Key Takeaways
- Technical charts reveal a bear flag formation for WLFI, suggesting a potential decline of 20% toward the $0.066 level throughout April.
- The project utilized its own illiquid WLFI tokens to secure a $75 million stablecoin loan through Dolomite, a lending protocol operated by World Liberty’s CTO.
- This massive borrowing activity drove pool utilization rates to 93%, effectively preventing certain users from accessing their stablecoin holdings.
- Tron’s Justin Sun, who committed a minimum of $75 million to WLFI, has publicly claimed the project deployed an undisclosed “backdoor blacklisting function” to freeze his 544 million token holdings.
- An impending unlock event involving more than 16 billion WLFI tokens threatens significant market dilution.
World Liberty Financial’s native WLFI token finds itself confronting challenges from several fronts as April 2026 unfolds. Chart patterns, questions about internal operations, and a high-profile conflict with a major investor are all creating downward momentum on the asset’s valuation.
From a technical perspective, WLFI is currently positioned within what market analysts identify as a bear flag formation — a continuation pattern typically associated with further downside movement. The measured move derived from this configuration points to a downside objective near $0.066, representing approximately 20% below present trading levels. Should bullish momentum emerge instead, initial resistance barriers would appear at the 20-day and 50-day exponential moving averages, positioned at $0.081 and $0.085 respectively.
The asset pairs with USDT for trading, with the four-hour timeframe chart displaying the pattern’s development following a pronounced selloff over recent weeks.
Controversial Collateral Strategy Raises Questions
Beyond technical indicators, fundamental concerns have emerged that worry token holders. Blockchain analytics from Arkham Intelligence reveal that addresses associated with World Liberty Financial deposited approximately 3 to 5 billion WLFI tokens as loan collateral on Dolomite — notably, a DeFi lending service created by the project’s own chief technology officer — to secure roughly $75 million in stablecoins, specifically USD1 and USDC.
The WLFI Team is borrowing $150M USDC against $400M WLFI on Dolomite.
The WLFI Team is lending $406.23M of WLFI across 2 wallets. That is 4.99% of the supply, and 97.8% of the WLFI cap on Dolomite.
They are borrowing a total of $150M USDC against their holdings on Dolomite. pic.twitter.com/7dPsDKF73R
— Arkham (@arkham) April 10, 2026
More than $40 million of these borrowed stablecoins were subsequently transferred to Coinbase Prime. This borrowing activity elevated Dolomite’s pool utilization to approximately 93%, creating withdrawal limitations for other platform participants attempting to access their deposited funds.
Market observers have characterized this maneuver as “circular” liquidity mining — leveraging the project’s own low-liquidity tokens to extract tangible value. Should WLFI experience a significant price correction, the collateral faces liquidation risk, potentially releasing massive token quantities into circulation while leaving depositors exposed to uncollateralized debt.
THEY PRINTED 5 BILLION OF THEIR OWN TOKENS THEN WITHDREW IT AS USDC$WLFI FEELS LIKE LUNA 2.0 pic.twitter.com/5OWK25YdK7
— Darky (@Darky1k) April 11, 2026
Morten Christensen, who founded airdropalert.com and holds WLFI tokens, stated: “The whole taking a loan on your own token as collateral is tremendously shady.”
High-Profile Investor Challenges Project Publicly
Justin Sun, the Tron blockchain founder who deployed at least $75 million into WLFI and received an advisory position, has openly challenged the project’s practices. He alleges the deployment of a concealed backdoor mechanism to immobilize his 544 million WLFI token holdings. Sun further claims governance procedures were manipulated and has demanded full disclosure regarding token release schedules.
On April 12, World Liberty Financial issued a response through X: “Justin’s favorite move is playing the victim while making baseless allegations to cover up his own misconduct.” The statement concluded: “See you in court pal.”
Sun’s token position was initially frozen during September 2025, coinciding with the project’s 20% token unlock event. The tokens have remained locked according to blockchain intelligence firm Bubblemaps.
World Liberty has announced it repurchased more than $65 million worth of WLFI tokens and explicitly denied liquidating any holdings.
The organization also indicated plans to conduct a governance vote regarding the remaining locked tokens, while clarifying that simultaneous release of all tokens would not occur. A proposed unlock affecting over 16 billion tokens allocated to public distributions continues to await resolution.
