A public spat between Justin Sun, founder of Tron, and WLFI, a crypto project linked to Trump, escalated on Wednesday after Sun lambasted a new governance proposal, labeling it as 'one of the most absurd governance scams' he has encountered. In a detailed post, Sun alleged that the proposal is designed to penalize those who dissent, with token holders who vote against the proposal facing indefinite token lockups.
He also claimed that he and other significant holders had been excluded from the voting process, stating that tokens equivalent to around 4% of the voting power under his control had been frozen. Sun further questioned the legitimacy of the vote, arguing that control of the protocol rests with anonymous wallet addresses, including a multisignature setup that can override outcomes and a separate account with the power to blacklist users.
'This proposal is not about governance,' Sun stated, 'but rather an exercise of power by a select few who are carefully orchestrating a further consolidation of power and expropriation of property.' The criticism revolves around WLFI's new proposal, which seeks to overhaul token lockups across the 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. Holders who do not accept the new terms would remain locked indefinitely, according to the proposal. Sun is not alone in his criticism, as Simon Dedic, founder of Moonrock Capital, expressed that early investors had been 'rugged' by the move.
'All the early investors in $WLFI who thought they were sitting on solid profits just got rugged by the Trump family themselves,' Dedic wrote, criticizing what he described as 'blatant misconduct' with little effort to conceal it. A spokesperson for World Liberty Financial stated that the proposal was designed to 'further align all participants in the WLFI ecosystem for the long run,' 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, following earlier threats of legal action and accusations of exploiting users through DeFi transactions.
The dispute has been escalating for months, with tensions intensifying after WLFI deposited its tokens into a lending protocol and borrowed stablecoins, triggering a significant drop in token value and public accusations from Sun.