World Liberty Financial (WLFI), the Trump family's crypto project, has published a governance proposal affecting 62.3 billion WLFI tokens. The proposal introduces a new vesting scheme. As a result, investors who do not approve will see their tokens locked indefinitely.
The WLFI token trades at roughly $0.08. Since the 20% unlock in September 2024, it has lost more than half its value. Early investors paid between $0.015 and $0.05 per token. Meanwhile, the market capitalization currently stands at around $2.5 billion. However, their tokens remain locked, potentially until the end of the Trump presidency.
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World Liberty Financial proposal with a built-in penalty mechanism
The plan splits the affected tokens into two groups. For early supporters holding 17 billion locked tokens, a two-year cliff applies. This is followed by linear vesting over two additional years. No token burn takes place.
Insiders, founders, and partners holding over 45 billion tokens face stricter terms: a two-year cliff as well, followed by linear vesting over three years. In addition, they must immediately burn 10% of their tokens, amounting to 4.5 billion WLFI. Investors who reject the proposal retain their governance rights but lose any prospect of token release.
The penalty mechanism for rejection stands out. Tokens belonging to investors who vote against the proposal remain locked indefinitely. Such mechanisms are unusual in the industry. As a rule, crypto projects use lockup periods of six to twelve months, followed by vesting over two to four years. WLFI ties the unlock to forced consent, which goes significantly further.
Justin Sun escalates the conflict
The most prominent public critic of the proposal is controversial Tron founder Justin Sun. He holds roughly 4% of WLFI voting power but cannot cast a vote. Furthermore, WLFI has frozen his wallet containing 544 million tokens.
The project justifies the freeze by claiming Sun attempted to sell 9 million tokens early. Sun denies this. At the beginning of April, he accused WLFI of embedding a "backdoor" in the smart contract. According to Sun, this backdoor allows insiders to freeze any wallet. WLFI rejected the allegation and described the function as a security measure. Moreover, the project states that the freeze affects hundreds of wallets, not just Sun's.
On April 13, WLFI threatened Sun with legal action. Sun subsequently called the lockup proposal "world tyranny." As a result, the conflict between the largest external investor and the project team continues to intensify.
Governance under team control
The vote runs for seven days. The quorum is set at one billion tokens, and a simple majority suffices. After deployment, token holders have ten days to opt into the new scheme. So far, WLFI has passed all governance proposals.
Furthermore, token holders cannot submit their own proposals. Only the WLFI team is authorized to draft them. In a previous staking proposal, 76% of the votes came from just ten wallets, with 99% approval. In contrast, only 23% of eligible locked tokens have ever participated in a vote. WLFI also pushed through a proposal that reduced early investors' voting power on key decisions.
Spokesperson David Wachsman defended the current proposal. According to him, it is designed to secure long-term participation in the ecosystem. In addition, it aims to ensure a healthy market supply. Early investor Morten Christensen of AirdropAlert.com disagrees. He argues that nobody has previously had the audacity to present investors with such an ultimatum.
Dolomite risk and political entanglement
Beyond the governance dispute, WLFI faces criticism for its lending activities. The project deposited 5 billion of its own WLFI tokens as collateral on the DeFi platform Dolomite. Subsequently, it borrowed $75 million in stablecoins against them. The team then transferred part of the funds to Coinbase Prime. If the WLFI price drops further, forced liquidation of the collateral could follow. However, WLFI counters that the team can top up the collateral at any time.
WLFI raised over $460 million from its presale. Trump-affiliated entities own 60% of WLFI and receive 75% of token sale revenue. In addition, the Trump family holds 22.5 billion WLFI tokens. They earned roughly $1 billion from the project by December 2025. Because of the two-year cliff, the full release of insider tokens cannot occur before January 2029. This coincides with the end of a potential second Trump term. The UAE government purchased a 49% stake in WLFI for $500 million before Trump's inauguration. Consequently, this triggered concerns in the U.S. Congress regarding the Emoluments Clause.
