World Liberty Financial (WLFI), the crypto platform with backing from Donald Trump, is once again under fire for its management of user funds. Recent actions, including wallet freezes and an impending asset redistribution, have amplified existing concerns about centralized control within the project. This situation has led to a division among users, with some viewing WLFI’s interventions as necessary oversight and others perceiving them as indicators of significant governance issues.
In brief
- •WLFI plans to reassign assets from compromised wallets, attributing the pre-launch phishing attack to external security failures.
- •Wallets remain frozen unless users complete KYC verification, with 272 wallets blacklisted as WLFI works to prevent further asset losses.
- •Critics argue WLFI’s unilateral wallet freeze contradicts its stated commitment to community governance, raising questions about trust and transparency.
- •Supporters contend that WLFI acted responsibly to safeguard users, although earlier decisions regarding token unlocks in September continue to be a point of discussion.
WLFI Addresses Pre-Launch Phishing Attack With Targeted Asset Recovery Plan
WLFI has announced its intention to reassign assets from wallets that were compromised in a pre-launch phishing attack. The platform indicated that the attackers gained access to the seed phrases of what it described as a "relatively small subset" of its users.
According to WLFI, the security breach stemmed from external vulnerabilities rather than any weaknesses in its own infrastructure or smart contracts. The affected wallets have been frozen since September, during which time the platform has been conducting its investigation into the incident.
Access to funds will only be restored for users who have successfully completed Know Your Customer (KYC) verification. Accounts that have not undergone KYC verification will remain locked. Previously, WLFI blacklisted 272 wallets associated with the incident, stating that its intervention was crucial in preventing further asset losses while it worked with the affected parties.
Crypto Community Split Over Wallet Freeze and Centralization Fears
The crypto community's reaction to WLFI's recent actions is divided. A portion of the community views WLFI’s interventions as necessary protective measures following the phishing attack. However, another segment argues that these steps are inconsistent with the project's stated principles of shared governance.
Concerns about centralization have been amplified by discussions on platforms like X, where users have questioned WLFI's capacity to freeze and reassign assets, particularly given the project's self-proclaimed community-governed model. Critics have also raised questions about why such decisions were made without a community voting process.
Traders and developers examining the situation have highlighted several critical questions:
- •What level of authority should a "community-governed" project wield over user assets?
- •Should fund recovery processes necessitate an on-chain vote by the community?
- •What are the long-term implications for trust when wallet freezes are implemented?
- •What standards of transparency should be upheld during account interventions?
- •How might similar security incidents be addressed by the project in the future?
Conversely, supporters of WLFI have defended the platform's actions, suggesting that the project is taking direct responsibility rather than distancing itself from the breach. Proponents argue that the decision to restore funds is a notable action in an industry where many projects tend to avoid addressing security failures openly.
Good to see a project actually taking responsibility instead of hiding behind ‘not our fault’. User safety > everything.
Crypto trader DefiBagira
Further scrutiny has been directed at a separate incident in September, during which WLFI unlocked 24.6 billion tokens, valued at approximately $5 billion at the time, shortly after initially presenting them as locked. This action led to a brief but significant price surge, followed by a subsequent decline, and reignited questions about the project’s internal decision-making processes.

