World Liberty Financial, the crypto venture co-founded by the Trump family, has conducted a series of transactions through decentralized finance (DeFi) lending protocol Dolomite, raising questions about insider access, circular token economy and concentrated risk for other depositors.
Onchain records analyzed by CoinDesk, pulled from Etherscan, Arkham and publicly available wallet data, show that the sequence began on February 8, when WLFI’s treasury deposited 14 million USD1, its own dollar-pegged stablecoin, in Dolomite as collateral and borrowed 11.4 million USDC against it.
Minutes later, 11.45 million USDC moved to a Coinbase Prime deposit address, per Arkham. Two days later, USD12.5 million was sent from the Treasury to a separate Coinbase Prime deposit address. Coinbase Prime is typically used to convert crypto to fiat or for institutional OTC trading.
The USD 12.5 million1 was not borrowed from Dolomite. It moved directly from WLFI’s treasury wallet to the exchange, meaning the venture sent its own stablecoin directly to a fiat off-ramp.
But the WLFI token entered the picture twelve days later. On February 20, the Treasury deposited 890 million WLFI into Dolomite and borrowed 20 million USD1 against it.
On March 24, another 1.1 billion WLFI followed. A total of 1.99 billion WLFI tokens are now sitting as collateral in Dolomite, and the treasury has received around 31.4 million in stablecoins from the protocol across both episodes.
However, the choice of protocol is not accidental.
Dolomite co-founder Corey Caplan is an advisor to World Liberty Financial. WLFI now sits atop Dolomite’s list of secured assets with $458.9 million in supply liquidity, about 55% of the protocol’s $835.7 million total.
The structural concern lies in Dolomite’s $1 pool. USD1, which now has $4.6 billion in circulation, is second on the protocol with $180 million delivered against $167.5 million borrowed, a utilization rate of about 93%.
The USD1 bid rate stands at 16.24% and the lending rate at 9.18%, figures that reflect concentrated lending activity rather than broad organic demand.
By that exploit, ordinary depositors who lent USD1 to the pool expecting to withdraw at will cannot all do so at once. Their funds are effectively locked up until the big borrower pays back.
The collateral for the WLFI-denominated loan is a separate issue.
WLFI trades with limited market depth relative to the size of the position. If the token moves down sharply and Dolomite’s liquidation mechanism is triggered, the forced sale would crash the price before the collateral could be liquidated, leaving the protocol with bad debt that would fall on the same retail depositors who are currently unable to exit.
The activity escalated in April along a different route. On April 2, WLFI’s treasury sent 2 billion WLFI to a Gnosis Safe proxy wallet at address 0x44a681DD. Five days later, it sent another DKK 1 billion.
None of the transfers went directly to Dolomite, and onchain data does not yet show where these tokens are going. The three billion additional tokens are worth about $266 million at WLFI’s current price of $0.0888.
World Liberty Financial did not immediately respond to CoinDesk’s request for comment.
