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World Liberty Financial said its $USD1 stablecoin was targeted in a coordinated attack that included hacked cofounder accounts, paid influencer campaigns, and aggressive short positions — but insisted the effort failed.
$USD1 Drops to $0.994 Before Recovering Amid Alleged Short Attack
World Liberty Financial ($WLFI), a crypto protocol tied to members of the Trump family, alleged that attackers attempted to destabilize its flagship stablecoin, $USD1, through what it described as a multi-pronged market assault. The episode briefly nudged $USD1 off its $1 peg before it recovered.
“A coordinated attack was launched against $USD1 this morning. Attackers hacked several $WLFI cofounder accounts, paid influencers to spread FUD, and opened massive $WLFI shorts to profit from the manufactured chaos,” $WLFI wrote.
The company added:
“It didn’t work. Thanks to $USD1’s sound mint-and-redeem mechanism and full 1:1 backing, we are trading steadily at par. No scammer can shake the long-term commitment of the entire $WLFI team and cofounders to $USD1. We encourage users to rely only on verified channels for accurate information.”
According to market data from Feb. 23, $USD1 dipped to roughly $0.99422, about 0.6% below its intended $1 peg. Coingecko’s API indicates that the lowest it has gone is $0.9896 per unit on Oct. 1, 2025. The token later traded near $0.998, suggesting that redemption flows and arbitrage activity helped stabilize the price.
$USD1, launched in April 2025, is a fiat-backed stablecoin designed to maintain a 1:1 peg with the U.S. dollar. It is issued through Bitgo Trust Company in South Dakota and backed by U.S. Treasuries and cash equivalents. As of February, $USD1 carried a market capitalization of about $5.02 billion, with 24-hour trading volume near $1.73 billion.
$WLFI said no core systems were compromised and emphasized that the stablecoin’s mint-and-redeem structure allowed holders to exchange tokens directly for dollars. That mechanism, common among asset-backed stablecoins, is intended to counter short-term price dislocations.
Still, not everyone is convinced. Some community members on X questioned whether the incident was a coordinated campaign or simply market volatility amplified by social media. As of publication, no independent forensic report confirming the alleged hack or paid influencer activity had been released.
The broader context adds layers of scrutiny. $WLFI is closely associated with Donald Trump Jr., Eric Trump and Jared Kushner, who reportedly hold a combined majority stake in the venture. In January, the firm applied for a national trust bank charter from the Office of the Comptroller of the Currency (OCC), seeking federal oversight for its stablecoin operations.
Critics have also pointed to concentration risks. Binance is estimated to control about 87% of $USD1’s circulating supply, a figure that has fueled debate over liquidity and decentralization. Supporters argue that institutional participation strengthens demand; skeptics counter that concentration can magnify volatility during stress events.
The episode revives familiar questions about stablecoin resilience. Even fully collateralized tokens can face temporary dislocations if sentiment shifts quickly or large positions are deployed against them. Whether $WLFI’s account of events proves accurate, the incident demonstrates how digital assets can become battlegrounds for narrative warfare as much as price speculation.
For now, $USD1 appears to be holding much closer to its $1 peg. Whether independent analysts step in to examine the alleged attack more closely may determine how this chapter is remembered — as a failed strike or a warning shot.
FAQ 🔎
- What happened to $USD1 on Feb. 23, 2026?$USD1 briefly dipped to about $0.994 after $WLFI alleged a coordinated attack involving hacked accounts, influencer campaigns and short positions.
- Did $USD1 lose its dollar backing?$WLFI says $USD1 remains fully backed 1:1 by U.S. dollar reserves and related equivalents.
- Was the alleged attack independently verified?As of publication, no independent forensic report has confirmed $WLFI’s claims.
- Why is $USD1 under added scrutiny?$WLFI’s political ties and the concentration of supply on Binance have drawn regulatory and community attention.