Trump’s crypto project in turmoil: Token lock-up plan sparks criticism and allegations of manipulation

Trump’s crypto project in turmoil: Token lock-up plan sparks criticism and allegations of manipulation

World Liberty Financial, a cryptocurrency platform linked to Donald Trump’s family, has come under fire for a controversial proposal that could severely limit early investors’ access to their own funds – and, in extreme cases, lock them up indefinitely.

The proposal, posted on the platform’s governance forum, would see WLFI tokens held by early investors locked up for another two years. They would then be released gradually over the next two years. However, investors who do not agree to the plan risk having their tokens frozen indefinitely.

This is the point that has caused the most outrage. One of the project’s main investors and advisors, cryptocurrency entrepreneur Justin Sun, called the proposal “one of the most absurd governance scams I’ve ever seen.” Sun, who holds a roughly 4 percent stake in World Liberty Financial, says his tokens are already frozen — and he himself has been excluded from the voting process, he says.

But the criticism isn’t limited to him. Simon Dedic, founder of investment firm Moonrock Capital, said many early investors who were expecting profits are now trapped. He called the proposal “squeezing the same lemon again,” and the timing, he says, fits in well with broader political and economic cycles.

World Liberty Financial has yet to comment directly on the backlash. However, spokesman David Wachsman said the proposal aims to “better align all ecosystem participants over the long term.” The vote on the proposal is expected to take place soon and will last a week.

The whole situation is also taking place against the backdrop of a significant drop in the value of the WLFI token. It is currently trading around 8 cents, down more than 40% since the beginning of the year. It has lost over 75% since its all-time high of 33 cents when it first went public.

The controversial proposal comes at a time when investor confidence is already being tested. The question remains whether the plan to lock up tokens for a long time will help stabilize the project – or deepen its crisis.

*This is not an investment recommendation.

The Coingarage Team