The cryptocurrency community is embroiled in a governance controversy surrounding World Liberty Financial (WLFI), a DeFi project associated with the Trump brand. A recent governance vote for its USD1 stablecoin has ignited outrage over allegations of restricted voting access, centralized control, and potential "slow" value extraction from public token holders.
The core of the controversy lies in a vote held in late February 2025. The proposal, concerning operational parameters for the USD1 stablecoin, passed despite significant community opposition. Critics highlight that holders of locked WLFI tokens were unable to participate in the vote, while nine addresses linked to the project's team and strategic partners exercised approximately 59% of the total voting power. Analysis shows these decisive votes were cast within a narrow two-hour window, suggesting coordinated action.
The project's economic model has further fueled the fire. According to its documentation, WLFI allocates 100% of its net protocol revenue to specific entities: 75% to an entity connected to the Trump family and 25% to an entity associated with the Witkoff family. Ordinary WLFI token holders are explicitly not entitled to any protocol revenue, a stark departure from community-centric models like MakerDAO or Aave.
Prominent trader DeFiSquared amplified these concerns, labeling the event a "rigged vote" and the start of a "slow extraction of value." He argued the team forced through the "USD1 growth proposal" instead of addressing holder demands for a token unlock. His thesis posits that the team, which holds 33.5% of tokens, has an incentive to sell WLFI tokens to fund protocol revenue that flows solely to themselves and partners.
The fallout extends to market and regulatory spheres. Following the vote, WLFI trading volumes spiked by roughly 300%, though the price remained relatively stable at around $0.1608. The project's ambitions for a banking license for USD1 add a layer of regulatory complexity, as authorities like the FATF and SEC increasingly scrutinize governance transparency. The incident has drawn criticism from decentralized autonomous organizations (DAOs), with over 50 major DAOs signing an open letter condemning the governance model.
