Compass Point Warns That Trump-Supported World Liberty Token Might Harm Retail Investors Significantly

Experts from investment bank Compass Point foresee potential risks for investors with the World Liberty Financial token as it becomes available in a few days.

WLFI will launch for trading on Memorial Day, positioning the Ethereum-based token for multiple exchange listings at a considerable valuation, following its introduction as a non-transferable governance token nearly a year prior, according to a note from Compass analysts on Tuesday.

Only a fraction of WLFI’s total supply will be tradable on Memorial Day, while other tokens will remain locked. This could make the token’s value appear inflated on paper since over 20% of its supply is owned by U.S. President Donald Trump’s family, as noted by Compass Point analysts. Although those tokens cannot be bought or sold, the price at which WLFI exchanges hands will be presumed for those holdings as well, they stated.

“If platforms like Coinbase list WLFI at an inflated FDV, it could lead to significant losses for retail traders,” the analysts commented, highlighting that most retail investors who attempted to benefit from the debut of Trump’s meme coin in January encountered losses.

When TRUMP was launched, approximately 80% of its supply was in the hands of insiders, and the Solana-based token achieved an FDV of $44 billion prior to being listed on exchanges such as Coinbase, the analysts reported. TRUMP’s FDV stood at $8.3 billion on Tuesday, as per crypto data aggregator CoinGecko, having dropped 89% from its all-time high in January.

Trump’s meme coin was listed on prominent platforms like Binance, Coinbase, and Robinhood shortly after its release, and its appeal among novice investors led market observers to view the token’s rapid rise as an “onboarding event.”

Currently, some experienced traders in the crypto space are speculating on WLFI’s valuation. The decentralized exchange Hyperliquid, for instance, presented so-called hyperps to traders on Monday, highlighting community interest on X. These are designed to replicate the functionality of perpetual futures contracts, without requiring an underlying spot price, according to Hyperliquid’s official site.

The token was valued at approximately $0.25 on Hyperliquid on Tuesday, leading to an FDV of around $25 billion for WLFI. This marked a significant decrease from WLFI’s initial price of $0.43 on the same platform.

While WLFI is transitioning to a tradable status, it has proven to be more challenging for investors to acquire compared to the president’s meme coin, which could be traded immediately after markets recognized it.

Thus far, WLFI has been accessible only to accredited investors. Moreover, current holders must complete a four-step procedure on the project’s website to unlock and trade their tokens. Approximately 34% of WLFI’s total supply of 100 billion was designated for such sales, as indicated in the project’s Gold Paper (or whitepaper).

However, it remains uncertain how much of WLFI’s total supply will become available on Memorial Day. A proposal passed in early July mentions that “a portion” of WLFI tokens sold to early supporters will become unlocked when WLFI is made tradable. More tokens may be released through a follow-up vote, it specifies.

“Tokens for founders, team members, and advisors will not be unlocked initially and will follow a longer schedule than early supporters, indicating a commitment to the long-term success of the protocol,” the proposal states.