WLFI Burns 47M Tokens, Blacklists Justin Sun’s Wallet: What Happened?

After the TGE, the WLFI token from World Liberty Financial, which is associated with President Donald Trump’s family, continued to fall, and this fueled rumors that early investors were offloading tokens. In turn, World Liberty Financial announced a 47 million WLFI burn and the blacklisting of Justin Sun’s wallet. Let’s take a closer look at what happened.

The WLFI TGE and positive actions from World Liberty Financial

After a long time of anticipation, the World Liberty Financial project advised by the Trump family, finally listed its WLFI token on September 2nd, debuting with a market capitalization of nearly $9.5B.

The WLFI TGE captured immense community interest, a phenomenon driven not only by its connection to the Trump family but also by the token's extensive listing on nearly every major & minor crypto exchange worldwide. The impressive roster of exchanges included Binance, Coinbase, Upbit, OKX, Bybit, Bitget, and Kraken.

Moreover, the launch was accompanied by pledges of support from many KOLs within the market.

“Excited to share my thoughts on $WLFI. I truly believe this will be one of the biggest and most important projects in crypto”. - Justin Sun, Tron Founder 

The significance of this is reflected in striking figures:

• USD1, the flagship stablecoin of World Liberty Financial is integrated across four major blockchains, including Ethereum, Solana, BNB Chain, and Tron, with a total supply reaching $2.68B. 
• The WLFI claiming process pushed Ethereum network gas fees to the highest in the past four months.
• On Whale Market, WLFI generated more than $55M in pre-market trading volume.

Although WLFI debuted with strong numbers, it traded between 0.31 and 0.35 USD per token, equivalent to a fully diluted valuation (FDV) of $35B, its price has nearly halved at the time of writing this article. 

According to data from Lookonchain, this decline stemmed from the actions of many pre-sale investors, who after claiming WLFI, immediately deposited it onto CEX to secure their profits. 

As WLFI’s price began to trend downward a few days after launch, the community quickly drew comparisons with TRUMP and MELANIA tokens. Rumors spread suggesting that WLFI might become another “TRUMP” scenario. 

In an effort to prevent WLFI’s price from dropping too sharply, World Liberty Financial took its first positive step. On Wednesday, on-chain data first reported by Lookonchain revealed that the platform burned 47 million WLFI tokens. The burn represents 0.19% of the token’s circulating supply in a bid to tighten supply and theoretically boost the value of the remaining tokens.  

Also on Wednesday, World Liberty Financial raised a proposal to implement a token buyback and burn program using protocol-owned liquidity fees in an effort to drive up the scarcity & price. 

However, before these positive actions had a chance to revive WLFI, World Liberty Financial became entangled in another controversy involving a key investor who had been a strong supporter of the project even before its TGE.

Why did World Liberty Financial blacklist Justin Sun's wallet address?

Justin Sun, the founder of Tron, who had spent a significant amount of money to secure a private dinner with Donald Trump and was holding $700M worth of WLFI, had his wallet unilaterally blacklisted by the World Liberty Financial project.

Although Justin Sun had stated that he would not sell a single WLFI token, a transaction transferring WLFI out of the Tron founder’s wallet prompted World Liberty Financial to lock Sun’s wallet earlier today.

According to a statement from World Liberty Financial on X, the project decided to blacklist Justin Sun’s wallet address after assessing these transactions as suspicious. At the same time, information from Zoomer, a signal channel on X, suggested that one exchange had used user tokens to drive the price downward.

The frozen assets in the wallet included: 

• 545M unlocked WLFI tokens (~$102.3M)
• 2.4B locked WLFI tokens (~$442M)

World Liberty Financial’s official X have not provided any specific details.

On the other hand, Justin Sun has publicly expressed his stance. He stated that he had contributed not only capital but also trust and support to WLF, with the hope of building a strong ecosystem alongside the team. However, locking his assets without a clear explanation went against the fundamental principles of blockchain.

According to Sun, all early investors participated in the same way and therefore deserve equal rights. He ultimately called on the project to unlock his blacklisted wallet as of yesterday.

“I call on the team to respect these principles, unlock my tokens, and let’s move forward together toward the success of World Liberty Financials.”

In the comments section under Justin Sun’s post, some investors voiced their agreement with his statement and demanded fairness and equal rights, while also urging World Liberty Financial to address the issue to prevent other investors from losing trust in the project.

As Justin Sun is a key investor in WLFI, the project’s decision to block an investor’s wallet, which is a rare occurrence in the crypto market. This action could have a notable impact on community confidence.

Conclusion

Typically, projects only blacklist wallet addresses associated with hackers in order to prevent the movement of stolen funds and minimize losses in the event of a security incident. Unless there had been prior discussions or agreements between Justin Sun and World Liberty Financial, his call to unlock the wallet is understandable.

Furthermore, blocking an investor’s wallet in a major and well-known project like World Liberty Financial could set a negative precedent for the future operations of DeFi.