World Liberty Financial (WLFI), a cryptocurrency venture tied to the U.S. President Donald Trump and his family, is facing growing scrutiny after raising more than $550 million from investors, only to quietly conduct additional large-scale token sales behind the scenes.
According to Bloomberg, in governance filings, WLFI sold an extra 5.9 billion tokens to private, accredited investors in deals worth hundreds of millions of dollars. The tokens were believed to be sourced from internal allocations, with much of the proceeds reportedly going to entities affiliated with the founders, raising concerns among early backers.
Investors stuck as token price drops
Early investors now find themselves in a difficult position. While they initially bought tokens at prices as low as $0.05, they are currently unable to sell 80% of their holdings. Meanwhile, the token (WLFI) has dropped below $0.06 in open trading. As of writing, as per CoinMarketCap data, it was trading at $0.053, down 45.52% over the last month.
Unlike most crypto projects, World Liberty initially provided only partial transparency on unlocks. Investors were only allowed to sell 20% of their holdings at launch last year, leaving the majority of their holdings locked as market conditions worsened and some gradual claims occurred without full public announcements.
“White Glove” sales raise questions
The project confirmed conducting private “white glove” token sales but declined to disclose who purchased the tokens or where the funds ultimately went.
Blockchain analytics platform Tokenomist.ai flagged discrepancies in token allocations, noting that the share of tokens assigned to founders, advisors, and partners had increased without public explanation.
Governance Proposal extend lockups
A new proposal, that is still under community vote as of early May, targets roughly 62 billion previously locked WLFI tokens: 45.2 billion for insiders, founders, advisors, partners + 17 billion for early supporters.
It offers opt-in structured vesting: insiders would face a two-year cliff plus three-year linear vesting with a mandatory 10% permanent burn (up to ~4.5 billion tokens destroyed); early backers would get a two-year cliff plus two-year vesting with no burn. Tokens from holders who reject the proposal risk remaining locked indefinitely.
Project spokespeople have defended the approach as promoting long-term alignment.
Conflict of interest and legal troubles
Critics argue the situation is unprecedented, as a sitting president’s family is financially tied to an active crypto project.
Although the White House maintains that Donald Trump has no direct involvement — with assets managed in a family trust — concerns about conflicts of interest persist.
The controversy deepened after crypto billionaire Justin Sun filed a lawsuit alleging an illegal scheme and fraud, claiming he invested $45 million without being able to sell any tokens. The lawsuit also highlighted concerns over the project’s structure, which directs up to 75-95% of token sale proceeds to insiders per disclosures. The project has denied the allegations.
World Liberty has also leveraged its own tokens by depositing 5 billion WLFI into a lending protocol and borrowing around $75 million in stablecoins.
Critics warn that this structure could allow insiders to extract liquidity while regular investors remain locked in. The project, however, insists the position is stable and partially repaid.
Broader ecosystem under pressure
The issues surrounding World Liberty reflect a wider downturn across Trump-linked crypto ventures. Several projects tied to the brand, including memecoins and mining operations — have seen steep declines, with some losing up to 90% of their value.
A Nasdaq-listed firm associated with the ecosystem has already shifted focus toward artificial intelligence, signaling a potential pivot away from struggling crypto strategies.
Moreover, unlike traditional financial markets, crypto projects like World Liberty operate with minimal regulatory oversight. There are no mandatory disclosures, audited financials, or strict governance requirements.
Also read: Consensys Takes Aim at Key Gaps in U.S. Stablecoin Regulation
