Justin Sun Sues World Liberty Financial Over Frozen WLFI Tokens

Background: A High-Profile Investment Gone Sour

TRON blockchain creator Justin Sun has sued World Liberty Financial (WLFI), the stablecoin and crypto project backed by members of U.S. President Donald Trump's family, alleging that the project unlawfully locked up his WLFI tokens and defrauded him about their rights and value. CoinDesk The lawsuit was filed in a California federal court and marks a formal legal escalation of a dispute that has been simmering since mid-2025.

Sun's complaint states that he invested $45 million in WLFI in 2024 based partly on the Trump family's association with the project, and that World Liberty later became hostile when he refused to keep investing or mint its USD1 stablecoin on their terms. The complaint accuses WLF of making multiple false statements to induce Sun's investments, improperly freezing his WLFI tokens multiple times, and threatening to burn his holdings and report him to law enforcement.

The Token Freeze and Smart Contract Dispute

The dispute originated in September 2025, when the Trump-backed project blacklisted Sun's WLFI wallet and froze roughly 540 million unlocked tokens. The move followed on-chain transfers of around $9 million worth of WLFI to exchanges, which WLFI flagged as possible early selling — though Sun argued the transfers were only minor tests.

In April 2026, tensions escalated further. Sun accused World Liberty of using a concealed blacklist function embedded in its smart contract that can freeze or restrict token holders' assets without notice, which he argued undermines the project's stated commitment to decentralization.

Key allegations in the complaint include:

✦ Sun's wallet held 540 million unlocked WLFI tokens and 2.4 billion locked tokens at the time of the freeze

✦ Sun's total WLFI stake was valued at approximately $75 million

✦ World Liberty has raised approximately $550 million through WLFI token sales — a 2,400% increase since Sun lent his name and credibility to the project

✦ Legal causes of action include breach of contract, fraud in the inducement, conversion, unjust enrichment, and declaratory relief

Governance Proposal Adds Complexity

Sun also took aim at a governance proposal WLFI published on April 15, 2026. If passed, the proposal would require token holders to "affirmatively accept" new terms, with those who do not accept facing an indefinite lock-up of their tokens. The proposal also mandates a 2-year cliff followed by a 2-year vesting period for early purchaser tokens, and burns 10% of advisor token allocations. Because his tokens remain frozen, Sun is unable to participate in the vote, effectively silencing one of the project's largest early backers.

Relief Sought and WLFI's Response

Sun and his companies have demanded a jury trial and are seeking a court order to unfreeze his WLFI tokens, monetary damages to be determined at trial, and injunctive relief preventing World Liberty from seizing, burning, destroying, or encumbering any of his holdings.

WLFI's project team has previously characterized Sun's claims as "baseless allegations," stating: "We have the contracts. We have the evidence. We have the truth."

Sun, for his part, was careful to separate the legal dispute from his broader political stance. He stated that the lawsuit does not change his support for President Trump or his administration's efforts to make the U.S. crypto-friendly, attributing the conflict to certain individuals on the project team rather than to political leadership.

Published by Coinplurk.com