co-founder of Dolomite, is also an advisor to WLFI. Although WLFI responded that borrowing stablecoins was aimed at creating value for the ecosystem, with no liquidation risks, and that WLFI had repaid 25 million USD1 loans on April 11, those who tracked the on-chain path of its borrowed stablecoins could clearly see that Dolomite is essentially a disguised channel for the WLFI team to sell tokens.

Renowned trader Pickle Cat also believes that WLFI is using high-profile buybacks to bolster confidence with one hand while low-profile collateralized borrowing cash with the other, leaving retail investors locked in the Dolomite pool to bear the brunt, which is why she decisively chose to liquidate all WLFI spot holdings.

WLFI's price performance since its launch has long been telling. WLFI officially launched on September 1, 2025, and commenced a token buyback in late September of that year, but the token has since fallen over 66%, down about 70% from its peak. So, where does the selling pressure in the market come from? It is highly likely that it is also from the Trump family and their stakeholders, primarily because they cannot possibly have only Dolomite as a disguised token-selling channel, and only they hold a large amount of WLFI tokens that can be "unlimitedly sold."

Even before WLFI officially launched, Odaily Planet Daily conducted an analysis of WLFI's token holding structure and selling pressure, believing that the Trump family is the biggest source of token selling pressure, with a total of 100 billion tokens, of which only 26.05% were allocated for pre-sale, and the remaining 73.95% is controlled by the team. (Related reading: WLFI Unlock Countdown: Trump 15.75% Whale Holdings, Can the Market Withstand "President Selling Pressure"?)

Moreover, after the WLFI token officially launched, the team blacklisted 272 addresses, including Sun Yuchen's, under the pretext of protecting user fund safety and preventing major holders from large-scale selling. At the time, this move was well-received by the community, but now, in light of WLFI's continued decline, we realize that the true purpose of freezing major addresses was to facilitate their own selling.

The situation does not end here; after the exposure of the WLFI team's actions, Sun Yuchen could no longer sit idle. The famous "Sun Cut" has never suffered this kind of loss; can you sell while I cannot? Thus, he confronted WLFI once again.

Sun Yuchen Confronts WLFI Again

On April 12, Sun Yuchen posted on platform X condemning WLFI for extracting fees from users, secretly implanting backdoors to control user assets, freezing investor funds, treating the crypto community as a personal ATM, and various other behaviors. The WLFI team did not let Sun Yuchen's accusations go unchallenged, responding that Sun Yuchen is best at playing the victim, fabricating unfounded accusations to cover up his own misconduct, and announced a desire to meet him in court.

To understand this drama, we need to revisit the relationship between Sun Yuchen and WLFI.

WLFI and Sun Yuchen had a honeymoon period. In November 2024, Sun Yuchen announced a $30 million investment in WLFI through the TRON DAO entity, becoming WLFI's largest investor and project advisor at the time. This transaction was interpreted as a political donation from Sun Yuchen to Trump, as Trump’s election had already become a fait accompli, and crypto figures wanted to maintain a good relationship with him. Therefore, this interaction was a win-win situation; WLFI received funding, and Sun Yuchen opened a channel to connect with the U.S. President.

However, upon the official launch of the WLFI token, the WLFI team promptly kicked Sun Yuchen out. On September 5, 2025, World Liberty Financial (WLFI) blacklisted Sun Yuchen-related addresses, involving around 540 million unlocked tokens and 2.4 billion locked tokens. The reason given by the WLFI team was straightforward: suspicion of someone selling off to depress the token price, and at that time WLFI blacklisted 272 addresses all at once.

Although later Nansen CEO Alex Svanevik stated that Sun Yuchen did not dump the market and that his transfer occurred after the WLFI token had already fallen, the underlying truth of the WLFI token's decline could also be attributed to large retail investors cashing in and panic selling further pressing down prices. But since WLFI used the community as a shield, Sun Yuchen did not step forward to confront them directly.

However, some people spoke up for Sun Yuchen. CryptoQuant CEO Ki Young Ju argued that it would be reasonable for Sun Yuchen to sell unlocked tokens since he has the right to manage his own assets, and WLFI has no right to freeze user addresses. Ironically, the Trump family has repeatedly stated in public that "de-banking" was the main reason they chose to enter the crypto field, having experienced their family assets frozen by banking systems repeatedly. But how is their blacklisting of user addresses different in essence from the banks that once rejected them? Such "pseudo-decentralization" behavior should rightfully be condemned.

That said, even though Sun Yuchen's experience merits sympathy, if he chooses to confront WLFI aggressively, it may not yield any "cheap" gains in the end. The people backing WLFI are the Trump family and a host of deeply entrenched elites in the U.S. political and business circles; which of them can Sun Yuchen afford to offend?

Moreover, considering Sun Yuchen's own regulatory history, political circumstances, and the controversies he has left behind, if he genuinely ends up in a U.S. court against WLFI, let alone winning the lawsuit, merely managing to retreat unscathed would be a fortunate outcome.

Therefore, Sun Yuchen's "rights protection" can create some media noise and posture alongside retail investors, but if it escalates all the way to the U.S. courts, it should be best avoided.

The Second Lesson the Trump Family Teaches the Crypto Sphere

We must acknowledge that WLFI is the second lesson the Trump family gives to the cryptocurrency community (the first lesson, of course, was TRUMP); its true purpose has never been to break traditional banking constraints and improve DeFi, but to rake in wealth in the blurry areas of financial management.

Previously, many people were reluctant to admit or ignored this point because the name Trump still held significant value. During bullish market sentiment, power would automatically be translated into a sense of security and competitive advantage, and coupled with Trump's extremely friendly attitude towards crypto in the early days of his campaign and presidency, crypto users did not erupt in large-scale protests or FUD. The Trump family reaped the rewards in the crypto market, and we could enjoy some benefits as well.

But now, the situation is entirely different. In the broader context, as "crypto czar" David Sacks shifted focus to AI, Trump became embroiled in the U.S.-Iran conflict and could not attend to the crypto sector. The luster of the Trump name has significantly diminished; once he is no longer our crypto president, what halo remains for his family? (Related reading: The "Crypto Czar" Departs: 130 Days of Political Theater Come to an End, How Much of Trump's Crypto Promise Remains?)

Also, regarding the specific WLFI project, influenced by token performance, governance disputes, and freezing incidents, the filter has already been largely torn away in users' minds. The cryptocurrency community is not innocent; being willing to pay a premium for power and buy into political backgrounds is itself a form of speculative complicity. But going forward, when faced with "poor projects" like WLFI created by the American elite in the crypto field, we should bravely say no.

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