Trump Family Crypto Scheme Borrows $75 Million Against Its Own Token on Advisor’s Protocol

World Liberty Financial (WLFI), the crypto project co-founded by the Trump family, just pulled off a brazen financial move that reeks of insider dealings and reckless risk-taking. According to a report from CoinDesk, WLFI pledged 5 billion of its own tokens as collateral on the Dolomite decentralized finance (DeFi) lending protocol to borrow roughly $75 million in stablecoins. More than $40 million of that cash promptly moved to Coinbase Prime, a platform typically reserved for institutional over-the-counter conversions.

On-chain data reveals WLFI’s treasury multisig wallet first routed about 3 billion tokens through an intermediary before depositing the full 5 billion tokens as collateral on Dolomite. The loan broke down into $65.4 million USD1 and $10.3 million USDC, though WLFI later repaid $15 million of the borrowed funds. This massive borrowing pushed the Dolomite USD1 pool utilization rate to nearly 93 percent, straining the protocol’s liquidity and making it difficult for ordinary depositors to withdraw funds in a timely manner.

What makes this arrangement especially troubling is that Dolomite’s co-founder, Corey Caplan, also serves as an advisor to WLFI. In traditional finance, such related-party transactions would trigger mandatory disclosure and require independent board approval to prevent conflicts of interest. But DeFi protocols operate with far fewer guardrails, allowing insiders to exploit their positions with little oversight.

WLFI’s token price plunged nearly 10 percent to a record low after these disclosures, reflecting investor unease. The venture’s limited market depth means a price drop could trigger forced liquidations, rapidly eroding collateral value and exposing depositors to bad debt that Dolomite may struggle to absorb.

This reckless borrowing episode adds to mounting scrutiny of WLFI. A separate investigation uncovered that WLFI had integrated its USD1 stablecoin with a Southeast Asian blockchain project linked to a founder sanctioned by U.S. and U.K. authorities over alleged large-scale online fraud.

The Trump family’s crypto operation is yet another example of how their ventures blend political influence with financial risk and opacity. WLFI’s use of unregulated tokens to enrich insiders and insiders-advisor entanglements highlight the urgent need for transparency and accountability in crypto dealings tied to political figures. Ordinary investors and depositors deserve better than to be collateral damage in these high-stakes, conflicted financial gambits.