WLFI Faces Security Breach Leading to $22M Token Burn and Wallet Freezes

Quick Breakdown:

• World Liberty Financial (WLFI) disclosed a significant security breach affecting user wallets before its official platform launch. 
• Attackers exploited phishing and third-party vulnerabilities, not WLFI’s smart contracts. 
• In response, WLFI froze affected wallets, conducted extensive KYC verification, and executed an emergency token burn valued at $22.14 million.  

 

WLFI breach sparks emergency response and Token burn

World Liberty Financial (WLFI)  revealed it suffered a security breach before its platform launch. Hackers accessed some user wallets through phishing and third-party security lapses, not because of flaws in WLFI’s smart contracts. Upon discovery, WLFI immediately froze all impacted wallets and required affected users to undergo renewed Know Your Customer (KYC) verification to ensure proper fund recovery.

1/ Prior to WLFI’s launch, a relatively small subset of user wallets were compromised via phishing attacks or exposed seed phrases.

Since then, we’ve tested new smart contract logic to safely reallocate user funds and verified users’ identity via KYC checks.

Shortly, users who…

— WLFI (@worldlibertyfi) November 19, 2025

In response, WLFI executed an emergency token burn on November 19, destroying approximately 166.667 million WLFI tokens valued at $22.14 million from compromised wallets. These tokens were reallocated to secure recovery wallets using a newly developed smart contract system designed for bulk, secure fund reallocation. This process took longer than expected as the engineering team thoroughly tested the logic to prevent any further issues.​

Fund recovery efforts amid Governance and regulatory scrutiny

WLFI has been under intense scrutiny not only for this security incident but also for broader governance and transparency concerns. The firm’s rapid pre-launch token sales raised eyebrows, with allegations that governance tokens were potentially sold to wallets linked to sanctioned countries and entities. Senator Elizabeth Warren recently called for investigations into these claims, raising worries over WLFI’s compliance with anti-money laundering (AML) and sanctions controls.

Despite these controversies, WLFI’s leadership, including co-founder Donald Trump Jr., continues to emphasize the project’s potential to transform how money moves in the DeFi space. The firm’s recovery plan involves verifying affected users before reallocating funds, while wallets of unverified users remain frozen. Users are encouraged to contact WLFI’s support to initiate the KYC and recovery process to regain access to their assets.​

 

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