According to a WLFI announcement, prior to the platform’s official launch, some user wallets were compromised due to phishing attacks or mnemonic phrase leaks. WLFI emphasized that the incident was not caused by any platform or smart contract vulnerability, but originated from third-party security issues. The team has developed new smart contract logic that allows assets to be reassigned to secure new wallets after completing KYC verification. Wallets that have not submitted a request or failed verification will remain frozen, though users can initiate the recovery process through customer support. According to Emmett Gallic, World Liberty Fi burned a total of 166.67 million WLFI tokens (worth approximately $22.14 million) from a suspected compromised wallet and reallocated an equal amount of tokens to a new secure address.