On the morning of February 23, 2026, in the GMT+8 time zone, an organized and coordinated attack surrounding World Liberty Financial (WLFI) and its USD-pegged asset USD1 quickly unfolded: from the accounts of co-founders being hacked, to KOLs on social media collectively amplifying panic, and then to significant short selling in the derivatives market, blending technology, security, and financial leverage into a complete attack chain. Despite the narrative being filled with a sense of crisis, multiple media outlets and publicly available market data pointed to one fact——that the overall price of USD1 remained hovering around its 1 dollar par value, without experiencing a systemic collapse similar to historical severe depegging events. This raises the question: In the face of a well-prepared and clearly targeted coordinated attack, how could USD1 still maintain its 1:1 peg? Is this ability to “maintain par value” coincidental, or is it a comprehensive reflection of mechanism and credit?
Accounts Hacked to KOLs Guiding the Narrative: The Collusion of Public Opinion and Positioning
● The starting point of account hacks: According to the publicly available information from various parties after the incident, the attack chain first pointed to the account of a WLFI co-founder being hacked. The attackers utilized the authority and trust backing of this account to publish abnormal content, attempting to create signals of “internal loss of control” or “team issues.” Since technical details have not been disclosed, it is currently unclear whether it was a simple password leak, phishing, or a more complex attack vector; what can be confirmed is that this step successfully laid a credible entrance for subsequent public opinion warfare, lowering the initial threshold of skepticism in the market regarding negative information.
● The diffusion chain of KOL amplifying FUD: Shortly after the account was compromised, the attackers were accused of hiring KOLs to spread FUD on social media. Typical rhetoric focused on three points: questioning whether the underlying assets of USD1 were sufficient, exaggerating compliance risks, and implying internal control and risk management failures within the team. Such content often used vague references like “heard that,” “internal news,” or “risk control personnel revealed,” deliberately avoiding verifiable data, yet emotionally targeting the most vulnerable points of retail investors. Combined with some circulating price screenshots in the market, the emotional environment became sharply tense, causing short-term traders to reduce positions or sell off in panic, leading to a noticeable resonance between public sentiment and market activity.
● Shorting positions in the derivatives market: In sync with the public opinion offensive, research notes indicated that the attackers were massively opening short positions in derivatives related to WLFI. Their potential profit path was relatively clear: first, by hacking the account and utilizing KOLs to rapidly amplify the trust shock against USD1 and WLFI, and then leveraging emotion-driven sell-offs to drive prices down, thereby gaining leveraged returns on tools like futures and perpetual contracts. This model is not merely riding the hype, but instead builds a closed loop between public discourse and financial engineering, directly translating “confidence fluctuations” into realizable short-selling profits.
● A coordinated attack rather than an isolated incident: Connecting the above links, it becomes evident that this event was not an isolated security incident but rather a coordinated attack combining public opinion warfare and financial warfare. Account hacks provided a breakthrough, KOL diffusion completed the emotional ignition, and short positions in derivatives were responsible for realizing results on the price level. The different modules overlapped significantly in time, making it difficult for the market to perceive it merely as a single security incident on a certain platform, but rather as a stress test of the entire credit structure of USD1.
The Price Did Not Crash: USD1's Fluctuations and Returns in the Eye of the Storm
● The only reliable consensus: Still trading near par value: Looking across various media and the publicly available information from the project parties, the only thing that can be considered a cross-channel consensus is that USD1 overall maintained trading around 1 dollar par value during the event. From publicly available screenshots and price curves, although there were fluctuations and emotional sell-offs during trading, it did not evolve into prolonged and significant price collapses, nor were extreme prices resembling “0.8, 0.7” seen as deep depegging. This fact provides a foundational coordinate for subsequent discussions on USD1’s ability to withstand pressure.
● Market rumors of “dropping to 0.98 then returning to 0.998”: A price path detailed to four decimal places circulated in the market: It was reported that USD1 briefly dropped below 0.99 on a mainstream trading platform before quickly recovering to near par value. The research notes classed this as “information pending verification,” and currently, there is no authoritative complete market data to confirm this specific trajectory, thus in this article it can only be mentioned as “market rumors reflected in partial platform quotes and community screenshots” and cannot be cited as precise data. The genuinely reliable conclusion remains: the price overall oscillates around 1 dollar and does not continuously depeg deeply.
● Invisible defense lines of depth, buying orders, and arbitrage: The swift return to par value after short-term fluctuations suggests that there was effective buying support and potential arbitrage intervention for the USD1-related trading pairs during this event. For any asset pegged at 1 dollar, as long as the minting and redemption mechanisms operate normally, when there is a significant discount in the secondary market, it opens up risk-free or low-risk arbitrage opportunities for funds capable of accessing the primary channels. Such funds buy discounted tokens during the peak of panic and then return to the pegged price through redemptions or cross-platform arbitrage, thereby profiting from the price difference while appearing as “strong buy orders at the bottom” on the price curve to help bring the price back to a reasonable range.
● Comparing with historical depegging events: Reflecting on previous crisis moments for various dollar-pegged assets, what truly triggers the collapse of confidence is often being maintained in a significantly discounted range for a long time, coupled with the project parties being unable to provide convincing explanations for asset and compliance. This time, USD1 has not shown continuous multi-day severe depegging in publicly available data, nor have there been hard issues like “reserve assets going missing” and “large-scale redemption failures,” although the market experienced reflexive panic, it has not crossed the threshold of “irreversible confidence break.” This outcome of “fluctuation but no collapse” makes the incident resemble a stress test in extreme volatility rather than a complete credit crisis.
Minting and Redemption Bearing Pressure: USD1's Mechanism Defense Line Tested in Practice
● The core narrative of “100% 1:1 fully collateralized”: Surrounding USD1, WLFI and core community representatives continually emphasize one design claim——“100% 1:1 fully collateralized/asset-backed”. According to the official public statements, USD1 is backed by dollars or equivalent assets corresponding exactly to the issuance scale, and the overall framework is packaged as “fully compliant and fully collateralized.” This narrative may seem formulaic during stable times, but during the outbreak of a coordinated attack, it becomes the key reason supporting whether market participants continue to believe in the 1 dollar peg: as long as the assets are genuinely there, any price deviation is viewed as “discount opportunity,” rather than “systemic bad debt.”
● Theoretical arbitrage closed loop formed by minting and redemption: Mechanistically, USD1 builds a theoretical price closed loop via minting and redemption channels: when the secondary market price exceeds 1 dollar, participants holding the underlying collateral can choose to mint USD1 and sell it for a premium; when the price dips below 1 dollar, holders of USD1 can choose to buy discounted tokens in the secondary market and then use the redemption channel to exchange them back for underlying assets or equivalent rights at a par value of 1 dollar. As long as this mechanism operates smoothly in practice, each price deviation from the peg will automatically signal arbitrage funds to “buy low and sell high” and “mint high and redeem low,” thereby continuously pulling the price back towards the peg.
● The “credibility test of the mechanism” in a panic environment: However, in real crisis situations, whether the mechanism can be genuinely trusted depends on two factors: whether the redemption channel is open and whether information disclosure is timely. If delays in redemption, limits on amounts, or abrupt changes to rules occur during a panic, even if the mechanism appears logically perfect in the white paper, the market will quickly regard it as “a paper design.” Similarly, if the project party cannot provide clear explanations about asset backing, operational status, and compliance at critical moments, arbitrage funds will hesitate about whether to dare to take on large amounts of “catching falling knives.” From the current event’s outcome, at least from the price performance, it can be inferred: there have been no widespread rumors of failed redemptions or mechanism stoppages, which has earned USD1 an early extension of trust.
● The boundaries of asset detail disclosure: It is worth emphasizing that regarding the specific composition, custodial arrangements, and proportional structure of USD1's underlying assets, the outside world can only rely on the limited descriptions that WLFI has publicly disclosed. The study notes clarify that no nonexistent asset lists or fabricated configurations can be inferred outside of publicly available information. Therefore, in this event, we can only analyze the publicly stated “100% 1:1 fully collateralized/asset-backed” narrative, without being able to assess more nuanced risks like asset duration mismatch or single custodian concentration. This also signifies that while USD1 has passed this price stress test, it still retains unanswered questions regarding asset transparency.
Conflicting Compliance Narratives: The Duel of Two Stories
● The project party and allies’ “stabilizing discourse”: After the incident broke out, WLFI and its supporters quickly voiced on social media, emphasizing “USD1 is fully compliant and fully collateralized”. For instance, Dylan (@0xDylan_) directly defined this incident as “an organized attack” and reiterated the asset support and compliance attributes of USD1; WLFI’s official announcement also emphasized its minting and redemption mechanisms and 100% 1:1 fully collateralized/asset-backed nature. This discourse system attempts to shift the public focus from short-term price fluctuations back to the systems and assets themselves, countering the panic narrative of “the project is about to blow up, there are holes in the assets” with “robust rules, assets secured.”
● The panic narrative path of the attackers: In contrast, the attackers in their rhetoric deliberately amplified regulatory and asset security concerns. On one hand, they stressed that the regulatory environment for dollar-pegged assets is tightening, suggesting that once scrutiny escalates, USD1 may encounter compliance risks; on the other hand, they vaguely questioned the transparency of the assets or custodians but never provided verifiable evidence. The two narratives collided fiercely in the information flow: one side appeals to “system and asset facts,” the other relies on “regulatory shadows and human fears,” telling completely different stories about the same product in the cognitive war.
● The persuasiveness of “compliance” and “full collateralization” to different groups: In the current tightening regulatory environment, keywords like “fully compliant” and “100% fully collateralized” possess high recognition and persuasiveness for institutions and professional participants——they are more aware of compliance costs, audit requirements, and the thresholds of asset custody, and are better equipped to independently verify and assess risks. However, for retail investors, these terms often appear abstract and distant, while short-term price fluctuations and KOL emotional output are more straightforward. Therefore, in this information war, the same set of “compliance + full collateralization” narratives yields a significant disparity in effectiveness among different audience groups, which is also the psychological basis that allows short-sellers to bet that “panic prevails over rationality.”
● The tension between short-term prices and long-term credit: The coordinated attack superficially targets prices, but essentially tests the resilience of institutional trust. Shorting funds can certainly lower prices in the short term through emotion and leverage tools, achieving temporary victories, but if the project party's mechanism design is solid, asset support is real, and has been validated over time, then once the panic subsides, prices would still have the opportunity to return to the peg, and the credit structure would be strengthened in reverse. Conversely, even if prices are fortuitously maintained during a single attack, as long as doubts at the institutional level remain unanswered over an extended period, long-term credit may still be eroded over time. USD1 this time maintained the 1:1 “surface achievement,” but the underlying institutional trust requires a longer time to be tested.
From USDT to USD1: The Market's Collective Memory of "1 Dollar Peg"
● Triggers of historical depegging: Reflecting on the crisis moments for mainstream dollar-pegged assets like USDT, the serious depegging is often triggered by two types of factors: reserve doubts and regulatory pressure. When there arises systematic doubt about “whether reserves are sufficient, whether asset quality is reliable,” or when regulatory agencies commence investigations and law enforcement actions against related products, the market will swiftly cast its votes with its feet. In such cases, prices frequently plunge significantly below par value within a short span and find it challenging to fully recover over a longer duration, reflecting deep cracks in trust.
● Reflexive panic and spillover fears: After enduring multiple rounds of similar events, the entire crypto market has developed a conditioned reflex to any “1 dollar pegged” product: once a security incident, regulatory turmoil, or asset rumors arise, panic spills over in an ultra-linear manner. Even if a new project has improved its mechanisms on some level, as long as it carries the label “pegged 1:1 to the dollar,” participants will instinctively recall the worst-case scenarios from historic examples, leading to preemptive selling and position reduction before announcements are made. This collective memory means that new entrants like USD1 naturally endure a heavier psychological discount in times of crisis.
● The entry threshold for new entrants: In a market dominated by established giants in the dollar-pegged arena, a new generation of products seeking to gain a foothold needs more than just brighter yield narratives or technical packaging. The coordinated attack that USD1 faced incorporated both “attack resistance capabilities” and “rumor resistance capabilities” into the entry threshold: on one side, it had to withstand real pressures from technology, security, and shorting funds; on the other side, it had to simultaneously address collective questioning from KOLs and the public discourse. Only under such compounded pressure can it maintain its peg and provide users with a normal experience, which is when the market would genuinely regard it as a “long-term reliable dollar substitute tool” rather than a short-term speculative target.
● WLFI's “stress test”: From a longer-term perspective, this incident can almost be seen as the first systematic stress test of WLFI and USD1. The results will not only impact retail attitudes in the short term but also become a critical variable for institutions assessing whether to include it in asset allocations and whether to treat it as a clearing unit and payment tool. If the market ultimately concludes that this coordinated attack did not shake USD1's pegging ability, then WLFI will carry a “real-world stress resistance” credit card in future efforts to attract institutional adoption and expand applications; conversely, if subsequent information disclosures reveal more structural vulnerabilities, this incident may be traced back as the starting point of trust breakdown.
This time it maintained the peg, but what will it rely on for self-rescue next time
The coordinated attack's failure to pierce USD1's price peg can largely be attributed to the combination of mechanism design, arbitrage spaces, and information responses: 1:1 asset backing and the minting/redemption structure provide the logical basis for arbitrage funds to “buy at a discount, redeem at par value,” while depth and buying support played a stabilizing role at critical moments, and the rapid responses from the project party and core KOLs also somewhat restrained the pace of panic spread. However, this does not mean that risks have been completely cleared——the identity and backing organization of the attackers remain a mystery, and the specific technical means of account hacking have not been disclosed; whether there will be a “second wave, more concealed” attack in the future is a question to which the outside world currently cannot provide a clear answer, and this hard-to-quantify hidden risk will accompany USD1 for quite a long time.
For WLFI, the real challenge ahead lies far beyond merely responding to a crisis public relations situation, but in how to institutionalize asset transparency, real-time disclosure mechanisms, and emergency response plans. At the asset level, there is a need to gradually construct a more detailed and verifiable disclosure framework atop the macro expression of “100% 1:1 fully collateralized”; at the information level, mechanisms for real-time disclosure and communication triggered during abnormal fluctuations should be explored, preventing the market from being led by rumors in a vacuum; at the risk control and compliance level, the attack surfaces and responding shortcomings exposed during this incident need to be solidified into systems and processes rather than remaining at the “post-summarization” level. Broadening the competitive landscape perspective, the future competition of dollar-pegged assets will no longer merely be a battle of costs and scenarios but rather who can stand firm amidst high-intensity attacks and highly amplified public discourse environments. For new-generation products like USD1, whether they can withstand such practical tests will determine their true “entry ticket.”
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