Confirmed! $WLFI the giant whale’s insider dealing (“mouse trading account”) drained the lending pool—where the $75 million went remains a mystery. Have ordinary depositors already become lambs led to slaughter?

A project called World Liberty Financial borrowed $75 million through the DeFi protocol Dolomite within two months.
This massive loan nearly drained the liquidity of the protocol’s $USD1 stablecoin pool, pushing utilization to 100%, currently still at 93%.
This means that ordinary depositors find it extremely difficult to withdraw their funds.

How was this money borrowed? The process reads like a carefully scripted play.
On February 8th, WLFI’s treasury deposited 14 million $USD1 tokens, lending out 11.4 million $USDC, and within minutes, 11.45 million $USDC flowed into a Coinbase Prime deposit address.
Two days later, 12.5 million $USD1 were directly transferred from the treasury to another Coinbase Prime address.

On February 20th, the script entered a new chapter: WLFI began using its own token $WLFI as collateral.
That day, they deposited 890 million $WLFI and borrowed 20 million $USD1.
By March 24th, they deposited another 1.1 billion $WLFI.
In total, nearly 2 billion $WLFI tokens were locked in Dolomite, exchanging for about $31.4 million in stablecoins.

In early April, the scale of operations ramped up again.
WLFI’s treasury transferred a total of 3 billion $WLFI tokens to an agent wallet, valued at approximately $266 million at the then-current price.
This huge amount of tokens did not go directly into Dolomite; its destination remains a mystery.
Adding all channels together, the total stablecoins mobilized by WLFI through Dolomite and Coinbase Prime reached $75 million.

Choosing Dolomite was no coincidence.
Public information shows that Dolomite co-founder Corey Caplan also serves as an advisor to WLFI.
WLFI’s own lending platform, “WLFI Markets,” is built on the Dolomite protocol.
This forms a typical related-party transaction: WLFI borrows stablecoins by using its own issued tokens as collateral on a protocol created with the help of its own advisor, and borrows its own issued stablecoins.
In traditional finance, such transactions require strict disclosure and independent approval, but here, firewalls are almost nonexistent.

The consequences are direct.
WLFI’s borrowing accounts for about 55% of Dolomite’s total platform liquidity of $458.9 million.
In the $USD1 pool, out of a total supply of $180 million, $167.5 million has been borrowed, leaving only about $12.5 million available.
The supply rate for $USD1 is as high as 16.24%, with a borrowing rate of 9.18%, reflecting a concentrated activity dominated by a single borrower rather than organic market demand.

Collateral risk is equally alarming.
The market depth of the $WLFI token is extremely limited, with daily trading volume far below its collateral size.
A sharp price drop triggering liquidation could cause forced selling that might break through the token’s price before collateral is disposed of, ultimately resulting in bad debt borne by ordinary depositors who cannot exit.

This is not WLFI’s first controversy.
According to The Wall Street Journal, four days before Trump’s inauguration, a company supported by Abu Dhabi Prince Sheikh Tahnoon bin Zayed Al Nahyan, Aryam Investment 1, acquired a 49% stake in WLFI for $500 million.
Of that, $187 million was paid upfront, flowing to entities affiliated with the Trump family.
Aryam thus became the only known investor besides the founders and gained a seat on the board.

Additionally, WLFI’s stablecoin $USD1 previously collaborated with Southeast Asian project AB DAO, which was linked to Chen Zhi, head of the sanctioned Cambodian Prince Group.
WLFI responded that they were unaware of this.
On February 23rd, $USD1 briefly de-pegged to $0.994, causing a panic withdrawal of $270 million.

In response to questions, WLFI stated on April 10th that as one of the largest suppliers and borrowers on WLFI Markets, there is no liquidation risk and collateral can be added at any time.
The project disclosed that $USD1 has an annualized revenue of about $159.5 million, and in the past six months, they have repurchased approximately 435 million $WLFI.
They also plan to propose governance measures to unlock early tokens and upgrade $USD1 's functionality.

However, this response sidesteps the core issue:
As the dominant player in the lending pool, how does WLFI ensure that extreme market conditions do not harm ordinary depositors?
When the protocol’s co-founder is also a project advisor, who guarantees the independence of risk control?
To date, neither Dolomite nor WLFI has explained the governance process for related-party transactions.
The $WLFI token price has fallen to a historic low of $0.0858.

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