World Liberty Financial Allegedly Minted $22M Unbacked Stablecoins
World Liberty Financial deposited nearly 2 billion WLFI tokens and borrowed about $51 million in stablecoins by March, funneling roughly $40 million to Coinbase Prime. On April 14 WLFI minted 25 million USD1 via BitGo and burned 3 million, netting 22 million new stablecoins without clear backing.
1. Alleged Money-Printing Mechanism
World Liberty Financial’s treasury began by depositing 14 million USD1 stablecoins into the Dolomite DeFi platform and borrowing 11.4 million USDC against it. By leveraging its own governance token WLFI, the venture expanded this process into a large-scale loop that appears designed to generate funds from within its own ecosystem.
2. Collateralization and Borrowing Details
Between February and March, WLFI’s treasury deposited nearly 2 billion WLFI tokens into Dolomite as collateral and borrowed roughly $51 million in stablecoins, of which about $40 million moved to Coinbase Prime. This activity drained ordinary depositors’ access to the USD1 pool, concentrating liquidity control in WLFI’s hands.
3. Token Minting and Depositor Impact
On April 9 and 11 WLFI repaid $25 million in two transactions to ease withdrawal pressures, then on April 14 it minted 25 million new USD1 through custodian BitGo and burned 3 million. The net creation of 22 million USD1 raised concerns over reserve backing and custodial oversight.