Duke Lecturer Argues World Liberty Financial's WLFI Token May Be Unregistered Security

According to Lee Reiners, a lecturing fellow at Duke University and former Federal Reserve Bank of New York examiner, World Liberty Financial's WLFI token may constitute an unregistered security, in a blog post on Friday. Reiners argues that WLFI does not qualify as a pure digital commodity under the SEC's recent token taxonomy and likely faces SEC scrutiny, contradicting World Liberty's claims that WLFI is purely a governance token.

World Liberty sold approximately 25 billion WLFI tokens out of a 100 billion total supply in presale rounds before the protocol was built. Reiners contends that buyers likely invested with a reasonable expectation of profits, meeting a key component of the Howey Test used by the SEC to identify securities. He also cited a $75 million borrowing arrangement between World Liberty and the Dolomite lending protocol, where Dolomite's co-founder serves as a World Liberty adviser, as evidence of centralized control and potential self-dealing.