The Trump family's crypto ventures go from bad to worse…
As if the Trump and Melania memecoins weren’t bad enough…
Now their DeFi platform, World Liberty Financial is back in the headlines…
Here’s the latest grift…
The company created 5 billion of their own WLFI tokens. These are tokens they can mint at any time, tokens they control.
Then they deposited those tokens as collateral on a lending platform called Dolomite, and borrowed $75 million in stablecoins against them.
Think of it like this… you go to a pawn shop, hand over a watch that you made yourself in your garage, and walk out with $75,000 in cash.
Oh, and the pawn shop owner is also on your payroll.
Because that's the other part. Dolomite's co-founder, Corey Caplan, is an advisor to World Liberty Financial.
Meaning the protocol they chose to borrow from isn't some random DeFi platform they stumbled across. It's one their own insider co-founded.
In traditional finance, a related-party transaction of this scale requires disclosure, independent board approval… plus significant regulatory scrutiny. In DeFi, there are no such guardrails.
So where did the $75 million go? More than $40 million moved directly to Coinbase Prime, the institutional trading arm of Coinbase.
Coinbase Prime is typically where institutions convert crypto to cash, or execute large over-the-counter trades. In other words... they cashed out. Just without ever technically selling their own token.
The problem is what they left behind.
WLFI's position now accounts for roughly 55% of Dolomite's entire deposit base.
And by draining the lending pool, they pushed the borrowing rate on their stablecoin pool up to 93%. So any ordinary depositors who put their money into that pool... CANNOT get it back out because the pool is dry.
Angry yet? Don’t worry, it gets worse.
The collateral backing the position (the billions of WLFI tokens) trades with extremely thin market depth.
So there aren’t nearly enough buyers on the open market to absorb the position if it ever needs to be liquidated. If the WLFI price drops enough to trigger forced selling, those tokens would crash on the way down, eroding the collateral value before it could be wound down... leaving Dolomite holding bad debt that falls squarely on ordinary depositors.
World Liberty Financial's response to all of this? They called the liquidation concerns "baseless."
They might be right. Or they may be one bad news cycle away from finding out exactly how baseless those concerns are.
What I can tell you is that the blockchain doesn't forget.
Every transaction I've described is publicly visible onchain, so these are receipts rathen than theories.
And meanwhile, the WLFI token has already dropped nearly 10% to a record low since this came to light.
Yet another L for this administration’s foray into crypto.
Oliver
P.S.