President Donald Trump-backed crypto venture World Liberty Financial (WLFI) faced increased bearish sentiment after a governance proposal to dilute its token supply received near-unanimous approval.
WLFI price dropped 23.01% over the past seven days, trading at about $0.0599 on April 30. The mid-cap altcoin saw its market capitalization drop by over $247 million on Thursday, with the token hovering at approximately $1.9 billion at press time.
The bearish sentiment for WLFI was exacerbated by the recent approval to unlock 62.3 billion previously locked. As of reporting time, the proposal had achieved 99.93% approval and cleared its quorum threshold by 739%, with six days remaining to vote.
Amid the proposal voting, WLFI recorded 15 whale transactions over 4 hours on April 29, the highest in 2 weeks, according to on-chain data from Santiment.
WLFI faces investor backlash
The WLFI token has faced increased criticism from investors due to its tokenomics. For instance, Justin Sun, founder of Tron (TRX), recently filed a lawsuit in federal court in California against World Liberty Financial.
Sun stated that the World Liberty Financial team wrongfully froze his WLFI tokens, thus preventing him from voting on the project’s proposals. Additionally, he rejected the recent proposal since it stated that investors who do not accept its terms would have their tokens locked indefinitely.
Meanwhile, the World Liberty Financial team has also been criticized for using the WLFI tokens to secure collateralized loans while earlier investors remained stranded. Precisely, the World Liberty Financial team used 5 billion tokens as collateral on the Dolomite lending protocol and borrowed $75 million in Stablecoins, as Finbold explained. Later, the team deposited more than $40 million of the borrowed funds into Coinbase Prime, thereby raising alarms among investors.
