- World Liberty Financial has bought $9.8 million worth of Wrapped Bitcoin.
- This purchase takes their net WBTC holdings to $11.7 million.
- Being a DeFi project, they have greater utility for WBTC, which can be used to stake or lend.
- Previously, WBTC, a project co-run by Tron’s Justin Sun, had been under fire due to doubts about its backing and reserves.
World Liberty Financial(WLFI) has purchased $9.8 million worth of Wrapped Bitcoin (WBTC) tokens. This purchase takes their WBTC reserves to $11.7 million. The purchase was made in two transactions of $4.9 million.
Previously, the Eric Trump-led DeFi organization had acquired $1.9 million WBTC, as per Arkham Intelligence.
The WLFI is a DeFi platform headed by Eric Trump and launched by Donald Trump just prior to the US Elections. Previously, it saw a large $30 million investment from Tron’s Justin Sun.
Why is WLFI Buying Wrapped Bitcoin Instead of Bitcoin?
The organization is buying WBTC instead of Bitcoin because of the latter’s compatibility with Ethereum-based DeFi platforms. Since WBTC is an ERC-20 token, it can be used in more than 50 layer-2 blockchains like Arbitrum and top layer-1 blockchains like Ethereum and the BNB Chain.
Had they purchased only Bitcoin, they would not been able to use it for collateralized DeFi lending, staking, or any other DeFi activity.
On top of that a WBTC can be readily swapped with any other ERC-20 token like WETH or USDT to redeem it instantly.
Criticism From Crypto Users
World Liberty Financial came under criticism from crypto users on X.com and Reddit due to their decision to purchase WBTC.
Some users started calling WBTC “paper Bitcoin” due to its chequered past. Previously, Wrapped Bitcoin came under fire due to its pegging issues with Bitcoin and doubt about its sufficient Bitcoin reserves.
Wrapped Bitcoin is an ERC-20 cryptocurrency initially founded by BitGo, Ren, and Kyber Finance. Tron Founder Justin Sun. However, in August 2024, BitGo announced that WBTC was transitioning from its previous version to a new version, which will be co-run by BitGo, Justin Sun, and the Tron Foundation.
Justin Sun Responds to Criticisms
After World Liberty Finance’s WBTC purchase came under fire, Justin Sun, an investor in WLFI and a WBTC advocate, called it better than cbBTC (by Coinbase). He further added that buying WBTC means that users are under the mercy of Coinbase, which can either freeze or confiscate their tokens at will.
Sun’s statement is based on the degree of control that centralized exchanges exercise on their tokens (like PayPal’s PYUSD), user accounts, and exchange wallets.
