USD1 De-anchoring Event Review: A Coordinated Attack Against USD1 and WLFI?

According to a statement released by World Liberty Financial (WLFI) on the X platform, on the morning of February 23rd Eastern Time, the project was targeted in a carefully orchestrated “coordinated attack.” Attackers compromised multiple WLFI co-founders’ social media accounts and hired paid influencers (KOLs) to spread large amounts of panic and uncertainty messages (FUD), attempting to create market chaos.

In this attack, USD1 and WLFI tokens were the main targets. Following the attack, USD1 quickly lost its peg to the dollar, dropping to as low as $0.9802 on some exchanges before rapidly rebounding. Meanwhile, WLFI token prices also plummeted. Data from the Gate platform on February 24th shows WLFI dropped about 7% in the past 24 hours, falling from $0.117 to a low of $0.106.

The WLFI team later stated that thanks to USD1’s robust minting and redemption mechanisms and full 1:1 asset backing, the stablecoin quickly restored its peg, and the attackers’ plans failed. The team described this incident as an organized effort to profit from shorting WLFI tokens.

Regulatory Concerns: USD1’s Asset Backing and Oversight

Although the WLFI team emphasized that USD1 is fully compliant and fully collateralized, the incident has sparked widespread discussion about the transparency of USD1’s reserves.

As one of the leading dollar-pegged stablecoins by market cap, USD1’s reserves consist of short-term U.S. Treasuries and cash equivalents, held in trust by BitGo Trust Co. However, the panic caused by the attack and potential de-pegging partly stem from market sensitivities around the liquidity and transparency of stablecoin reserves. Especially after the passage of the U.S. GENIUS Act, the integration of stablecoins into mainstream finance has accelerated, but regulatory requirements for issuers have become stricter.

Additionally, the potential links between Binance, WLFI, and USD1 continue to be scrutinized. Forbes reports that Binance holds about 87% of circulating USD1, worth approximately $4.7 billion. Considering Binance’s former CEO CZ received a Trump pardon in October 2025, some U.S. lawmakers have raised concerns about conflicts of interest. These complex political and business ties mean USD1 faces not only market tests but also potential regulatory pressures.

Bull-Bear Dynamics: Market Logic Behind WLFI Price Movements

This “coordinated attack” was not just a security incident but also a classic example of a bull-bear game. The price fluctuations of WLFI tokens clearly reflect this process.

According to data from the Gate platform on February 24th, trading volume for WLFI spiked significantly on the day of the attack, with selling pressure concentrated. Attackers pre-emptively built large short positions in WLFI and, combined with FUD spread via social media, aimed to profit from the subsequent price decline.

Key market data from Gate regarding WLFI:

This battle extended beyond WLFI itself. The panic triggered by the attack even spilled over into the broader crypto market. Data shows that within the same two-hour window, Bitcoin plunged over 4%, dropping to $64,300, forcing the liquidation of $458 million in positions, 92% of which were leveraged longs. This indicates that targeted attacks during vulnerable market periods can amplify systemic deleveraging risks.

Gate’s Perspective: Cutting Through the Noise to Focus on Asset Fundamentals

As a bridge connecting investors and the crypto world, Gate always reminds users to focus on the underlying fundamentals behind events. The recent attack on WLFI and USD1 reaffirms several market truths:

1. Quality assets are resilient: Although USD1 experienced a brief de-pegging, its full 1:1 collateralized redemption mechanism quickly restored its price peg. This demonstrates that assets with solid backing have stronger recovery capabilities in extreme market manipulations.
2. Beware of leverage risks driven by news: In this incident, attackers used social media to amplify panic and target highly leveraged longs. Investors engaging in derivatives or leveraged trading should carefully assess liquidation risks in extreme conditions and manage their positions prudently.
3. Focus on compliance and transparency: As global regulatory frameworks become clearer, the compliance and transparency of assets will be key to their long-term viability. The complex political ties behind WLFI and the reserve composition of USD1 will continue to be scrutinized by the market.

Conclusion

The organized attack on WLFI, while causing short-term market turbulence, was ultimately countered by the stability of core mechanisms. It served as a stress test, verifying USD1’s resilience and exposing WLFI’s vulnerability to market sentiment. For investors, trading on compliant platforms like Gate requires not only monitoring price swings but also peeling back the layers of news to assess the true value and risks of assets. The bull-bear battle in markets never ceases, and maintaining rationality and insight is the best armor against the unknown.