Key Highlights
- WLFI successfully recovered and reallocated approximately $22.1 million worth of its tokens following a pre-launch security incident.
- Hackers accessed wallets through phishing, leaked seed phrases, and malicious Ethereum contracts.
- WLFI is returning tokens to users who completed verification, while wallets of unverified users will remain frozen until done.
World Liberty Financial (WLFI) has recovered and reallocated more than $22 million worth of its tokens after hundreds of user wallets were compromised before the project officially launched in September.
In an X post on November 19, the project confirmed the security issue did not originate from its own platform or smart contracts. Instead, attackers gained access to user wallets through external security failures, mainly phishing attempts and leaked seed phrases.
The team also noted that some affected wallets were also compromised due to malicious contracts tied to complications during Ethereum’s EIP-7702 implementation in the Pectra upgrade.
Recovery Measures: Burn and Reissue
WLFI took immediate action in September by freezing 272 wallets. The recovery process required all affected users to complete know your customer (KYC) verification again to confirm their identities and submit new wallet addresses.
During this period, the team also developed and tested new smart contract tools to safely manage large-scale token reallocations. On November 19, WLFI executed an emergency on-chain function that burned around 166.7 million WLFI, about $22.1 million, from compromised wallets and issued the same amount to verified users.
On-chain analyst Emmett Gallic reviewed the transaction, noting that the function used was originally designed for situations where a user loses access to a wallet before vesting or when tokens end up with an attacker.
WLFI stated the cautious approach was necessary to ensure fund safety was prioritized over speed. Users who have completed the required identity checks will receive their tokens shortly. Wallets belonging to users who haven’t completed verification will remain frozen until they complete the recovery steps.
WLFI’s USD1 product updates
Despite the continuing questions, WLFI is continuing its development work, including progress on its USD1 stablecoin and upcoming integrations. On Nov. 1, WLFI expanded its USD1 Points Program into decentralized finance by unveiling support on Dolomite, a DeFi lending platform.
In September, WLFI also announced that it will offer a debit card pegged to its USD1 stablecoin. Co-Founder Zak Folkman announced the card will integrate with Apple Pay and link to USD1 via the WLFI app. “Coming very soon,” he added.
The successful recovery operation marks a significant step for WLFI as it attempts to move forward and focus on product development.
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