WLFI Wallet Freeze Sparks Debate on ‘Community Governance’

“Community Governed” or Centralized? WLFI Wallet Freeze Raises Doubts

Written by Aaron S.,

Editor-In-Chief

Last Updated: November 21, 2025

Key Takeaways

WLFI, a Trump-backed crypto platform, is under fire for freezing user accounts while claiming to be "community governed";
The company will return funds only to users verified through KYC, which leaves others’ wallets locked;
WLFI blames third-party security flaws for a phishing attack that led to 272 wallets being frozen.

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World Liberty Financial, a cryptocurrency platform supported by the Trump family, is facing criticism for restricting access to user accounts while promoting itself as "community governed".

The controversy began when the company announced it would redistribute funds from wallets affected by a phishing scam that occurred before its official launch.

WLFI stated that only users who had completed identity checks through Know Your Customer (KYC) verification would receive their funds, while others would continue to have their wallets frozen.

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According to WLFI, the incident was caused by external security issues rather than weaknesses in its own systems. The company explained in a post on X:

This was not a WLFI platform or smart contract issue. Attackers gained access to user wallets through third-party security lapses.

In September, WLFI froze hundreds of accounts while investigating the situation. The team reported that 272 wallets had been blocked, 215 linked to the phishing attack and 50 reported by users as compromised.

The company said in a September 6 post on X, "We stepped in preemptively to stop hackers from draining funds and are working with the rightful owners to secure/move assets".

The platform’s decision to control and reassign user funds has raised questions about its governance model. A user on X argued that the decision shows centralized control, contrary to WLFI’s claims of community decision-making.

Meanwhile, users of Binance Wallet continued to face difficulties viewing their account balances after volatile market conditions on October 10. What did Binance Wallet say? Read the full story.