World Liberty Financial, the Trump-backed decentralised finance (DeFi) protocol, is facing fresh scrutiny after reports surfaced suggesting it had engaged in token swaps with other blockchain projects.
While the project firmly denies these allegations, on-chain data shows it has moved significant portions of its treasury, including ETH, WBTC, AAVE, ENA, and LINK, to Coinbase.
The controversy has sparked questions about the project’s treasury management strategy, financial stability, and whether its actions align with its public statements.
Allegations and Onchain Movements
The controversy began when a report from Blockworks alleged that World Liberty Financial had approached blockchain projects with an offer to exchange its soon-to-be-launched WLFI tokens for native tokens of other protocols.
The claim suggested that these deals were accompanied by a 10% fee, raising concerns over potential quid pro quo relationships. Based on anonymous sources, the report coincided with World Liberty’s significant movement of assets to Coinbase, further fuelling speculation.
Source: Arkham Intelligence
Onchain data revealed that the protocol moved nearly all of its ETH and wrapped bitcoin holdings, valued at over $175 million and $62 million respectively.
The movements included multiple transactions via decentralised exchanges like CoW Swap before eventually arriving at a Coinbase Prime deposit address.
Additionally, millions of dollars worth of staked ETH, AAVE, ENA, and LINK were transferred using intermediary addresses before reaching Coinbase, leaving only a fraction of its previous holdings in its treasury.
Curiously, World Liberty has also received dozens of small-value ETH transactions from newly created or inactive addresses linked to exchanges like Binance and KuCoin.
While the significance of these deposits remains unclear, it has added to speculation that the project could be engaging in undisclosed financial arrangements.
World Liberty’s Response and Market Reaction
In response to the allegations spreading on social media, World Liberty issued a statement denying any form of token sales.
The project’s official X account described the asset transfers as “routine treasury management,” emphasising that the team was reallocating holdings to cover operational expenses and maintain liquidity.
We’re making routine movements of our crypto holdings as part of regular treasury management, and payment of fees and expenses and to address working capital requirements. To be clear, we are not selling tokens—we are simply reallocating assets for ordinary business purposes.…
— WLFI (@worldlibertyfi) February 3, 2025
The post dismissed speculation about token swaps, calling it “standard practice” in managing a DeFi protocol’s reserves.
Despite the official denial, the market has reacted strongly to the news. The project’s total crypto holdings reportedly fell from $363 million to just over $33 million following the asset movements.
This drastic reduction in holdings has raised concerns about the project’s financial strategy, particularly given its previous large-scale token purchases.
On Inauguration Day, World Liberty spent over $112 million on various cryptocurrencies, including ETH and TRX, in symbolic amounts of $4.7 million or $47 million to mark Donald Trump’s presidency.
Adding to the speculation, Eric Trump, the former president’s son, posted on X encouraging investors to buy ETH, coinciding with the protocol’s asset movements.
His comments have led to discussions about whether there is an underlying strategy behind World Liberty’s sudden treasury shifts, but no direct link has been established.
Concerns Over Governance and Transparency
Beyond the immediate controversy, questions about World Liberty’s governance and financial transparency remain unresolved.
The protocol has previously faced criticism for its close ties to the Trump family, particularly after Justin Sun, the founder of Tron, joined as an advisor following his $30 million investment in the project.
Sun later increased his investment to $75 million, further solidifying his influence within the project.
Reports of undisclosed token deals have only added to the concerns. While World Liberty has categorically denied selling tokens, its decision to move such a large portion of its treasury assets at once has left many in the crypto community questioning the project’s long-term intentions.
The lack of clear communication about its treasury strategy has contributed to uncertainty, particularly given that its WLFI tokens remain locked indefinitely.
Additionally, reports indicate that World Liberty has approached multiple projects with token swap offers, a claim that at least one blockchain team has denied.
The lack of transparency around these alleged negotiations has raised questions about whether the project is truly operating with the best interests of its investors and token holders in mind.
Conclusion
World Liberty Financial’s decision to move the majority of its treasury holdings to Coinbase has led to significant speculation about its financial health and strategic direction.
While the project denies any token sales, the timing of these transactions, coupled with reports of alleged token swap deals, has raised concerns about its governance and transparency.
Whether these asset movements are truly part of routine treasury management or something more remains to be seen, but for now, the controversy continues to cast a shadow over the Trump-backed DeFi project.