World Liberty Financial is facing mounting backlash from investors over a controversial governance proposal that could lock up their tokens for years—or even indefinitely.
Summary
World Liberty Financial is under fire after proposing a mandatory four-year token lock-up, with a clause that could freeze assets indefinitely for those who reject the plan.
Major investor Justin Sun slammed the proposal as a “governance scam” and claimed his holdings are currently blocked from voting.
The Trump family-backed project plans to extend the lock-up for early investors and introduce a staggered release schedule over multiple years.
Governance proposal sparks outrage
According to details shared on the platform’s governance forum, the proposal seeks to extend the existing lock-up period for early participants by an additional two years. After that, tokens would be gradually unlocked over another two-year period.
The most controversial element states that investors who vote against—or refuse to accept—the revised terms could have their tokens locked indefinitely, effectively preventing them from accessing their holdings.
Investor backlash intensifies
The proposal has triggered strong reactions within the crypto community. Justin Sun, one of the platform’s largest investors with a reported 4% stake, publicly criticized the move, calling it “one of the most absurd governance scams” he has encountered.
Sun argued that the mechanism amounts to coercion, as it penalizes dissenting investors. He also alleged that his own tokens are currently frozen, preventing him from participating in the vote that will determine the proposal’s outcome.
Similarly, Simon Dedic raised concerns, suggesting early backers who anticipated liquidity are now effectively being “rugged.” He added that the four-year timeline appears to align with a broader strategic agenda, allowing leadership to maintain control while delaying investor exits.
Market impact and broader concerns
Amid the controversy, the WLFI token has shown weak performance, holding steady around $0.08 over the past 24 hours. The asset has dropped more than 75% from its all-time high of $0.33 recorded in September.
The governance dispute comes alongside increased scrutiny of the platform’s financial activity. Reports indicate that World Liberty Financial deposited 5 billion WLFI tokens as collateral on the Dolomite platform to secure a $75 million stablecoin loan.
This move reportedly pushed Dolomite’s USD1 lending pool to near full utilization, leaving other users unable to withdraw funds due to limited liquidity—further fueling concerns about the project’s risk management and transparency.
