A highly publicized dispute between Tron founder Justin Sun and the Trump-affiliated cryptocurrency project WLFI escalated on Wednesday, as Sun harshly criticized a newly introduced governance proposal, labeling it as 'one of the most absurd governance scams' he has encountered. In a detailed post on social media platform X, Sun alleged that the project has designed a vote that punishes dissenting voices, with token holders who vote against the proposal risking indefinite token lockups. Furthermore, Sun claimed that he and other major holders have been excluded from the voting process, stating that tokens representing approximately 4% of the voting power under his control have been frozen.
Sun also questioned the legitimacy of the vote, suggesting that control over the protocol rests with anonymous wallet addresses, including a multisignature setup that can override voting outcomes and a separate account with the power to blacklist users. 'This proposal is not about governance,' Sun stated in his post.
'It is an exercise of power by a select few who are carefully orchestrating a further consolidation of power and expropriation of properties.' The criticism revolves around WLFI's new proposal, which seeks to overhaul token lockups across the ecosystem. Over 62 billion WLFI tokens would be subject to new terms, including multi-year lockups and vesting schedules. Under the plan, tokens held by 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 face slightly shorter vesting terms but no burn.
Up to 4.5 billion tokens could be permanently destroyed. Token holders who do not accept the new terms would remain locked indefinitely, as per the proposal. Sun is not alone in his opposition.
Simon Dedic, founder of Moonrock Capital, stated that early investors have effectively been 'rugged.' 'All the early investors in $WLFI who thought they had solid profits just got rugged by the Trump family themselves,' Dedic wrote on X, adding that the move appears to give the project another opportunity to extract value from investors. He also criticized what he described as 'blatant misconduct' with little effort to conceal it. A spokesperson for World Liberty Financial told CoinDesk that the proposal 'was designed to further align all participants in the WLFI ecosystem for the long term,' aiming to 'optimally ensure long-term participation in our ecosystem and help maintain a healthy market supply.' The backlash marks the latest episode in the deteriorating relationship between Sun and the project. Earlier in the week, WLFI threatened legal action, stating that it had 'contracts' and 'evidence' after Sun accused the team of exploiting users through DeFi transactions.
The dispute has been escalating for months. In September, WLFI blacklisted a blockchain address linked to Sun that held approximately $107 million worth of its governance tokens at the time. This marks a sharp reversal from late 2024, when Sun was a key backer, investing $30 million in WLFI tokens and taking on an advisory role to support the project. Tensions intensified after WLFI deposited 5 billion of its own tokens into the lending protocol Dolomite – where one of its advisers is a co-founder – and borrowed roughly $75 million in stablecoins.
The tokens fell 12% to a record low the next day, after which Sun publicly accused the project of treating users as 'personal ATMs,' triggering the latest legal threats.