Tron founder Justin Sun launched a public offensive against World Liberty Financial (WLFI) on April 12, challenging the project’s recent $261 million stablecoin borrowing spree. The project, which is backed by the Trump family, secured the funds by pledging billions of its own WLFI tokens as collateral on the lending protocol Dolomite.
Sun, a major investor in the platform, targeted the project's technical architecture in a series of posts on X. He alleged that the WLFI smart contract contains a hidden "backdoor" that grants the project the power to blacklist addresses and seize user assets without warning.
"Every investor has the right to know who holds the power to freeze their assets," Sun wrote. He further demanded that the project disclose the identities of those controlling the multisig wallet and the guardian account responsible for these administrative functions.
Liquidity strain and governance concerns
World Liberty Financial’s borrowing strategy has significantly impacted market liquidity. By depositing roughly 5 billion WLFI tokens into the Dolomite protocol, the project accounts for approximately 78% of the supplied liquidity in the platform's USD1 pool. The heavy borrowing has driven utilization rates near capacity, causing deposit interest rates to spike to 36% and borrowing costs to hit 30%.
Multiple depositors reported difficulty withdrawing their funds as the protocol struggled with the concentration of the WLFI-backed position. Despite the volatility, WLFI management defended the move, labeling themselves the "anchor borrower." They stated that the position is over-collateralized and remains far from liquidation thresholds.
Adding to the tension, the project's relationship with Dolomite is under scrutiny. Corey Caplan, the co-founder of Dolomite, serves as an advisor to World Liberty Financial, creating potential conflicts of interest regarding the lending arrangement.
World Liberty Financial responded to Sun’s critique on April 13 with a terse post on X, stating, "see you in court, pal." The dispute marks a significant rift between Sun and the Trump family, following a period where Sun had been a vocal proponent of the administration's cryptocurrency policy.
US lawmakers have previously raised questions regarding the project's governance, specifically whether political influence is being leveraged to promote the platform. The project has hosted exclusive meetups with the Trump family for its top tier of token holders.
Sun’s criticism follows his own recent legal resolution with US regulators. In March 2026, his firm, Rainberry, settled with the Securities and Exchange Commission for $10 million, resulting in the dismissal of personal claims against Sun regarding the distribution of BitTorrent tokens.
