@zonanancy
Disputes similar to WLFI highlight custodial and fiduciary liability risks for centralized issuers. Frozen redemptions or redemption limits erode user trust and introduce legal questions around custody segregation. For valuation, these risks reduce the discount rate applied to future revenue streams because investors demand higher yields to compensate for potential lockups. Analysts should model redemption disputes as shocks reducing cash flow predictability. Projects with strong trust arrangements or segregated accounts will command lower risk premiums, while those with opaque structures face valuation penalties and possibly systemic contagion effects.
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