The Trump family-backed crypto project World Liberty Financial (WLFI) has reignited concerns regarding its capacity to freeze and reassign user funds, a move that contrasts with its public image as a "community governed" platform.
The platform announced on Wednesday that it will reallocate assets that were affected by a pre-launch phishing attack. This attack reportedly exposed the seed phrases of a "relatively small subset" of user wallets. WLFI stated that the compromised wallets were targeted due to "third-party security lapses," asserting that the issues did not stem from the platform or its smart contracts.
"This was not a WLFI platform or smart contract issue. Attackers gained access to user wallets through third-party security lapses," WLFI communicated in a post on X.
This reallocation will specifically apply to users who have completed Know Your Customer (KYC) verification. Accounts belonging to users who have not yet completed KYC will remain frozen. WLFI initially halted the affected wallets in September as it began its investigation into the attack.
WLFI blacklisted a total of 272 wallets. Of these, 215 were linked to the phishing attack, and 50 of those wallets reported being compromised.
"We stepped in preemptively to stop hackers from draining funds and are working with the rightful owners to secure/move assets," WLFI stated in a September 6 post on X.
Cointelegraph has reached out to WLFI for further details regarding the total value of the affected assets.
User Reactions Divided Over WLFI's Control of Funds
Following the announcement, some users on X expressed dissatisfaction, raising concerns about the platform's ability to freeze and reassign user funds without the necessity of a formal decentralized governance proposal.
"I think it’s hilarious how everyone is cheering that you can rug or lock any wallet on your own protocol. The entire ecosystem is dependent on your security. Everyone will get phucked in the end," wrote pseudonymous blockchain developer flick in response to WLFI’s announcement.
Conversely, other users viewed WLFI's action as a demonstration of accountability, particularly as the platform intends to compensate users affected by the September phishing attack.
"Good to see a project actually taking responsibility instead of hiding behind ‘not our fault’. User safety > everything," commented crypto trader DefiBagira in a response on X.