World Liberty Financial, the crypto initiative backed by the Trump family, executed a series of aggressive measures to arrest the decline of its governance token WLFI after it hit record lows. Facing months of pressure stemming from governance disputes and liquidity concerns, the project implemented token burns, exchange partnerships, and a stablecoin reward program tied to USD1. While these actions temporarily boosted market sentiment, they simultaneously provided an exit ramp for long-term holders, underscoring a structural dependency on external incentives and exchange support rather than organic demand.

To counter a valuation drop of nearly 88% from its historical peak, World Liberty Financial accelerated the destruction of WLFI tokens. Data compiled by Woofun AI indicates that the project has permanently removed 3 billion WLFI tokens from circulation, representing approximately $180.8 million in value. This action follows a prior community-approved governance proposal to destroy 10% of tokens held by founders, team members, advisors, and partners, a move targeting approximately 4.5 billion WLFI tokens to reduce supply pressure.

Concurrently, the project pivoted to establish the stablecoin USD1 as a core utility asset within its ecosystem. Rather than relying solely on native token demand, World Liberty Financial leveraged major exchange infrastructure to drive commercial adoption. 币安 introduced the USD1/BTC trading pair, enabling market participants to utilize USD1 as collateral for Bitcoin futures contracts for the first time. Bybit also integrated USD1 as eligible collateral for margin trading, crypto lending, institutional credit lines, and buy-now-pay-later services. To further stimulate adoption, Bybit and World Liberty Financial launched a joint reward campaign featuring a pool of 45 million WLFI tokens, offering users who stake or hold USD1 an annual return of up to 20%.

These high-return incentives and token burns triggered a surge in WLFI trading activity, but the resulting liquidity spike produced unintended consequences. Monitored by Woofun AI, on-chain data from Santiment reveals that on May 18, the project recorded its highest levels of realized profits and token dormancy consumption in history. On that single day, the market saw the sale of 1.8 billion WLFI tokens, all attributed to profit-taking activities. The token dormancy consumption indicator, calculated by multiplying dormant tokens by holding duration, soared to 17.4 trillion, signaling a massive liquidation of long-held positions shortly after 币安 introduced the USD1 futures collateral function.

Despite the unprecedented selling pressure, the market absorbed most of the outflow, with WLFI prices rising by 5.5% on the day of the surge. This price resilience suggests that new demand channels from exchanges helped mitigate the impact of the profit-taking wave.

However, the concentrated transfer of dormant tokens implies that sustained recovery will require the market to digest the massive volume of sell orders accumulated by early participants, creating a fragile equilibrium dependent on continuous liquidity injection.

The financial strain on the World Liberty Financial ecosystem has extended beyond token price volatility to critically impact the balance sheets of affiliated entities. Regulatory filings from fintech company AI Financial for the first quarter of 2026 reveal that digital asset fluctuations have severely disrupted its financial structure. In August 2025, AI Financial raised $1.5 billion through a private placement, purchasing 7.28 billion WLFI tokens at $0.20 per token. By March 28, 2026, contract lock-ups rendered $706 million of these assets unusable for daily operations, as 3.53 billion tokens remain non-transferable for 12 months and 3.75 billion tokens face additional restrictions requiring shareholder approval and regulatory registration.

Consequently, AI Financial ended the quarter with only $10.5 million in cash, total assets of $32.2 million, and total liabilities of $39.1 million, resulting in a working capital deficit of $5.5 million. This liquidity crisis prompted management to issue a formal warning regarding the company's ability to continue operations over the next year. To bridge the funding gap, AI Financial borrowed nearly $15 million directly from World Liberty Financial in January 2026, a move management stated could be used for stock repurchases or increasing WLFI holdings, effectively using project debt to support both public shares and ecosystem assets.

Beyond financial distress, the project faces intense legal and regulatory scrutiny regarding governance rights and smart contract integrity. A defamation lawsuit involving crypto entrepreneur 孙宇晨 alleges that World Liberty Financial developers concealed an undisclosed blacklist function within the smart contract code, allowing the core team to unilaterally freeze wallets and restrict governance participation. World Liberty Financial denies these claims and has filed a counterclaim, accusing 孙宇晨 of deliberately short-selling WLFI tokens and manipulating governance token flows to 币安 during the September 2025 launch to interfere with decision-making.

Further complicating the situation, blockchain records indicate that World Liberty Financial utilized 5 billion WLFI tokens as collateral to borrow over $75 million in USDC, drawing attention from U.S. lawmakers. Senator Elizabeth Warren has requested an investigation by the SEC, arguing that the project's actions appear to benefit the Trump family while harming investors facing redemption difficulties. Warren highlighted that approximately 80% of early investor holdings are locked and unsellable following the token price collapse, raising serious questions about the project's governance transparency and investor protection mechanisms.