The sudden rise and fall of Dough Finance
In July 2024, Dough Finance, a Florida-based DeFi platform promising leveraged “looping” returns, fell prey to a flash-loan exploit that drained $2.5 million from person accounts. The exploit not solely worn out investor funds but additionally introduced operations to a halt.
Chase Herro and Zak Folkman based Dough Finance in 2024 in Florida. The platform attracted buyers by providing high-risk DeFi methods comparable to looping, a course of the place merchants reuse borrowed crypto. Right here’s how looping works:
- First, a dealer deposits a crypto asset right into a lending protocol. This residue acts as collateral. Then the dealer borrows one other crypto asset, typically a stablecoin, primarily based on the collateral worth.
- Subsequent, the dealer takes the borrowed crypto and buys extra of the unique asset. The cycle repeats with extra depositing and borrowing; that is the looping course of.
The purpose is to achieve extra publicity to the unique asset. If the worth will increase, the dealer makes extra revenue than they’d with their preliminary deposit.
Nevertheless, all of it got here aside with a flash mortgage assault in July 2024. Hackers concentrating on the DeFi protocol manipulated the good contract and acquired away with about $2.5 million price of cryptocurrencies.
The $2.5-million loss was the nail in Dough’s coffin. Investor Jonathan Lopez, who deposited $1 million primarily based on encouragement from co‑founder Chase Herro, noticed his financial savings evaporate. He was reportedly suggested step-by-step by means of the looping technique simply earlier than the hack struck.
Regardless of guarantees to compensate customers by way of proprietary tokens convertible again to Ether (ETH), solely $281,000 was ever recovered. Communications had gone silent by August 2024, and by Might 2025, Lopez had filed a fraud lawsuit towards Herro. His courtroom date is about for Florida in April 2026.
This case spotlights a rising development: Customers are more and more searching for authorized recourse for failed crypto platforms as soon as unofficial assurances crumble.
Relaunch beneath a brand new banner: The start of World Liberty Monetary
Barely two months publish‑collapse, Herro and companion Zak Folkman relaunched beneath a brand new banner, World Liberty Monetary (WLFI), debuting in September 2024.
Their new DeFi platform rapidly drew headlines due to high-profile backers: US President Donald Trump and his sons. The partnership reportedly took form by means of Steve Witkoff, an actual property developer and US particular envoy to the Center East, who facilitated the connection between the embattled founders and the Trump camp.
Flush with recent capital, the undertaking launched into a shopping for spree, amassing a portfolio of ETH, Wrapped Bitcoin (WBTC), USDC (USDC) and Tether’s USDt (USDT). At its core is a non-transferable governance token referred to as WLFI, an uncommon design alternative for a platform branded as “decentralized.”
However it wasn’t the tokens that stirred controversy. It was the cash movement.
Following two token gross sales, together with a blockbuster spherical in March 2025, the platform claimed to have raised $550 million. But the income cut up was something however decentralized: 75% of all internet protocol income was routed to DT Marks DEFI, a Trump-linked entity. The remaining 25% went to an organization owned by Herro and Folkman.
In actual phrases, the Trump household reportedly pocketed $400 million, whereas the once-disgraced Dough Finance founders walked away with at the very least $65 million, a dramatic reversal of fortune for a pair who had misplaced $2.5 million only a 12 months earlier.
Critics have been fast to name out the irony: a platform that markets itself as decentralized however operates beneath an intensely centralized construction. Herro and Folkman’s quiet reappearance, particularly as fraud allegations from their earlier enterprise stay unresolved, solely added gas to the backlash.
World Liberty, nevertheless, is only one piece of a broader Trump-family crypto ecosystem that’s rising with stunning velocity.
Trump launched a memecoin referred to as Official Trump (TRUMP) on Solana earlier this 12 months, adopted shortly by Official Melania Meme (MELANIA), the same token launched by the First Woman. In the meantime, Eric Trump co-founded a cryptocurrency mining firm referred to as American Bitcoin, with Donald Trump Jr. listed as a stakeholder. Most just lately, Trump Media and Know-how Group filed a proposal with the US SEC on June 5, 2025, to launch a Bitcoin (BTC) exchange-traded fund (ETF), the Reality Social Bitcoin ETF.
Collectively, these ventures kind an more and more blurred line between politics, private enrichment and crypto, a line that Herro and Folkman have now positioned themselves squarely inside.
What Dough Finance promised after the hack and what didn’t occur
Though Dough Finance went darkish after its July 2024 collapse, the undertaking hasn’t light from regulators’ radar. The truth is, it’s solely now coming into the authorized and investigative highlight.
Dough Finance launched a post-incident restoration plan pledging to “make customers entire.” The proposal outlined a three-part technique:
- Redistribute recovered funds by way of a governance vote on a professional rata foundation.
- Situation Dough tokens to compensate for unrecovered losses, with the promise they may very well be used throughout the platform’s ecosystem.
- Burn-and-redeem mechanism permitting customers to change these tokens for added recovered funds sooner or later.
The platform additionally credited Seal 911, a cybersecurity agency, for incident response assist and emphasised transparency transferring ahead.
Nevertheless, affected customers say none of those guarantees materialized. The governance vote was by no means held, Dough tokens have been by no means listed or usable, and no extra funds have been recovered past an preliminary partial reimbursement of round $281,000. By June 2025, the platform had gone silent, leaving buyers like Lopez to pursue authorized motion.
Reportedly, Lopez’s Might 2025 lawsuit accuses co-founder Herro of misrepresentation, securities fraud and breach of fiduciary obligation. The case, set for trial in April 2026, might assist outline how courts deal with DeFi founders who instantly information buyers by means of high-risk methods like looping.
Underneath Florida’s CS/HB 273, any platform transmitting person funds should maintain a cash transmitter license. If Dough Finance operated with out one, it might face regulatory scrutiny as an unlicensed cash companies enterprise. As of mid-2025, no prison prices have been filed, however Florida’s Workplace of Monetary Regulation (OFR) continues to observe digital asset fraud and unregistered securities circumstances, suggesting this may occasionally solely be the start.
This sample of vanishing communications, vaporware tokens and silent pivots has drawn comparisons to earlier DeFi collapses like SafeMoon and BitConnect. However in contrast to many defunct founders, Herro and Folkman didn’t disappear — they reemerged beneath a brand new title and cashed in massive.
Is World Liberty Monetary actually secure?
After elevating $550 million and tying itself to the Trump title, WLFI may appear to be a robust DeFi success story. However for anybody following Chase Herro and Zak Folkman’s journey from Dough Finance to WLFI, one query lingers: Is it secure?
The warning indicators are acquainted.
At Dough Finance, customers have been promised cutting-edge DeFi methods and post-hack reimbursements. What they acquired as an alternative was silence, lacking funds and vaporware tokens. At present, with fraud allegations nonetheless energetic, the identical founders now management a brand new platform with much more capital, extra complexity and extra political weight.
WLFI makes use of a non-transferable governance token (WLFI), presents little person management over treasury allocation and funnels 75% of protocol income to a Trump-linked LLC. That’s a far cry from the community-first, decentralized beliefs DeFi customers are informed to anticipate.
So, what can buyers be taught?
- Belief the observe report, not the headlines.
- Simply because a undertaking is politically related or cash-rich doesn’t imply it’s clear, safe or equitable.
The rise of WLFI, constructed within the shadow of Dough Finance’s collapse, is a robust reminder: In DeFi, “again once more” doesn’t all the time imply “higher.”
Should you’re asking whether or not WLFI is secure, contemplate this: Would you belief your belongings with a platform whose founders nonetheless haven’t answered for the final one?
In case your reply is not any, you’re not paranoid. You’re paying consideration.
In DeFi, recycled founders don’t include recycled accountability. If the previous is any information, this undertaking warrants shut scrutiny, not blind belief.
