World Liberty Financial (WLFI) issued an alert on Monday, February 23, regarding a coordinated attack on their USD1 stablecoin. The stablecoin momentarily fell below its $1 mark but has since risen closer to its $1 peg.
WLFI notified their followers on X, stating that their cofounder accounts had been hacked. The attackers, according to WLFI, had paid influencers to spread fear, uncertainty, and doubt.
The company stated that they had attempted to take advantage of the situation by opening large short positions. However, the attack failed.
Peg Restored While Attack Mechanism Unclear
The data indicates that USD1 fell to $0.99707. The stablecoin has since risen closer to its $1 peg. WLFI stated that USD1’s mint and redeem process, as well as its full one-to-one backing, ensured price stability. The stablecoin, therefore, continued trading at par.
Market analyst Wu Blockchain stated that Eric Trump, a cofounder at WLFI, had deleted several of their posts on X before the stablecoin fell. The details of how the attack was carried out, however, remain unknown.
The reserves, which amount to USD1, are held in custody with BitGo. The reserves comprise short-term US treasury bonds. WLFI claims that each token is backed one-to-one with the US dollar. This stablecoin is intended for redemption at par value.
Small fluctuations in the prices of stablecoins are common, especially on cryptocurrency exchanges. These changes can stem from trading spreads, liquidity issues, and delays in arbitrage.
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Industry experts do not view a 0.01% to 0.03% fluctuation as a de-peg unless it persists over an extended period. At the time of writing, the token is currently trading at $0.9990.
Source: CoinMarketCap
Regulatory Plans and Rising Scrutiny
Earlier this year, WLTC Holdings LLC filed a request with regulators to form a national trust bank to facilitate the expansion of USD1’s operations. WLFI is also engaged in the business of crypto lending.
The project has been marred by issues concerning conflicts of interest, especially with regard to a $2 billion investment with Binance involving USD1.
An Abu Dhabi-based investment vehicle acquired a 49% stake in World Liberty Financial for $500 million prior to the inauguration of President Trump.
While USD1 has held its peg, the combination of hacked accounts and coordinated trades can still impact overall market sentiment. The cryptocurrency space is known to react to perception risk, causing traders to retreat as uncertainty increases.
The situation has now brought about questions as to whether it could create short-term volatility, as well as more underlying concerns over confidence levels in WLFI’s ecosystem, as an investigation is ongoing.
Also Read: WLFI Price Prediction 2026-2032: Will World Liberty Financial Reach $1?