Concerns Arise Over WLFI’s ‘Community Governance’ Following Wallet Freezes

World Liberty Financial (WLFI), a crypto project supported by the Trump family, is facing scrutiny over its claims of being “community governed.” This skepticism comes after the platform announced it would freeze user wallets and reallocate funds due to a phishing attack that compromised certain user accounts.

Key Takeaways

WLFI, a crypto project supported by the Trump family, froze wallets after a phishing attack.
The project claims third-party security lapses led to the wallet vulnerabilities.
Reallocation of affected assets will only apply to users who completed KYC verification.
Public sentiment is mixed, with some praising WLFI's accountability, while others criticize the control over funds.

WLFI’s ‘community governed’ image strained as Trump-backed project freezes wallets

On Wednesday, WLFI stated that it plans to reassign assets impacted by phishing attacks that revealed the seed phrases linked to what it called a “relatively small subset” of user wallets. They clarified that the issues arose from “third-party security lapses,” not from any vulnerabilities in their platform or smart contracts.

WLFI emphasized in a post on X (formerly Twitter) that “This was not a WLFI platform or smart contract issue. Attackers gained access to user wallets through third-party security lapses.” The reallocation of funds will only affect users who have finished the Know Your Customer (KYC) verification process. Accounts of those who haven’t completed KYC will stay frozen. WLFI initially suspended the affected wallets in September during their investigation of the phishing incident.

Blacklisted wallets due to phishing Source: Worldlibertyfi

In total, WLFI has blacklisted 272 wallets, with 215 directly linked to the phishing attack; 50 of these wallets have been confirmed as compromised.

Security measures in place Source: Worldlibertyfi

“We stepped in preemptively to stop hackers from draining funds and are working with the rightful owners to secure/move assets,” WLFI stated in a post on X on September 6. Cointelegraph has reached out to WLFI for more information regarding the total value of the affected assets.

Public Reaction: Divided Opinions on Fund Control

The announcement by WLFI has sparked mixed reactions among users on X. Some voiced their concerns, questioning the platform's authority to freeze and reassign funds without following a decentralized governance process. One anonymous blockchain developer, flick, commented, “I think it’s hilarious how everyone is cheering that you can rug or lock any wallet on your own protocol. The entire ecosystem is dependent on your security. Everyone will get phucked in the end.”

Conversely, others interpreted WLFI’s actions as a responsible move, demonstrating accountability in the wake of the phishing attack. Crypto trader DefiBagira took to X to say, “Good to see a project actually taking responsibility instead of hiding behind ‘not our fault’. User safety > everything.”