WLFI may drop 20% as World Liberty Financial faces 'LUNA 2.0' allegations

World Liberty Financial allegedly used illiquid tokens to borrow $75 million, fueling bad debt fears and rattling confidence among traders.

World Liberty Financial’s WLFI token risks dipping 20% in April, according to a mix of convincing technical and fundamental indicators.

WLFI is painting a bear flag setup with a 20% downside potential.

Insider trading activity allegations add to bearish risks.

As of Tuesday, WLFI was consolidating inside a classic bear flag, a continuation pattern that typically forms after a sharp decline.

In technical analysis, a bear flag typically resolves when the price breaks below the lower trendline alongside rising trading volumes and falls by as much as the structure’s maximum height.

Applying this classic rule to WLFI’s chart brings its measured downside target to around $0.066 in April, down about 20% from the current price levels.

Conversely, a break below the upper trendline risks invalidating the bear flag setup, with the 20-day (green) and 50-day (red) exponential moving averages (EMAs) at around $0.081 and $0.085 serving as primary upside targets.

Beyond technicals, WLFI faces mounting scrutiny that continues to weigh on sentiment.

On-chain data from Arkham Intelligence show wallets linked to the project deposited roughly 3–5 billion WLFI tokens—largely illiquid—as collateral on Dolomite to borrow about $75 million in stablecoins, including USD1 and USDC.

Over $40 million was later moved to Coinbase Prime. The position pushed pool utilization to ~93%, restricting withdrawals and drawing criticism for “circular” liquidity extraction.

The structure is risky because it uses thinly traded internal tokens to borrow real liquidity, meaning any sharp WLFI price drop could trap depositors, trigger bad debt, and deepen selling pressure.

At the same time, markets are bracing for a proposed unlock of over 16 billion WLFI tied to still-locked public allocations, raising dilution risks.

Adding to the pressure, Tron founder Justin Sun, who reportedly invested ~$75 million and became an adviser, again accused WLFI of embedding a hidden backdoor blacklisting function in the smart contract.

Related: US President Trump faces renewed backlash as Trump-linked tokens crash

This allegedly allowed the team to unilaterally freeze his wallet/assets without notice or recourse, violating "decentralization" promises.

He called it a trap, denounced "token scandals," claimed governance votes were rigged/non-transparent and demanded unlocks/transparency.

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Source: CoinTelegraph