- WLFI blacklisted an Ethereum address associated with Justin Sun after a $9 million token transfer to HTX.
- Sun claims the moves were deposit tests with no market impact and calls for the tokens to be unfrozen.
- The incident led to a 19% price drop in WLFI, prompting a 47 million token burn by the project.
World Liberty Financial, the (DeFi) project backed by former U.S. President Donald Trump, has blacklisted an Ethereum wallet linked to Tron founder Justin Sun.
The address held approximately 595 million WLFI tokens, valued at over $107 million, and was frozen after transferring 50 million tokens worth $9 million to the HTX exchange. Blockchain analytics firms Arkham and Nansen identified the wallet as belonging to Sun.
Sun, an advisor to the project, denied any wrongdoing in a post on X: “The wallet only generally did a few exchange deposit tests, the amounts were very low, then did a distribution to one address. [The tests] did not involve any buying or selling.” (See the full post: here).
He further appealed for the unfreezing of his tokens, stating: “I believe that a truly great financial brand must be built on fairness, transparency, and trust—not on unilateral actions that freeze investor assets.” Sun emphasized that the activity had no market impact and that he remains committed to the project’s long-term vision.
The blacklist has sparked debate over WLFI’s governance. Despite being promoted as a decentralized platform, the ability to unilaterally freeze wallets suggests centralized control, raising concerns among investors.
In response to the ensuing price volatility, WLFI burned 47 million tokens on Wednesday to reduce supply and proposed a buyback program funded by protocol fees, with repurchased tokens also set for burning.
The WLFI token, which launched for retail at above $0.33, has fallen to $0.18, marking a 45% loss for many buyers. Early investors like Sun, who acquired tokens at $0.015, still hold substantial gains despite the drop.
Analysts suggest the transfers, while small relative to Sun’s holdings, may have contributed to bearish sentiment. Bubblemaps CEO Nick Vaiman noted: “To be honest, I don’t think this dump has anything to do with Justin Sun.”
This event highlights risks in DeFi token launches, including lockup agreements and the potential for whale actions to influence prices. WLFI operates on the Ethereum blockchain, where assets like WETH and USDC are integral to liquidity. (via https://cryptopress.site/coins/)
The project now ranks among the most bearish tokens by sentiment, per CoinMarketCap data, underscoring the need for transparency to rebuild trust.
Disclaimer: This article is for informational purposes only and does not constitute advice of any kind. Readers should conduct their own research before making any decisions.
© 2024 Cryptopress. For informational purposes only, not offered as advice of any kind.
