Trump-Linked USD1 Stablecoin Wobbles Under 'Coordinated Attack

A $5 billion stablecoin just broke its most sacred promise: staying pegged to the dollar. For six hours on Monday, USD1—the flagship token of World Liberty Financial, closely tied to President Trump's family—traded as low as $0.994, marking a 0.6% deviation that sent ripples through the crypto community.

The Attack That Wasn't Supposed to Happen

World Liberty Financial's response was swift and defensive. The team claimed their project faced a "coordinated attack" involving hacked cofounder accounts, paid influencers spreading fear, and short positions against their native WLFI token. "It didn't work," they declared on X, crediting their dollar-for-token redemption mechanism with preventing a deeper crisis.

But the numbers tell a different story. Even after the supposed attack was repelled, USD1 continues trading at $0.998—still 0.2% below its intended peg. For a stablecoin backed by BitGo and boasting direct dollar convertibility, this lingering discount raises uncomfortable questions.

Political Crypto Meets Market Reality

USD1 occupies a unique position in the stablecoin landscape. With its $5 billion market cap, it's among the largest dollar-backed stablecoins, though still dwarfed by giants like Tether (USDT) and Circle (USDC). What sets it apart isn't size—it's the political baggage.

World Liberty Financial has raised over $750 million from investors, largely riding the wave of Trump's return to the White House. But Monday's wobble exposed a fundamental tension: can a politically-branded cryptocurrency maintain the market neutrality that institutional investors demand?

The Redemption Mechanism Paradox

The team's explanation hinges on their redemption feature—the ability to exchange USD1 tokens directly for dollars. This mechanism, they argue, prevented a deeper depeg and restored confidence. But here's the paradox: if the redemption system works so well, why hasn't USD1 fully recovered to $1.00?

Three possibilities emerge:

1. Market confidence remains shaken despite the technical safeguards
2. The redemption mechanism has practical limitations not disclosed to investors
3. Ongoing selling pressure suggests deeper concerns about the project's fundamentals

Winners and Losers in the Wobble

Winners: Short sellers who positioned against WLFI before the depeg, competitors like USDT and USDC who can point to superior stability, and critics of politically-affiliated crypto projects who found ammunition for their arguments.

Losers: USD1 holders who experienced unexpected volatility, World Liberty Financial's reputation for stability, and the broader narrative that Trump-backed crypto projects are somehow immune to market forces.