The WLFI project recently sparked an intense storm against Tron founder Sun Yuchen. On September 4, the project suddenly blacklisted Sun Yuchen's wallet address, freezing up to 540 million unlocked tokens and 2.4 billion unlocked tokens.
This action directly stemmed from a series of market manipulation allegations against Sun Yuchen, which included secret asset transfers, high-position sell-offs, and designing high-yield traps through exchanges he controlled.
01 The blacklisting incident: Huge transfers trigger freezing actions
The direct trigger for this incident was an abnormal transfer detected by on-chain data monitoring. Before being blacklisted, one of Sun Yuchen's wallet addresses transferred out WLFI tokens worth approximately 9 million USD.
The project party subsequently identified this as 'potential selling behavior' and quickly took action to freeze the address. The frozen assets included approximately $102.3 million worth of 545 million unlocked WLFI tokens, as well as 2.4 billion tokens still in a locked state.
Sun Yuchen quickly responded to this, stating that these transfers were just 'a few very low-value general exchange recharge tests' and address dispersion operations, denying any involvement in buying and selling activities, and emphasizing that it was impossible to have an impact on the market.
02 Surface commitments and covert operations: A meticulously designed harvesting game?
According to multiple analyses, Sun Yuchen is suspected of adopting a complete 'high-end hedging' strategy in his operations with WLFI.
He first publicly promised on social media that he 'would not sell', instilling confidence in investors; then he launched a high-yield staking activity with an annualized return of 20% through his associated HTX exchange, attracting a large number of retail investors to deposit tokens.
When the user's tokens continuously flowed into the exchange, Sun Yuchen was accused of transferring these tokens to other exchanges for sale through multiple associated addresses. Due to the dispersed and hidden operations, the market found it difficult to track the source of the selling pressure.
Lastly, when users need to redeem, they complete the redemption with tokens in their wallets, and this part of the funds likely comes from profits obtained from early sales.
03 Project background and political connections: The deep involvement of the Trump family.
WLFI is not an ordinary cryptocurrency project; it has a strong political background. The project has the endorsement of the Trump family and claims its goal is to create a global stablecoin payment and financial governance platform.
The Trump family, through its company DT Marks DEFI LLC, holds up to 22.5 billion WLFI tokens, of which Trump himself directly holds 15.75 billion tokens, valued at approximately $6 billion based on the market price at that time.
As an important early supporter of the project, Sun Yuchen had purchased WLFI tokens worth $75 million, was appointed as an advisor to World Liberty, and used his crypto platform to promote its stablecoin USD1.
04 The illusion of decentralization and the reality of centralization: The blacklist function sparks controversy.
The WLFI project has always claimed to be completely decentralized, but this blacklist incident has exposed the enormous power held by the project party.
In a truly decentralized system, the project party should not have the ability to arbitrarily freeze investors' assets. The WLFi project party's ability to easily freeze the address of top investors like Sun Yuchen reveals that the so-called 'decentralization' is often just surface propaganda.
This contradiction between centralized control and decentralized promotion not only raises doubts among retail investors about WLFI but also impacts the trust system of the entire cryptocurrency industry.
05 Market impact and retail investor losses: A roller coaster of price fluctuations.
After the blacklist news was announced, the WLFI price experienced violent fluctuations. The market initially interpreted it as good news, with the price rising nearly 10% in a short time, but then quickly reversed and fell, with a daily drop of over 16%.
From a broader time frame, WLFI's performance is even more disappointing. The token was launched for trading on September 1, with an opening price of $0.32, then fell all the way down to around $0.18, with a cumulative drop of nearly 60%.
The serious defects in token economics design are one of the important reasons for the decline. The total supply of the project reaches 100 billion tokens, while the Trump family and early investors hold the vast majority of the shares, causing the market circulation to suddenly increase fivefold, resulting in huge selling pressure.
06 Risk insights from the crypto world: Beware of halo and commitment traps.
The controversy between Sun Yuchen and WLFI provides us with several important insights:
On the one hand, celebrity endorsements and political halos cannot guarantee the reliability of the project. Even with strong backing from the Trump family, the project may still have defects in token economic design and issues of opacity.
On the other hand, in the cryptocurrency field, 'promising not to sell' may only be a strategy to stabilize market sentiment. Investors should pay more attention to on-chain data and behavioral evidence rather than simply believing verbal commitments.
The lack of regulation also makes it difficult to prevent manipulation in the crypto market. Although our country has long suspended ICOs and virtual currency trading since 2017, investors may still participate in related activities through overseas platforms, facing huge risks.
WLFI's price has dropped from the opening price of $0.32 to around $0.18, with a cumulative decline of nearly 60%.
Facing accusations from the SEC and doubts about market manipulation, Sun Yuchen maintains 'active communication' with the WLFI team while planning to purchase an additional $10 million of WLFI tokens.
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