WLFI Accused of Withholding Funds in Token Freeze Controversy: Report

• WLFI, linked to Donald Trump, faces accusations of unlawfully withholding funds from developer Bruno Skvorc.
• Skvorc’s wallet was flagged as “high risk,” causing frustration over the token withholding and compliance tools.
• Tron’s Justin Sun joins critics, calling WLFI’s token freeze “unreasonable” and against blockchain’s core values.

A crypto venture linked to U.S. President Donald Trump, World Liberty Financial (WLFI) is being accused of unlawful fund withholding. Bruno Skvorc, a developer of that Polygon, accuses WLFI of embezzling his money by declining to issue his tokens. This event has caused ardent debate about the application of compliance tools in blockchain projects.

Skvorc has provided a copy of an email sent by the compliance team at WLFI on X that showed his wallet address was considered a high risk. The project team attributed that his tokens will stay locked in because of blockchain exposure. Skvorc was frustrated, referring to the situation as a new age mafia in which there was no one to complain to, no one to sue.

Flawed Compliance Freezes Tokens, Sparks Controversy

The developer went further to state that he was among six investors who had been offered 100% token lockups since its inception. He defended that taking money out of his wallet was not a high-risk action. But it was now thought unsafe to address the owed tokens to the same address.

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ZachXBT, one blockchain researcher, weighed in on the situation, dismissing the issue of the flawed compliance tools. He observed that these robots easily falsely categorize addresses belonging to wallets due to minor causes, such as communicating with decentralized finance (DeFi) contracts. Such errors may result in inappropriate freezing of assets, as experienced in Skvors’ case.

This wallet of Skvorc had been blocked because of previous activity in crypto mixer Tornado cash. Moreover, it also had indirect connections with approved organizations such as Garantex and Netex24. An earlier engagement with one of the blacklisted dashboards was also raised in the compliance tool.

WLFI Controversy Grows as Skvorc and Sun Criticize Freezes

Skvorc is a Croatian blockchain developer involved in Ethereum 2.0 and his company, RMRK, which places multi-resource NFTs into gaming metaverses. Other people in the crypto community have taken notice of his allegations against WLFI.

Tron founder Justin Sun also announced his WLFI tokens were frozen following a big transaction of $9 million that automatically generated a flag. Sun described the freeze as unreasonable and said it contradicted the principles of blockchain. He pointed out that access to tokens is to be seen as sacred and inviolable.

The controversy around WLFI also continues to expand as additional investors express their concerns. The application of compliance tools and the relationship between the project and influential people will probably be actively discussed. As the situation continues to unfold, there can be a permanent negative impact on the reputation of WLFI in the crypto market.

Also Read: WLFI Crashes to $0.181562 After 2.9 Billion Tokens Frozen