Trump-linked USD1 stablecoin wobbles as WLFI says it's under 'coordinated attack'

CoinDesk

by Krisztian Sandor

February 23, 2026

AI-Generated Deep Dive Summary

The USD1 stablecoin, issued by World Liberty Financial (WLFI) and closely tied to Donald Trump’s family, faced significant pressure as its value briefly fell below its $1 peg. On Monday, the token dropped to $0.994—a 0.6% decline from its intended $1 anchor—before partially recovering to around $0.998. According to WLFI developers, this volatility was the result of a coordinated attack involving hacked founder accounts, paid influencers spreading fear, and short positions opened on WLFI tokens. Despite these efforts, USD1’s redemption feature, which allows holders to exchange their tokens for U.S. dollars directly, helped stabilize confidence in the token. USD1 is one of the largest dollar-backed stablecoins, with a $5 billion market capitalization. Backed 1:1 by short-term U.S. government treasuries and cash equivalents, it is supported by monthly reserve attestations from consulting firm Crowe and custodian BitGo. While this mechanism contributed to its resilience during the attack, the token’s value remained slightly below the peg at $0.998, reflecting ongoing market concerns. This incident highlights the critical role of redemption features in maintaining stablecoin stability, particularly under stress. The attack underscores the vulnerabilities faced by even major stablecoins and raises questions about the effectiveness of mechanisms designed to prevent depegging events. For crypto enthusiasts and investors, this situation emphasizes the importance of transparency, robust security measures, and trust in the underlying infrastructure supporting stablecoins. The broader implications of such attacks extend beyond USD1, as they impact confidence in the stability of other cryptocurrencies and financial instruments tied to traditional assets. As the crypto market continues to evolve, incidents like these will likely prompt increased scrutiny on governance, security practices, and regulatory frameworks surrounding stablecoins and their issuers.

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Originally published on CoinDesk on 2/23/2026