A heated public dispute between Tron's Justin Sun and the Trump-linked cryptocurrency project WLFI escalated on Wednesday, as Sun vehemently criticized a newly introduced governance proposal. Sun described the proposal as one of the most absurd governance scams he has encountered, claiming it is designed to penalize token holders who vote against it by indefinitely locking their tokens.
Furthermore, Sun alleged that he and other significant holders were excluded from the voting process, with tokens representing about 4% of the voting power under his control being frozen. Sun questioned the legitimacy of the vote, suggesting that control of the protocol actually rests with anonymous wallet addresses, including a multisignature setup capable of overriding outcomes and a separate account with the power to blacklist users. He stated, 'This proposal is not about governance; it is an exercise of power by a select few who are engineering a further consolidation of power and expropriation of property.' The controversy surrounds WLFI's proposal to overhaul token lockups across its ecosystem, affecting over 62 billion WLFI tokens with new terms including multi-year lockups and vesting schedules. Insiders, such as team members, advisors, and partners, would face a two-year lockup followed by a three-year gradual release, alongside a 10% token burn upon opting in.
Early supporters would have slightly shorter vesting terms but no burn, with up to 4.5 billion tokens potentially being permanently destroyed. Token holders who do not accept the new terms would remain locked indefinitely.
Simon Dedic, founder of Moonrock Capital, also pushed back against the proposal, stating that early investors had effectively been 'rugged' by the Trump family themselves. A spokesperson for World Liberty Financial defended the proposal, saying it was designed to align all participants in the WLFI ecosystem for the long term, ensuring optimal long-term participation and healthy market supply.
The backlash is the latest episode in the deteriorating relationship between Sun and the project, which has been escalating over months. Earlier in the week, WLFI threatened legal action against Sun, who had accused the project of exploiting users through DeFi transactions.
The dispute has its roots in September when WLFI blacklisted a blockchain address linked to Sun holding about $107 million worth of its governance tokens, a significant reversal from late 2024 when Sun was a key backer and investor in WLFI tokens.