WLFI Seeks to Restructure Locked Tokens After Investor Backlash
World Liberty Financial, a digital asset venture backed by the Trump family, has proposed a sweeping overhaul of its token structure, as the project faces mounting scrutiny over recent financial activity and investor concerns.
Summary:
- WLFI plans to burn 4.5 billion insider tokens.
- More than 60 billion tokens will move to vesting schedules.
- The proposal follows backlash over a $75 million loan.
According to information from Reuters, the proposal, released on April 15, targets what WLFI calls a “governance overhang.” Large amounts of tokens are locked and inactive. This limits voting participation.
Under the plan, founders and team members hold about 45.2 billion tokens. They must burn 10%, or roughly 4.5 billion tokens, if they opt in.
In return, the remaining tokens will unlock over time. The schedule runs for five years with a two-year cliff. After that, tokens unlock monthly.
Early supporters hold about 17 billion tokens. They will not face a burn. Instead, their tokens move to a four-year vesting plan with the same two-year cliff.
Token holders must actively accept the new terms. If they do nothing, their tokens stay locked indefinitely.
The vote lasts seven days. It requires a 1 billion token quorum and a simple majority. If approved, the burn happens immediately.
Loan Controversy Sparks Pressure
Earlier this month, WLFI deposited 5 billion tokens into Dolomite. The tokens were used as collateral.
The project then borrowed about $75 million in stablecoins. Some of the funds were reportedly sent to Coinbase Prime.
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This triggered backlash. Investors had been told the tokens were non-transferable. Retail holders remained locked while the treasury accessed liquidity.
Concerns grew around governance. Observers noted links between WLFI and Dolomite. One of Dolomite’s co-founders is also an advisor to WLFI. That raised questions about insider access.
Price Drop and Legal Risks
The market reaction was quick. The WLFI token fell about 12% after the reports. It dropped to around $0.079, a record low.
That level is far below previous buyback prices. It added to investor concerns about valuation and liquidity.
Legal pressure is also building. Early investors in the U.S. and the Netherlands have issued notices. They claim they were misled about lockups and liquidity.
A Bid to Restore Confidence
The new proposal looks like an attempt to reset the structure. It introduces clearer timelines and reduces supply through the burn.
Still, it comes with trade-offs. Investors must accept new terms to gain future liquidity. Otherwise, their tokens remain locked.
The outcome of the vote will be key. It will show whether the community supports the new direction.
More broadly, the situation highlights a familiar issue in crypto. Token design and transparency can shape trust – or quickly erode it.
The information presented in this article is intended for informational purposes only and should not be interpreted as financial, investment, or trading advice. Coinspress.com does not promote or advocate for any particular investment strategy, asset, or cryptocurrency project. Cryptocurrency markets are highly volatile and unpredictable – always perform your own research and seek guidance from a qualified financial professional before making any investment decisions.
Alexander Zdravkov
Reporter at CoinsPress
Alexander Zdravkov is a market analyst and crypto journalist with interests in economics, broader financial markets and digital assets. His journey into crypto began more than four years ago, driven by a fascination with the rapid evolution of blockchain technology and the transformative potential of decentralized finance. He began analyzing market cycles and identifying emerging trends before they reach the mainstream. He holds a degree in International Relations - a background that helped shape his broader perspective on global economics, geopolitics, and the interconnected nature of modern financial markets. Whether covering the latest developments in the crypto sector or exploring broader macroeconomic themes, Alexander focuses on giving readers context rather than simply repeating headlines. During his career, he has authored more than 10,000 articles covering cryptocurrencies, traditional finance, and global market developments. His work spans everything from Bitcoin and altcoins to macroeconomic trends influencing risk assets worldwide.
