WLFI crash wipes $427M overnight

April 10, 2026

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WLFI sinks as $427M wiped, loan risks mount

Key points:

  • WLFI dropped to record lows, erasing roughly $427M in market value as concerns grew around its DeFi borrowing strategy.

  • While the team dismissed liquidation risks, critics flagged liquidity strain, collateral pressure, and systemic exposure.

News - World Liberty Financial’s WLFI token slid to its lowest level since launch, falling about 12–14% in 24 hours as scrutiny intensified over its lending activity on the Dolomite DeFi platform. The Trump-linked project used its own governance token as collateral to borrow stablecoins, though reports differed on the size of the position, with figures ranging from about $75M to as high as $160M.

The move raised alarms after Dolomite’s USD1 pool utilization climbed above 90%, limiting withdrawals for depositors and increasing concerns about potential bad debt if positions unwind. WLFI pushed back, stating it is “nowhere near liquidation” and could supply additional collateral if needed, positioning itself as an “anchor borrower” generating yield for users.

Collateral loop raises red flags - Critics pointed to a circular structure, where falling WLFI prices weaken collateral strength while requiring more tokens to maintain borrowing capacity. On-chain data also showed a significant share of WLFI supply pledged on Dolomite, concentrating risk within a declining asset. Portions of borrowed funds were reportedly moved to Coinbase Prime, suggesting possible trading or off-platform activity.

Unlock vote adds pressure - Separately, WLFI confirmed plans to propose a phased token unlock for early holders, following backlash over prolonged lockups. With most of the supply still restricted, the proposed unlock now adds another layer of scrutiny as markets assess WLFI’s borrowing strategy and token structure.

TAO slides as builder exit triggers decentralization debate

Key points:

  • TAO declined sharply after Covenant AI exited Bittensor, accusing the network of centralized control despite its decentralization claims.

  • Rising sell pressure, liquidations, and bearish projections have added to concerns about further downside.

News - Bittensor’s TAO token dropped between 18% over the past day and nearly 30% from its weekly high after Covenant AI, one of its leading subnet operators, confirmed its exit from the network, citing concerns over centralized governance. The dispute quickly escalated, with Covenant accusing founder Jacob Steeves of exerting control over emissions, subnet operations, and community channels.

Steeves denied the allegations, stating he does not have the ability to unilaterally suspend emissions or override network processes. Despite the response, the fallout weighed heavily on sentiment, with TAO erasing much of its recent rally.

The selloff was accompanied by a surge in trading activity, with volume jumping sharply and around $11.83M in futures positions liquidated, the majority of which were long positions, adding to the downward pressure.

Confidence shock hits network narrative - Covenant AI’s departure has intensified scrutiny of Bittensor’s decentralization claims, with critics arguing that governance remains concentrated despite its positioning as a permissionless AI network. The firm’s allegations, including claims of emission control and governance influence, have brought renewed focus to how authority is distributed across the ecosystem.

Downside risks still in play - Alongside weakening sentiment, historical price patterns highlighted in recent analyses have pointed to the possibility of further downside, with prior setups suggesting declines of up to 45% under similar conditions.

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Hong Kong clears first stablecoin licenses for banks

Key points:

  • Hong Kong approved its first stablecoin issuers, granting licenses to HSBC and Anchorpoint Financial under its new regulatory framework.

  • The rollout reflects a cautious, bank-led approach, prioritizing compliance, reserves, and institutional backing.

News - Hong Kong has issued its first stablecoin licenses, approving HSBC’s Hong Kong banking arm and Anchorpoint Financial, a joint venture backed by Standard Chartered, Animoca Brands, and Hong Kong Telecommunications. The approvals mark the first batch under the city’s Stablecoins Ordinance, which took effect in August 2025 and requires issuers to meet strict standards on reserves, governance, redemption, and anti-money laundering controls.

The Hong Kong Monetary Authority reviewed 36 applications but limited the initial approvals to a small group, signaling a deliberate preference for established financial institutions. HSBC and Standard Chartered are among the city’s note-issuing banks, reinforcing the regulator’s focus on firms with strong compliance frameworks, reserve capacity, and established distribution networks.

Bank-led model takes center stage - The decision to prioritize traditional banks highlights Hong Kong’s effort to balance innovation with financial stability. Licensed stablecoins are expected to operate under strict identity verification rules, and the framework points to tighter transfer controls than those seen in freely transferable tokens.

Launch plans and global ambitions - The licensed issuers are expected to launch stablecoin services in the coming months, targeting use cases such as cross-border payments, trade settlement, and digital asset transactions.

With the first approvals in place, Hong Kong is positioning regulated stablecoins as a key part of its broader push to strengthen its role as a global digital finance hub.

Japan moves to classify crypto as financial products

Key points:

  • Japan approved a bill to classify cryptocurrencies as financial products, shifting oversight under its main securities law.

  • The move introduces insider trading bans, stricter disclosures, and tougher penalties for unregistered operators.

News - Japan is preparing to bring cryptocurrencies under its core securities framework, following cabinet approval of a bill that would treat digital assets as financial products. The proposal marks a shift away from the country’s existing approach, where crypto has largely been regulated as a payment instrument. If passed during the current parliamentary session, the changes could take effect as early as fiscal 2027.

The amendment places crypto assets under the Financial Instruments and Exchange Act, aligning them more closely with traditional investment products. It introduces a formal ban on insider trading based on undisclosed information and requires issuers to publish annual disclosures.

Penalties for violations are also set to increase. Operating without registration could carry prison terms of up to 10 years, while fines may rise to ¥10 million, signaling stricter enforcement as oversight expands.

From payments to investment assets - Japan previously regulated crypto under the Payment Services Act, focusing on custody, anti-money laundering checks, and exchange registration. The shift reflects growing use of digital assets for investment and increased institutional participation in the market.

Tighter oversight, broader ambitions - Authorities said the changes aim to expand capital supply while strengthening market fairness, transparency, and investor protection. The move also signals Japan’s intent to integrate crypto more closely with traditional financial systems as the sector matures.

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Crypto scams uncovered

  • The “locked liquidity” promise at SafeMoon ended in a 100-month prison sentence: SafeMoon CEO Braden John Karony was sentenced in February 2026 after prosecutors said he and others diverted millions in investor funds while publicly claiming the project’s liquidity was locked and inaccessible.

  • The scam center playbook now blends crypto fraud with forced labor and global trafficking networks: In February 2026, a man was sentenced to 20 years in prison for his role in a $73 million crypto investment scam tied to Southeast Asian scam compounds, showing how pig-butchering operations have evolved into industrialized transnational crime.

  • IcomTech sold a crypto dream, then paid investors with PowerPoint slides and excuses: A key promoter in the IcomTech Ponzi scheme was sentenced in December 2025 for helping market fake crypto trading returns, even as the company blocked withdrawals and fed victims excuses that its systems were under maintenance.

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Top 3 coins of the day

Dash (DASH)

Key points:

  • DASH climbed to $42.66 after a sharp rally, with price action suggesting a completed Wave (5) and early signs of a pullback.

  • MACD momentum remained strongly bullish, while elevated volume confirmed the breakout but hinted at near-term exhaustion.

What you should know:

DASH pushed aggressively higher from the $31 region, peaking near $44 before easing to around $42.66, reflecting a completed impulsive wave structure. The Elliott Wave setup indicated that the recent surge likely marked the end of Wave (5), with price now entering a corrective phase. MACD stayed firmly above the signal line with expanding histogram bars, reinforcing strong bullish momentum, while volume spikes validated heavy participation during the breakout.

The move coincided with renewed interest in privacy coins, as capital rotated into the sector alongside a broader risk-on shift tied to geopolitical de-escalation. In the near term, price is likely to test lower levels, with $39.37 and $37.88 acting as immediate supports, while a deeper retracement could extend toward $36.38 if momentum cools further.

Zcash (ZEC)

Key points:

  • ZEC jumped to $380 after an aggressive late-stage rally, with price now showing signs of stalling near recent highs.

  • RSI stayed elevated in overbought territory, while strong volume backed the move but hinted at potential distribution.

What you should know:

Zcash surged higher into the$380 range after a rapid upside expansion, but the pace of the move began to slow near the top. The Elliott Wave structure suggested the rally was in its final leg, increasing the likelihood of a pause or pullback. RSI remained firmly above the overbought threshold, reinforcing that momentum was stretched despite the bullish trend. Meanwhile, volume remained elevated throughout the advance, confirming strong participation, though similar spikes near highs can precede profit-taking.

The upside was fueled by renewed capital rotation into privacy coins, alongside ETF-related speculation and a wave of short liquidations in derivatives markets. If price holds above $350, the structure remains intact, while a slip toward $332 would signal a broader cooldown phase.

Bittensor (TAO)

Key points:

  • TAO slipped to $265 after a sharp breakdown from the $330 range, with price struggling to regain short-term structure.

  • Stochastic RSI remained near oversold levels, while heavy volume spikes confirmed strong liquidation-driven selling pressure.

What you should know:

TAO faced a steep decline from the $330–$340 zone, quickly dropping toward $265 as selling pressure intensified. The move pushed price below its 9 SMA, which now acts as immediate resistance, with recent candles failing to reclaim that level. Stochastic RSI stayed pinned near oversold territory, signaling exhaustion in the sell-off but only a limited rebound attempt so far. Volume surged during the drop, pointing to aggressive exits and likely long liquidations.

The downturn followed a governance controversy tied to Covenant AI’s exit, where centralization concerns triggered a wave of panic selling. Roughly $9M in liquidations amplified the move, accelerating downside momentum. For now, $260 remains the key level to hold, while a break lower could expose $250 in the near term.

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