Trump’s Crypto Initiative WLFI Encounters Security Issues Ahead of Launch

Summary:
World Liberty Financial (WLFI), a cryptocurrency project supported by the Trump family, faced its first significant security issue. Some user wallets reportedly experienced phishing attacks just before the launch of WLFI’s tokens. The team has taken steps to secure affected accounts and is implementing new processes to protect user funds.

Key Takeaways

WLFI experienced security breaches affecting some user wallets due to phishing attacks prior to launching its tokens.
The project assured that vulnerabilities did not originate from its systems or smart contracts.
Affected users are undergoing new KYC checks and must provide fresh wallet addresses for transferring funds.
WLFI trading volume peaked at nearly $1 billion on Binance within the first hour after launch, but the family's token stake has since dropped significantly.

WLFI

Initial Security Alerts for WLFI Wallets

World Liberty Financial (WLFI), the Trump family-supported cryptocurrency project, is addressing its first security concern after it was reported that a number of user wallets were compromised due to phishing attempts just before the token launch.

In a post on X last Thursday, the WLFI team indicated that several wallets suffered breaches, either from phishing schemes or by exposed seed phrases. They clarified that this issue was not caused by any flaws within WLFI's platform or smart contracts but rather by security weaknesses from third-party sources that allowed hackers to gain access to private wallets.

The project reacted swiftly by freezing the affected wallets in September and initiated verification processes for ownership.

WLFI Implements KYC Measures and Revamped Wallet Procedures

Users who reported compromised accounts were required to undergo new know-your-customer (KYC) verification and provide new wallet addresses, ensuring that their funds could be transferred to safer accounts.

At the same time, the engineering team worked on developing and testing new smart contract protocols designed to facilitate bulk reallocations. The WLFI team stated that reallocations would commence for users who submitted support tickets and passed the necessary verification checks. Meanwhile, wallets linked to users who have not yet engaged will remain locked. Those users can commence the process via the help center.

WLFI described the staged rollout as intentional, emphasizing the importance of prioritizing the security of user funds over rapid deployment, even when the origins of the issue lay outside their infrastructure. This message was intended to reassure users whose wallets remained locked for weeks while the migration process was being created and tested.

WLFI Trading Surges on Binance With Significant Volume

The security incident took place just weeks after WLFI made a highly publicized entry into the market. The project launched its WLFI token on September 1, following promotional material released earlier in 2024. Trading started on decentralized platforms, exhibiting notable volatility, including a drop of over 15% on the launch day.

Interest quickly shifted to larger exchanges, with trading volumes skyrocketing on Binance and others, resulting in nearly $1 billion worth of tokens traded within the initial hour, according to CoinMarketCap. Prices fluctuated between $0.24 and $0.30, which aligned closely with futures pricing prior to the token's listing.

At the peak of this price range, the Trump family's holdings—amounting to 22.5 billion tokens from a total supply of 100 billion—were valued at over $6 billion on paper, establishing WLFI as their most significant asset, as reported by the Wall Street Journal. This price surge granted the project immediate attention in both political and cryptocurrency spheres.

WLFI Stake Value Drops to $3.15 Billion Amid Market Correction

Market dynamics have since stabilized. As of November 20, the family's WLFI stake is valued at approximately $3.15 billion on paper, based on a token value of $0.13, maintaining the same 22.5 billion token stake.

These tokens are classified as locked governance tokens, which grant voting rights and a share of the revenue from presales, which are estimated to amount to between $400 million and $500 million generated so far, but do not equate to full economic claims on the business.

Despite the project’s visibility and considerable resources, phishing links, fraudulent support channels, and inadequate key storage continue to be the most significant vulnerabilities in consumer-facing crypto projects.