World Liberty Financial investors are pushing back against a controversial new governance plan that threatens to lock up their tokens for years or even indefinitely.
Summary
- World Liberty Financial faces heavy internal backlash after proposing a mandatory four-year token lock-up that threatens to freeze investor assets indefinitely if they reject the new terms.
- Major investor Justin Sun criticized the move as a governance scam and a form of coercion while claiming his own holdings are currently blocked from participating in the upcoming vote.
According to the proposal posted to the platform’s governance forum on Wednesday, the Trump family-backed crypto venture aims to extend the lock-up period for early participants by an additional two years.
Following that period, tokens would only be released in staggered batches over the subsequent two years. The most contentious clause specifies that any tokenholders who vote against or refuse to accept this new schedule will “continue to have their tokens locked indefinitely.”
The governance forum served as the primary staging ground for the backlash, led largely by crypto entrepreneur and advisor Justin Sun.
As the platform’s largest investor with a 4% stake, Sun labeled the strategy “one of the most absurd governance scams I have ever seen” in a post on X.
He argued that the proposal effectively amounts to “coercion” because it penalizes those who disagree with the management’s direction.
Sun further claimed his own holdings are currently frozen, preventing him from participating in the very voting process that will determine the fate of his investment.
Simon Dedic, founder of Moonrock Capital, echoed these concerns, suggesting that early supporters who expected liquidity are instead being “rugged.”
Dedic noted that the four-year timeline appears strategically aligned with the duration of the current political term, adding that the move allows the platform’s leadership to continue “squeezing the same lemon they’ve been inflating with hot air for the past two years.”
Market performance for the WLFI token remains sluggish amidst the internal turmoil. The asset stayed flat at 8 cents over the last 24 hours, continuing a steep decline that has wiped out more than 75% of its value since hitting an all-time high of 33 cents in September.
As previously reported by crypto.news, these governance disputes are unfolding alongside intense scrutiny over the project’s financial maneuvers on the Dolomite lending protocol.
World Liberty Financial reportedly deposited 5 billion of its own WLFI tokens as collateral to secure a $75 million loan in stablecoins. This massive position pushed Dolomite’s USD1 lending pool to nearly 100% utilization, effectively trapping other depositors who found themselves unable to withdraw their funds due to the lack of available liquidity.
Source: https://crypto.news/world-liberty-financial-investors-revolt-over-four-year-token-lock-up-proposal/
