World Liberty Financial is taking decisive action following recent security lapses attributed to third-party vulnerabilities. The Trump-backed project, facing congressional scrutiny, announced steps to reallocate user funds and verify user identities through Know Your Customer (KYC) checks.
In a recent post on X, World Liberty Financial revealed that a small subset of user wallets was compromised due to phishing attacks and exposed seed phrases. These incidents were traced back to third-party security lapses, prompting the project to enhance its security measures.
Security Lapses Prompt Swift Action
World Liberty Financial is currently testing new smart contract logic to better safeguard user accounts. The project’s team emphasized that users who submitted support tickets and passed the necessary identity checks would have their funds transferred to new, secure wallets. In September, impacted wallets were frozen, and ownership was verified to ensure a seamless transition.
While the exact number of affected users and the total funds at risk remain unclear, World Liberty reassured that the security breach was not a result of flaws in the WLFI platform or its smart contracts. Despite the external vulnerabilities, the team prioritized user security while adhering to regulatory standards.
Congressional Scrutiny and Alleged Sanctioned Sales
World Liberty Financial has been under the spotlight due to alleged token sales to sanctioned entities, including North Korea, Russia, and Iran. Senators Elizabeth Warren and Jack Reed recently urged the Departments of Justice and Treasury to investigate these claims, as reported by CNBC.
The transactions in question reportedly involved the North Korean hacking group Lazarus and a Russian tool for sanctions evasion. An Iranian crypto exchange was also implicated. It’s unclear if World Liberty’s announcement is directly related to the senators’ inquiry. This scrutiny is not new for the organization, which includes Eric Trump, Donald Trump Jr., and Barron Trump as co-founders.
Blockchain Security Experts Weigh In
Several blockchain security experts have questioned the validity of some analyses connecting World Liberty to these sanctioned entities. Taylor Moynahan, a security lead at MetaMask, and Nick Bax, founder of Ump.eth, criticized reports from watchdog Accountable.US.
Bax noted that the report falsely accused individuals of being affiliated with North Korean hackers, leading to the freezing of significant WLFI token holdings. These analyses have raised concerns about potential misinformation and its impact on users.
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