Allegations of Slow Value Extraction in Trump-Linked World Liberty Financial

A recent governance vote concerning World Liberty Financial (WLFI), a decentralized finance (DeFi) initiative associated with the Trump brand, has sparked controversy. Allegations have emerged that certain wallets linked to the team are manipulating votes, leaving many regular token holders unable to participate.

Key Takeaways

Allegations have surfaced regarding a governance vote at World Liberty Financial that appears to favor team-affiliated wallets.
A prominent trader claims that many public token holders are locked out and unable to vote.
The proposal's intent and WLFI's financial model are called into question, suggesting a potential for value extraction from holders.
WLFI's revenue distribution primarily benefits the Trump and Witkoff families, raising concerns over fairness.
The WLFI token's market value has significantly declined amid these allegations.

Slow Rug? Trump-Associated World Liberty Fi Accused Of Value Extraction

The governance vote, described by top trader DeFi^2 as potentially “rigged,” raises questions about the integrity of the proposal process at WLFI. Accusations revolve around the distribution of voting power primarily in favor of team-affiliated wallets while ordinary holders remain locked out of token access. Concerns about value extraction practices and governance transparency are central to the unfolding narrative.

Allegations of a Rigged Vote at World Liberty Financial

Prominent crypto trader DeFi^2, recognized as the top-ranked trader on Bybit for 2023 and 2024, took to X to highlight what he considers a troubling governance vote at World Liberty Financial this month. He stated that this vote seems to mark the beginning stages of a slow extraction of value from WLFI holders by the project's team.

DeFi^2 commented, “What you see above appears to be a rigged vote, where the majority of top voters are team wallets or strategic partner wallets according to Bubble Maps. In contrast, real voters, who are represented lower in the screenshot, have been locked out from accessing their WLFI tokens since the Token Generation Event (TGE) and cannot vote on any unlocks until the team allows it.”

The governance proposal, referred to as the "USD1 growth proposal," may sound innocuous at first. However, DeFi^2 questions its timing and context: “Why would the team go out of their way to push this vote if it isn't addressing the WLFI token unlock that most holders are requesting?”

World Liberty Financial votes

His concerns stem from the financial structure of WLFI. DeFi^2 asserts that WLFI holders do not earn any protocol revenue. According to the project's “Gold Paper,” revenue distribution indicates that 75% of the protocol's earnings go to the Trump family while 25% is allocated to the Witkoff family. He suggests this creates a misaligned incentive structure: “The team is pushing a vote to sell WLFI tokens at the expense of locked holders, which funds revenue that benefits only them.”

Allegations extend to the voting process itself, as DeFi^2 believes that the vote's outcome was manipulated. “This vote was initially failing when it reached quorum, with most votes rejecting the proposal, until the team and partners forced the vote through,” he added. Moreover, he provided insight into token distribution, highlighting that the WLFI team owns 33.5% of all tokens, while strategic partners hold another 5.85%. In comparison, only 20% was allocated for public sale.

Following the vote, DeFi^2 points to on-chain activities to substantiate his claims, specifically mentioning a significant transfer of 500 million WLFI tokens to Jump Trading while existing investor allocations remain locked.

500 million WLFI tokens sent to Jump trading

Concluding his analysis, DeFi^2 expressed skepticism regarding the valuation of WLFI, stating, “It’s hard to see the intrinsic value in a $17 billion token that offers no real governance power, no share in revenue, and is under sell pressure to benefit the foundation.” He mentioned that he has shorted WLFI periodically since it traded above $0.34 and anticipates further declines due to dilution, deliberate extraction, and various factors tied to Trump’s concluding term in office.

As of this writing, WLFI is trading at $0.1608.

WLFI token price