World Liberty Financial Under Fire Over Stablecoin Minting and Loan Repayments

World Liberty Financial (WLFI) is facing intense scrutiny following on-chain data revealing a $22 million net increase in its USD1 stablecoin circulation. The minting activity occurred on Monday, coinciding with the project's claims that it had repaid $25 million toward a $75 million loan taken from the Dolomite lending platform. Data indicates that WLFI created $25 million in new USD1 tokens via custodian BitGo and permanently destroyed $3 million in existing tokens. This pattern follows a broader trend of minting activity, with $38.5 million in fresh USD1 issued over a five-day period. The timing of these mints closely aligns with the project's repayment schedule, raising questions about whether the venture is printing tokens to settle its debts. The borrowing activity has caused significant friction within the community. Major backer Justin Sun accused the WLFI team of treating the project as a 'personal ATM' and extracting illegitimate fees. Furthermore, the venture's massive borrowing previously pushed Dolomite's USD1 lending pool to nearly 100% utilization, effectively locking other users out of their deposits. In response, World Liberty Financial has dismissed the allegations as 'FUD,' asserting that it serves as an 'anchor borrower' to generate yield for other participants. The venture maintains there is no liquidation risk and has threatened legal action against Justin Sun. Despite the claimed repayments, approximately $50 million remains outstanding on the Dolomite position. The WLFI token has reacted poorly to the news, trading roughly 20% below its value prior to the initial reports of the borrowing controversy.