Two key figures behind former President Donald Trump’s World Liberty Financial (WLFI) venture are facing serious allegations after abandoning investors from their previous DeFi project, Dough Finance, which suffered a devastating $2.5 million exploit. This development raises concerns about the integrity of Trump’s latest crypto endeavor and highlights ongoing security challenges in the DeFi space.
Key Developments in the WLFI Controversy
Chase Herro and Zak Folkman, co-founders of the exploited Dough Finance protocol and current WLFI partners, are under scrutiny after Reuters revealed they left their previous investors stranded following a major security breach. The hack, which occurred through a flash loan attack, resulted in the loss of $2.55 million in USDC and Ethereum assets.
Timeline of Events
- July 12, 2024: Dough Finance suffers $2.55M exploit
- Late July 2024: Only 76.2 ETH ($281,000) recovered
- September 2024: Partial distribution of $180,000 to some investors
- January 2025: Lawsuit filed against Herro in Florida
- May 2025: WLFI controversy emerges
Impact on Investors and Market Trust
The situation has left numerous investors empty-handed, with at least ten victims speaking to Reuters anonymously. One investor, Jonathan Lopez, has filed a lawsuit claiming fraud and securities law violations after investing approximately 300 ETH in the project.
WLFI Connection and Current Status
Despite abandoning their previous project, Herro and Folkman have reportedly earned at least $65 million from WLFI token sales, which have generated over $550 million in total revenue. This stark contrast between their current success and their previous investors’ losses has raised serious ethical concerns in the crypto community.
FAQ Section
What happened to Dough Finance investors?
Most investors have not received compensation for their losses, despite promises of reimbursement from the project’s founders.
How much did the Dough Finance hack cost?
The total loss amounted to $2.55 million in USDC and ETH tokens.
What is the connection to Trump’s WLFI project?
The two co-founders of Dough Finance are now key partners in Trump’s WLFI crypto venture.
Market Implications and Future Outlook
This controversy could have significant implications for the broader DeFi sector and highlights the need for stronger investor protections in crypto projects. The situation may also impact future regulatory discussions around DeFi protocols and celebrity-endorsed crypto ventures.