Key Takeaways
Crypto entrepreneur Justin Sun filed a lawsuit on April 21 in California federal court against World Liberty Financial, escalating a dispute over approximately $75 million in frozen WLFI tokens.
"They wrongfully froze all of my tokens, stripped me of my right to vote on governance proposals, and have threatened to permanently destroy my tokens by ‘burning’ them," Sun said in a statement posted on X, reaffirming his support for President Trump but criticizing the WLFI team's actions.
The complaint alleges breach of contract and fraud, stemming from a wallet freeze that locked 540 million unlocked WLFI tokens and 2.4 billion locked tokens. The freeze occurred after Sun transferred between $9 million and $11 million worth of tokens. Sun initially invested around $30 million in late 2024, later increasing his total commitment.
The lawsuit challenges the core premise of decentralized finance, questioning whether a project can unilaterally restrict a major token holder's assets without due process. The outcome could set a legal precedent for investor rights in the growing "PoliFi" sector and impact how projects with centralized control mechanisms are perceived.
Sun was initially a key backer and advisor for the Trump-linked WLFI project, praising its pro-crypto alignment. The relationship soured after the WLFI team allegedly introduced a "backdoor blacklisting function" into the smart contract in August 2025 without investor disclosure, according to the court filing. A month later, Sun's wallet was blacklisted. WLFI has maintained the freeze was a routine security measure.
The conflict intensified following a recent governance proposal to unlock 62 billion WLFI tokens. Sun criticized the plan, which he called "one of the most absurd governance scams," noting that 72% of the unlocking tokens belonged to insiders, including executives and founders, while public buyers who purchased tokens in 2024 and 2025 held the rest. The proposal, according to Sun, gives public token holders little say in a decision that could create enormous selling pressure on the token.
This article is for informational purposes only and does not constitute investment advice.
