Trump’s Crypto Firm Freezes Accounts later than Security Lapses as Senators Seek Probe

Why Did Trump-Linked World Liberty Freeze User Wallets?

World Liberty Financial, the digital asset project tied to Eric Trump, Donald Trump Jr. and Barron Trump, said Wednesday it froze a portion of user wallets in September later than “third-party security lapses” exposed viewd phrases and enabled phishing-based compromises. The project said it is now reallocating funds to new secure wallets for users who passed verification checks.

In an X post, the project wrote that a “relatively small subset” of user wallets had been compromised due to external vulnerabilities rather than flaws in WLFI’s own platform or smart contracts. The team said it is testing new smart contract logic to protect affected accounts and maintain regulatory compliance during the reallocation process.

World Liberty did not disclose how many users were affected or the size of the compromised funds. According to the update, impacted wallets were frozen while ownership was verified, with fund transfers expected to continue once checks are completed.

The announcement comes at a sensitive time for the project as its high-profile political connections — and recent price volatility — place it under heightened scrutiny from lawmakers and analysts.

Investor Takeaway

Senators Demand Investigation Into Possible Sales to Sanctioned Entities

Earlier this week, CNBC reported that Senators Elizabeth Warren (D-MA) and Jack Reed (D-RI) asked the Departments of Justice and to sanctioned actors, citing research from Accountable.US. The watchdog claimed that transactions involved addresses tied to:

• a sanctioned Russian ruble-backed sanctions-evasion tool
• an Iranian crypto platform

The senators argued that these “suspicious” transactions raise national security concerns given the Trump family’s direct involvement in the project. They also suggested WLFI could be vulnerable to abuse due to fragile controls around token distribution and compliance.

World Liberty’s Wednesday announcement did not address the allegations, nor confirm whether the wallet-freeze action is related to the senators’ request.

Security Experts Dispute Key Parts of the On-Chain Analysis

Despite the political pressure, several blockchain security experts pushed back on the Accountable.US report. MetaMask security lead Taylor Monahan and Ump.eth founder Nick Bax said the analysis misinterpreted token movements and falsely linked a user to Lazarus.

Bax wrote that the watchdog’s conclusions relied on a “funky Worthless coin token transfer” and risked misidentifying innocent users. He also said one analyst, known as Shryder, may have had approximately 95,000 dollars worth of WLFI tokens frozen due to a “false positive” accusation.

That dispute underscores a recurring issue in on-chain investigations: wallet clustering tools and attribution heuristics can sometimes mislabel addresses based on proximity to suspicious activity rather than direct involvement.

The criticism adds complexity to the political narrative. While Warren and Reed are pushing for a probe, a number of specialists argue the evidence presented so far is fragile or mischaracterized.

Where Does This Leave World Liberty and Its Users?

World Liberty said it is reallocating funds for users who can pass identity checks and verify wallet ownership. The process includes:

• new secure wallet creation
• on-chain transfers via updated smart contract logic
• KYC confirmation for impacted accounts

The project framed the action as a necessary defense against external threats and part of broader efforts to strengthen compliance. It also reiterated that no WLFI .

Still, the project now faces two overlapping challenges:

• Operational risk: User-wallet compromises raise questions about World Liberty’s user-security readiness as the project grows.
• Regulatory risk: Congressional scrutiny around possible sanctioned-entity exposure could trigger deeper inquiries from DOJ, Treasury or OFAC.

World Liberty has already drawn attention in Congress before, with lawmakers flagging due to its direct ties to the Trump family. The latest developments will likely amplify those concerns, especially as regulators monitor new token issuances more aggressively.

As the project works to restore affected wallets and maintain user trust, it must also navigate a rapidly intensifying regulatory environment — one where face far more scrutiny from policymakers, security researchers and market participants.