WLFI Transactions on Dolomite Raise Concerns About Insider Access and Concentrated Risk

World Liberty Financial (WLFI), a cryptocurrency venture co-founded by the Trump family, has been involved in a series of transactions through decentralized finance (DeFi) lending protocol Dolomite. The transactions have raised concerns about insider access, circular token economics, and concentrated risk to other depositors.

According to onchain records analyzed by CoinDesk, WLFI's treasury deposited its own dollar-pegged stablecoin, USD1, into Dolomite as collateral and borrowed 11.4 million USDC against it. Minutes later, the borrowed stablecoins were moved to a Coinbase Prime deposit address.

The choice of protocol is not incidental, however. Dolomite co-founder Corey Caplan is an advisor to World Liberty Financial. WLFI now sits at the top of Dolomite's supplied-assets list with $458.9 million in supply liquidity, roughly 55% of the protocol's entire $835.7 million total.

The structural concern sits in Dolomite's USD1 pool, which has a utilization ratio of about 93%. This means that ordinary depositors who lent USD1 to the pool expecting to withdraw at will cannot all do so at once. Their funds are effectively locked until the large borrower repays.