World Liberty Financial, the crypto firm co-founded by the Trump family, executed a series of trades through decentralized finance (DeFi) lending protocol Dolomite that raises questions about insider access, the economics of circular tokens and the concentration of risk for other depositors.
Onchain records analyzed by CoinDesk, sourced from Etherscan, Arkham and publicly available wallet data, show that the streak began on February 8, when WLFI Treasury deposited US$14 million, its own dollar-pegged stablecoin, into Dolomite as collateral and borrowed US$11.4 million in return.
Minutes later, 11.45 million USDC was transferred to a Coinbase Prime deposit address, according to Arkham. Two days later, $12.5 million1 was sent from the Treasury to a separate Coinbase Prime deposit address. Coinbase Prime is typically used to convert cryptocurrencies to fiat currency or for institutional over-the-counter trading.
This 12.5 million USD1 was not borrowed from Dolomite. It went directly from WLFI’s treasury wallet to the exchange, meaning the company sent its own stablecoin directly to a fiat off-ramp.
But the WLFI token came onto the scene twelve days later. On February 20, the Treasury deposited 890 million WLFI in Dolomite and borrowed $20 million1 in return.
On March 24, another 1.1 billion WLFIs followed. A total of 1.99 billion WLFI tokens now serve as collateral in Dolomite, and Treasury received approximately 31.4 million stablecoins from the protocol over the two episodes.
The choice of protocol is, however, not accidental.
Dolomite co-founder Corey Caplan is an advisor to World Liberty Financial. WLFI now tops the list of assets supplied by Dolomite with $458.9 million in supply liquidity, or approximately 55% of the protocol’s total total of $835.7 million.
The structural problem lies with Dolomite’s $1 pool. USD1, which now has $4.6 billion in circulation, comes in second on the protocol with $180 million provided versus $167.5 million borrowed, representing a utilization rate of around 93%.
The supply rate per USD stands at 16.24% and the borrowing rate at 9.18%, figures that reflect concentrated borrowing activity rather than broad organic demand.
In this case, ordinary depositors who lent $1 to the pool in the hope of withdrawing at will cannot all do so at the same time. Their funds are effectively blocked until the big borrower repays.
The collateral securing the WLFI-denominated loan is a separate issue.
WLFI trades with limited market depth relative to position size. If the token drops sharply and Dolomite’s liquidation mechanism is triggered, the forced sale will cause the price to drop before the collateral can be unwound, leaving the protocol holding bad debts that would fall on the same retail depositors who currently cannot exit.
Activity intensified in April through a different route. On April 2, Treasury WLFI sent 2 billion WLFI to a Gnosis Safe proxy wallet at address 0x44a681DD. Five days later, he sent another 1 billion.
Neither transfer went directly to Dolomite, and on-chain data does not yet show where these tokens are going. The additional three billion tokens are worth approximately $266 million at WLFI’s current price of $0.0888.
World Liberty Financial did not immediately respond to CoinDesk’s request for comment.
