Folkman says World Liberty took ‘very small loan’ to jumpstart Dolomite, calls Justin Sun defamation case ‘cut and dry’

World Liberty Financial co-founder Zak Folkman pushed back on two fronts at Consensus 2026: a $75 million borrowing position on lending protocol Dolomite and a defamation lawsuit filed by Tron founder Justin Sun.

In an interview with The Block’s Gareth Jenkinson, Folkman said World Liberty had been the largest liquidity supplier on Dolomite Markets before taking "a very, very small loan" relative to collateral to increase utilization rates on the protocol. He said the strategy had since contributed to growth in liquidity across the markets.

The comments follow scrutiny surrounding transactions disclosed in April involving a World Liberty wallet that deposited roughly 5 billion (WLFI) tokens into Dolomite before borrowing about $75 million in (USD1) and USDC stablecoins against the collateral. Onchain data from Arkham later showed that more than $40 million of the borrowed funds were transferred to Coinbase Prime.

At the time, DeFi researchers and analysts on X warned that the size of the WLFI-backed position created concentration and liquidation concerns for lenders on the protocol.

Folkman rejects Sun's allegations, says WLF was 'blindsided'

Folkman also addressed World Liberty’s dispute with Sun, who filed a lawsuit against the project in a California federal court on April 22, alleging that WLFI improperly froze his tokens and excluded him from governance participation.

Sun had claimed that the project embedded undisclosed blacklist functionality into the WLFI smart contract and threatened to permanently burn his holdings. World Liberty denied the allegations at the time, while CEO Zach Witkoff described the lawsuit as a "desperate attempt" to deflect from Sun’s own conduct.

During the interview, Folkman said World Liberty was "blindsided" and has retained Quinn Emanuel to pursue a defamation case against Sun, describing the matter as "cut and dry." He dismissed Sun's claims as "blatantly false," arguing that the 20% unlock terms were laid out in terms and conditions and that smart contract functionality has always been visible on Etherscan and block explorers.

"The left-wing media for so long documented all of his issues, all of these legal issues," Folkman said in the interview. "And now that he's put out all of these erroneous and baseless claims against us, they're so quick to jump and take a side simply because we're Trump-affiliated."

Folkman also acknowledged that World Liberty faces heightened scrutiny compared with other DeFi projects because of its ties to President Donald Trump, describing the association as both a "blessing and curse" for the company. He said the affiliation accelerated the project’s distribution and growth while also placing it under heavier public and media attention.

Meanwhile, according to The Block's data dashboard, World Liberty's USD1 stablecoin is nearing a $4.5 billion market cap. Folkman called it the "fastest-growing stablecoin of all time" and the first to integrate Chainlink Proof of Reserves.

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USD1 was released in March 2025, nearly six months after President Trump announced the launch of World Liberty Financial. To support further expansion, the firm has filed an OCC charter application for a Limited Trust Company to serve as its own official issuer.