World Liberty Financial (WLF) has reassured investors after a cyber incident temporarily disrupted the peg of its flagship stablecoin, USD1, to the US dollar. Reports emerged that hackers gained unauthorized access to social media accounts of some of WLF’s co-founders, leading to concerns over the stability of the token. The firm characterized the breach as a “coordinated attack” focused purely on social media, emphasizing that its core infrastructure and the digital wallets that store USD1 remain secure.
On Monday, USD1 dropped to as low as 99.4 cents due to the incident. WLF accused external influencers of spreading “FUD”—fear, uncertainty, and doubt—to undermine the token’s value for profit. However, the company did not present any evidence to substantiate this claim. In a statement on X, WLF affirmed that all funds associated with USD1 are safe and fully backed, contending that its operational structure functioned “exactly as designed.”
This incident followed a recent event hosted at Donald Trump’s Mar-a-Lago resort, which attracted high-profile figures from both finance and the cryptocurrency sectors, including the sons of Donald Trump: Donald Trump Jr. and Eric. Also present were Alex and Zach Witkoff, the latter being a prominent figure in the company whose family is linked to billionaire real estate mogul Steve Witkoff, currently serving as the US special envoy to the Middle East.
Despite the turmoil, USD1 has solidified its position as the fifth-largest stablecoin, boasting a market capitalization of around $5 billion. In contrast, WLF’s competitors, Tether and Circle, command much larger valuations at $185 billion and $73 billion, respectively.
WLF profits primarily from the interest generated by US Treasury securities that back USD1. With a stablecoin of this size enjoying a 3% yield on government securities, the firm could be generating approximately $150 million annually. At the Mar-a-Lago event, Zach Witkoff touted the company’s scale, saying that each USD1 minted contributes directly to US Treasury purchases, thereby boosting demand for government debt.
The monthly reserve reports for USD1 are compiled by crypto group BitGo and verified by the accounting firm Crowe LLP, following industry standards set by the American Institute of Certified Public Accountants. Data from Arkham, a cryptocurrency analytics firm, indicates that around $4.5 billion of USD1 is currently held on the Binance exchange, co-founded by Changpeng Zhao, who was also present at the recent conference. Zhao has faced legal challenges, having pled guilty earlier this year to failing to adequately prevent money laundering, although he received a pardon from the US president in October.
The broader cryptocurrency market has faced significant selling pressure recently, with Bitcoin’s value dropping about 4% on Monday to $64,600, marking a nearly 50% decline since its peak in early October.
