World Liberty Financial criticised for insider-heavy token allocation

CoinDesk has obtained a draft white paper showing that 70% of World Liberty Financial’s (WLFI) governance tokens are earmarked for insiders, such as the project's founders, team members, and service providers. 

This revelation has caused concern within the crypto community, given the project's branding as a tool for empowering everyday people against the "rigged" traditional financial system, a narrative heavily promoted by former U.S. President Donald Trump and his sons. 

While 30% of the WLFI tokens are planned for public sale, the draft indicates that some of the funds raised will also benefit insiders. 

The rest will be placed in a treasury to support operational activities. 

An advisor to early-stage crypto projects reportedly criticised this insider-heavy allocation, calling it a “joke.” 

This approach to token allocation sharply contrasts with the strategies of other significant blockchain projects. 

For example, Ethereum (CRYPTO:ETH) allocated about 16.6% of its initial supply of Ether (ETH) to early contributors, while Cardano (CRYPTO:ADA) distributed approximately 20% of its ADA tokens to insiders. 

Bitcoin’s (CRYPTO:BTC) creator, Satoshi Nakamoto, is estimated to hold around 5% of its total supply. 

Compared to these, WLFI’s allocation heavily favors insiders, which has raised questions about fairness and transparency. 

Moreover, the draft white paper reveals that WLFI tokens will be non-transferable until there is regulatory clarity. 

This means that once purchased, tokens will remain locked in a wallet or smart contract and cannot be traded or transferred until compliance with legal standards is ensured through governance procedures. 

This measure aims to prevent potential securities law violations but also limits token holders' flexibility. 

The white paper also highlights plans for rigorous screening of token purchasers to ensure they are not on sanctions lists, although it mistakenly refers to FinCEN rather than the Office of Foreign Assets Control (OFAC) for these checks. 

Additionally, World Liberty Financial has faced fraudulent activities, with recent hacks on the social media accounts of Lara Trump and Tiffany Trump used to promote a fake crypto token falsely associated with the project. 

Though the project's team is reportedly making adjustments to its tokenomics, the current draft has already sparked significant debate among potential investors and crypto enthusiasts about the true intentions and future direction of World Liberty Financial.