U.S. Senator Elizabeth Warren has urged the U.S. Securities and Exchange Commission (SEC) to investigate crypto firm World Liberty Financial (WLFI) over concerns that the company may have violated securities laws and misled investors.
In a letter sent to SEC Chairman Paul Atkins the same day the Senate Banking Committee held its markup of the CLARITY Act, i.e. on May 14, 2026, Warren argued that regulators must enforce securities laws regardless of political influence.
The timing was deliberate. Warren has spent months arguing that comprehensive crypto market structure legislation must include explicit conflict-of-interest provisions targeting officials who profit from the industry they regulate. Her SEC letter is a positional document in that broader fight, sent hours before the CLARITY Act passed committee and headed toward the Senate floor.
“As Congress considers crypto market structure legislation, it is critical that it both protects investors and shuts down the President and his family from profiting off of cryptocurrency while in office,” Warren wrote.
$75M Loan sparks investor concerns
According to the letter, early in April World Liberty Financial borrowed approximately $75 million using nearly $440 million worth of its own WLFI tokens as collateral. The transaction was reportedly executed through Dolomite, a DeFi lending platform co-founded by Corey Caplan, who also serves as WLF’s advisor and Chief Technology Officer.
The deal allegedly involved WLF depositing 5 billion WLFI tokens as collateral and withdrawing around $65.4 million in its USD1 stablecoin along with $10.3 million in USDC (with approximately $15 million subsequently repaid).
Following the transaction, WLFI reportedly fell nearly 10-15% to a record low. Warren also claimed the move created liquidity issues on Dolomite, leaving some depositors temporarily unable to withdraw their stablecoins.
Token lockup proposal draws backlash
The controversy intensified on April 15, when WLF proposed unlocking 62.3 billion WLFI governance tokens that were previously locked without any vesting schedule. Under the proposal:
- Early supporters holding 17 billion WLFI would keep all their tokens, subject to a two-year cliff followed by a two-year linear vesting period.
- Founders, team members, advisors, and partners would see 10% of their 45.2 billion WLFI allocation burned, with the remaining 40.7 billion tokens unlocking over five years after a two-year cliff.
Warren said the proposal left investors “blindsided,” arguing that token holders were effectively forced to either accept unfavorable conditions or remain indefinitely locked under previous restrictions. “WLF’s activities appear to have benefited the Trump family at the expense of investors,” Warren stated in the letter.
She also noted that early investors cannot currently access 80% of their holdings, meaning they are watching market conditions move against them without any path to liquidity.
She further emphasized that antifraud protections apply to all securities transactions “regardless of technological form or whether the company is connected to the President and his family.”
The Justin Sun parallel lawsuit
Warren’s letter follows a separate but converging legal challenge from Tron Founder Justin Sun, who was once WLFI’s largest backer. In April 2026, Sun filed a lawsuit in California federal court alleging that WLFI froze tokens worth as much as $1 billion belonging to him, after he refused to invest hundreds of millions more in WLFI’s USD1 stablecoin project.
Sun’s complaint alleges he bought $45 million in WLFI tokens as one of the project’s early backers. He said WLFI later unilaterally changed governance rules to let itself block specific token holders from trading; without any token-holder vote or proposal. His large investment came after he project had raised only $22 million in its first month and helped drive total raises to ~$550 million.
Further, Sun also accused WLFI of treating users as “personal ATMs,” prompting the company to respond with legal action against him in return citing defamation.
A pattern of Warren-led WLFI challenges
The latest letter adds to Warren’s broader campaign against Trump-linked crypto ventures. This is now her third major WLF-focused Congressional action in roughly 13 months. Last year in April, Warren and Representative Maxine Waters wrote to then-acting SEC Chair Mark Uyeda demanding preservation of all SEC records related to WLF, focused on the agency’s abrupt pause of its Justin Sun enforcement case.
Then, in January this year, she also urged the Office of the Comptroller of the Currency to halt the review of a crypto banking charter tied to World Liberty Financial until President Donald Trump severed financial ties with the firm.
The renewed scrutiny comes as U.S. lawmakers continue debating comprehensive crypto market structure legislation and the role of digital assets in the financial system.
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