World Liberty Financial reported that its USD1 stablecoin and WLFI token were targeted in what the team described as a “coordinated attack” involving hacked social media accounts, disinformation campaigns, and aggressive short-selling activity.
The incident briefly shook market confidence before both assets stabilized.
According to the project’s official statement, attackers allegedly compromised several WLFI cofounder social media accounts and used them to spread misleading information. At the same time, influencers were reportedly paid to amplify fear, uncertainty, and doubt while traders opened large short positions designed to profit from market volatility.
The project said the effort failed to achieve lasting damage, emphasizing that USD1 quickly recovered and continued trading close to its intended peg.
USD1 Temporarily Depegged Before Rapid Recovery
During the incident, USD1 briefly slipped to approximately $0.98 on Binance before recovering within minutes.
The short-lived depeg triggered concern among traders, particularly as stablecoins are expected to maintain consistent price stability. However, the recovery occurred quickly, suggesting strong liquidity and active arbitrage activity.
While USD1 stabilized, the WLFI token experienced more noticeable volatility. The token fell roughly 7% during the incident as traders reacted to the sudden wave of negative sentiment and uncertainty.
Market participants initially struggled to distinguish between legitimate project updates and compromised accounts, which contributed to short-term confusion.
The rapid recovery of USD1 helped restore confidence and prevented the situation from escalating further.
Hacked Accounts And Disinformation Campaign Alleged
World Liberty Financial said the attack relied heavily on compromised social media accounts belonging to project cofounders.
According to the project, attackers used these accounts to publish misleading statements designed to undermine confidence in USD1 and WLFI. The team described the operation as a coordinated disinformation campaign intended to trigger panic selling.
The project also claimed that influencers were paid to amplify negative narratives about USD1 in order to accelerate the price decline.
By combining hacked accounts with targeted messaging, the attackers allegedly attempted to create the appearance of a crisis within the project.
World Liberty Financial urged users to rely only on verified communication channels to avoid being misled by false information.
Large Short Positions Opened During Market Panic
The project alleged that the attackers opened significant short positions on WLFI during the incident.
Short selling allows traders to profit from falling prices, and World Liberty Financial believes the attackers intended to benefit financially from the volatility they created.
According to the team, the sequence of events suggested a coordinated strategy:
- Social media accounts were compromised
- Negative information spread rapidly
- Market panic followed
- Short positions increased
The project described the activity as a deliberate attempt to manufacture market chaos rather than a natural market movement.
Although WLFI declined approximately 7%, the drop was smaller than what attackers may have anticipated.
Mint And Redeem Mechanism Helped Stabilize USD1
World Liberty Financial credited USD1’s mint-and-redeem mechanism for preventing a prolonged depeg.
The project stated that USD1 remains fully backed on a one-to-one basis, allowing traders to redeem tokens directly for underlying assets. This mechanism creates arbitrage opportunities whenever the price moves away from parity.
When USD1 briefly dropped below $1, traders were able to buy discounted tokens and redeem them at full value, quickly restoring the peg.
According to the project, this design ensured that the stablecoin continued trading steadily at parity despite the attempted disruption.
The team emphasized that the incident demonstrated the resilience of the system rather than its weakness.
Project Reaffirms Commitment To USD1 Stability
Following the incident, World Liberty Financial reaffirmed its long-term commitment to maintaining USD1 stability.
The project stated that no attackers or scammers could undermine the long-term plans of the WLFI team and its cofounders. Officials emphasized that USD1 remains fully backed and operational.
The team encouraged users to verify information through official channels and avoid relying on unverified social media posts.
The incident highlights the growing role of social media security in cryptocurrency markets, where hacked accounts and misinformation can quickly influence prices.
While the attack caused short-term volatility, USD1’s rapid recovery suggests that the stablecoin’s underlying structure remains intact.
For World Liberty Financial, the episode serves as both a warning and a demonstration of resilience, showing how coordinated market attacks can emerge, but also how robust systems can withstand them.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.
Follow us on Twitter @themerklehash to stay updated with the latest Crypto, NFT, AI, Cybersecurity, and Metaverse news!
