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USD1 
WLFI Sun Yuchen accuses World Liberty Financial of having a "backdoor function"
Sun Yuchen claimed that the USD1 stablecoins issued by World Liberty Financial contain a "backdoor function" that may allow user assets to be frozen or destroyed.
Sun Yuchen issued a statement through Platform X stating that his legal team successfully prevented World Liberty Financial from transferring the dispute between the two parties to private arbitration and preventing its attempt to seal relevant files in the California federal court to the public. According to Sun Yuchen, the court ruled that all claims filed by him should continue to be heard in open court.
Sun Yuchen said that during this process, he learned that World Liberty Financial's USD1 stablecoin also has a similar authorization mechanism. He believes that this technical structure gives World Liberty the ability to freeze or destroy user assets at any time.
Sun Yuchen also warned USD1 users in his statement that such power brings significant counterparty risks, especially in the centralized stablecoin structure. Sun Yuchen further claimed that World Liberty had previously been willing to use similar powers against WLFI token holders.
Another issue raised by Sun Yuchen was the financial status of World Liberty Financial and USD1. He emphasized that the collateral supporting the market value of USD1 of approximately US$4 billion belongs to stablecoin users and believes that these reserves cannot be used to meet his claims or other corporate debt, which may amount to hundreds of millions of dollars.
Sun Yuchen said he had not seen any evidence other than USD1 reserves that World Liberty Financial had enough funds to cover potential court orders and other debts. As a result, he urged investors to be "extremely cautious."
As of now, World Liberty Financial has not issued a public statement on Sun Yuchen's recent allegations about the technical structure of USD1 and the company's financial adequacy. Sun Yuchen's remarks are still at the accusation stage.
