WLFI falls 10% after $75M loan empties Dolomite pool

World Liberty Financial (WLFI) shares fell about 10% after the project defended a $75 million stablecoin loan that relied on WLFI token collateral and drained liquidity from Dolomite’s USD1 lending pool. On-chain records show the transactions began on Feb. 8 and accelerated in April.

WLFI’s treasury supplied 5 billion WLFI tokens as collateral, a nominal amount WLFI reported at about $440 million, and borrowed stablecoins to act as an anchor borrower on WLFI Markets. Earlier activity included a deposit of 890 million WLFI that generated a 20 million USD1 loan and a subsequent 1.1 billion WLFI deposit, bringing the total collateral inside Dolomite to about 1.99 billion WLFI and approximately $31.4 million in stablecoins received.

In April the treasury transferred 2 billion WLFI to a Gnosis Safe proxy wallet and sent another 1 billion WLFI five days later. On-chain data does not yet show where those tokens were moved next. At the current WLFI price of about $0.08195, roughly 3 billion WLFI tokens are worth about $266 million.

The borrowing pushed utilization of Dolomite’s USD1 pool above 93%, restricting timely withdrawals for other depositors. Observers noted WLFI is thinly traded, and large forced sales could depress the token price and create bad debt for the protocol. Critics flagged circular token economics, concentrated downside risk for depositors and insider access to the lending pool.

On-chain tracking links more than $40 million tied to the borrowing flows to Coinbase Prime. Records show an 11.45 million USDC transfer to a Coinbase Prime deposit address and a separate 12.5 million USD1 transfer that was not connected to the Dolomite loan. WLFI’s records indicate $15 million of the funds was later repaid to the Dolomite pool.

Related-party scrutiny centers on WLFI advisor Corey Caplan, who is listed as a co-founder of Dolomite. In traditional finance, large transactions between a company and a platform tied to its own adviser typically require disclosure and independent board approval. Critics say the transactions raise disclosure questions for depositors and regulators.

The WLFI team posted on April 9: “Let’s talk about the FUD going around our WLFI Markets lending position. It’s wrong. Here’s what’s actually happening — and why the real story is a lot more interesting.” The project described the collateral strategy as routine support for liquidity.

WLFI’s token recorded roughly a 17% decline over the prior week and about a 16% drop over the month.