According to an official statement from World Liberty Financial on the X platform, the project experienced a meticulously orchestrated "coordinated attack" on the morning of February 23, Eastern Time. World Liberty Financial reported that attackers infiltrated the social media accounts of several WLFI co-founders and hired paid influencers (KOLs) to spread widespread fear, uncertainty, and doubt (FUD), aiming to trigger market chaos.
USD1 and WLFI tokens were the primary targets in this attack. Following the incident, USD1 lost its peg to the US dollar for a brief period, dropping to $0.9802 on some exchanges before quickly rebounding. At the same time, the price of WLFI tokens also suffered a sharp decline. Gate platform data from February 24 shows that WLFI fell by about 7% in the past 24 hours, sliding from $0.117 to a low of $0.106.
In response, the WLFI team stated that thanks to USD1’s robust minting and redemption mechanism and its 1:1 full asset backing, the stablecoin rapidly regained its peg, and the attackers’ attempt failed. The team described the incident as an organized effort to profit by shorting WLFI tokens.
Compliance Concerns: USD1’s Asset Backing and Regulatory Scrutiny
Although the WLFI team emphasizes that USD1 is fully compliant and entirely backed by assets, the event has sparked widespread discussion about USD1’s reserve transparency.
As one of the world’s leading dollar stablecoins by market capitalization, USD1’s reserves consist of short-term US Treasury bills and cash equivalents, held in custody by BitGo Trust Co. However, the panic over USD1 depegging was partly fueled by the market’s inherent sensitivity to the liquidity and transparency of stablecoin reserves. Especially after the passage of the US GENIUS Act, the integration of stablecoins into mainstream finance has accelerated, but regulatory requirements for issuers have become increasingly stringent.
In addition, the potential connection between Binance, WLFI, and USD1 continues to draw scrutiny. According to Forbes, Binance holds approximately 87% of USD1 in circulation, valued at about $4.7 billion. Given that former Binance CEO Changpeng Zhao was pardoned by Trump in October 2025, some US lawmakers have raised concerns about possible conflicts of interest between the parties. This complex web of political and business relationships presents not only market challenges for USD1 but also potential regulatory pressures.
Bull-Bear Dynamics: The Market Logic Behind WLFI Price Volatility
This "coordinated attack" was not just a security incident—it was a classic bull-bear battle. The price movements of WLFI tokens clearly reflect this dynamic.
Gate platform data from February 24 shows that trading volume for WLFI surged on the day of the attack, with intense sell-side pressure. Attackers had established large short positions in WLFI ahead of time and leveraged social media FUD to drive prices down, aiming to profit by closing their shorts after the drop.
Here are key market data points for WLFI from Gate:
| Data Dimension | Performance |
|---|---|
| 24-Hour Decline | Fell by about 7%, indicating a sudden panic triggered by the attack. |
| Current Price | Partially recovered to around $0.106, suggesting buyers have begun to step in. |
| Market Influences | Social media FUD, account breaches, and stablecoin depegging fears. |
The impact extended beyond WLFI itself. The panic triggered by the attack rippled across the broader crypto market. Data shows that, within the same timeframe, Bitcoin plunged over 5% in two hours, dropping to $64,300. This led to $458 million in forced liquidations across the network, with 92% coming from leveraged long positions. This demonstrates how attacks on specific projects during periods of market fragility can escalate into systemic deleveraging risks.
Community Response: From Caution to Optimism
While WLFI and its supporters claim this was an organized attack, some users remain skeptical about the full details and motives, and are awaiting the results of an investigation teased by on-chain detective ZachXBT.
On the X platform, several prominent crypto KOLs expressed mixed views on USD1’s brief depegging. Accounts like @FenoXBT voiced deep concerns, warning this could repeat the UST collapse and urging the project team to take swift corrective action.
Conversely, @nehalzzzz1 noted that the peg had nearly fully recovered. Despite the volatility, strong support from the Trump family foundation and VC/market maker redemption mechanisms enabled rapid arbitrage, closing the price gap. He reflected on his own hesitation at the low point. @Karamata2_2 saw the event as a stress test for the platform, highlighting the quick resolution as proof of resilience and team commitment.
@Tanaka_L2 offered a more detailed analysis, arguing that a 0.5% deviation is normal during panic periods. With reserves held by BitGo—including US Treasuries and cash equivalents—supporting 1:1 redemptions, overall risk remains manageable, and he remains optimistic about the outlook. Meanwhile, @Hrd_Target_Prez questioned whether the depegging was actually related to the WLFI price drop, hinting at suspicious circumstances.
Overall, opinions ranged from caution to optimism, but most recognized the event’s temporary nature and the rapid recovery.
Conclusion
The "organized attack" on WLFI began with short-term market turmoil, but ended with the stable operation of its core mechanisms. It served as a stress test for USD1’s redemption resilience and exposed WLFI’s vulnerability to shifts in market sentiment. For investors trading on compliant platforms like Gate, it’s essential not only to track price movements but also to cut through the noise, carefully evaluating the fundamental value and risks of assets. The bull-bear battle in the market never stops, and maintaining rationality and insight is always the best armor against the unknown.
