TLDR
- World Liberty co-founder Zak Folkman said the $75 million Dolomite loan was small compared to posted collateral.
- Folkman stated that the borrowing aimed to increase utilization and liquidity on Dolomite Markets.
- Onchain data showed that more than $40 million of the borrowed funds moved to Coinbase Prime.
- DeFi analysts raised concerns in April about concentration and liquidation risks tied to the WLFI position.
- Justin Sun filed a lawsuit alleging that World Liberty froze his tokens and restricted governance access.
World Liberty co-founder Zak Folkman addressed a $75 million Dolomite borrowing position and a lawsuit from Justin Sun at Consensus 2026. He said the loan represented a small share of posted collateral and aimed to increase protocol usage. He also confirmed that World Liberty hired Quinn Emanuel and rejected Sun’s claims as false.
World Liberty Explains WLFI and USD1 Loan Activity on Dolomite
Folkman said World Liberty acted as the largest liquidity supplier on Dolomite Markets before taking a limited loan. He stated that the team posted about 5 billion WLFI tokens as collateral and borrowed roughly $75 million in USD1 and USDC. He described the move as “a very, very small loan” compared with the collateral size, and he said the goal focused on raising utilization rates.
He added that the strategy helped expand liquidity across the protocol over time. Onchain data from Arkham showed that the wallet later transferred over $40 million to Coinbase Prime. However, DeFi analysts on X raised concerns in April and warned about concentration and liquidation risks tied to the WLFI-backed position.
Folkman said the borrowing strategy followed internal planning and transparent smart contract rules. He stressed that all contract functions remain visible on Etherscan and other public explorers. He maintained that the position size did not threaten lenders based on posted collateral levels.
He also said the team monitored utilization and liquidity metrics during the borrowing period. He stated that World Liberty reduced its position as liquidity expanded. He reiterated that the company aimed to support growth within Dolomite rather than extract value.
World Liberty Rejects Justin Sun Claims and Files Defamation Case
Folkman also addressed a lawsuit filed by Tron founder Justin Sun in a California federal court on April 22. Sun alleged that World Liberty froze his tokens and excluded him from governance. He also claimed that the WLFI contract contained undisclosed blacklist features and threatened permanent token burns.
Folkman said World Liberty felt “blindsided” by the filing and denied all allegations. He said the project retained Quinn Emanuel to pursue a defamation case against Sun. He described the matter as “cut and dry” and called Sun’s statements “blatantly false.”
He said the 20% unlock terms appeared clearly in the project’s terms and conditions. He also stated that smart contract features remained publicly accessible on blockchain explorers. He argued that no hidden blacklist functions existed beyond disclosed parameters.
Folkman further said World Liberty faces heavier scrutiny due to its ties to President Donald Trump. He described the connection as both a “blessing and curse” for distribution and growth. He stated that the association accelerated adoption while increasing media and public attention.
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