Justin Sun, the founder of Tron, has initiated a lawsuit against World Liberty Financial, a cryptocurrency and stablecoin firm backed by the Trump family, alleging that the company froze his $WLFI token holdings without justification, made false claims, and issued threats against him. The lawsuit, which acknowledges Sun's support for former US President Donald Trump, claims that World Liberty's leadership engaged in an 'illegal scheme to seize property' by freezing Sun's tokens, which he had purchased after being solicited by the company in 2024. According to the lawsuit, Sun invested $45 million in $WLFI tokens due to the project's claims of promoting decentralized finance and its association with the Trump family. However, when it became clear that Sun would not continue investing in 2025, including a request to mint World Liberty's USD1 stablecoin, the company's principals became hostile towards him.
The lawsuit alleges that World Liberty made fraudulent misrepresentations about the economic rights and liberties associated with purchasing $WLFI tokens, including statements about token holder rights, governance, and the freedom to transact. It is also claimed that World Liberty, despite presenting itself as a decentralized finance company, exerted centralized control over its tokens. The company allegedly modified the smart contract governing $WLFI in August 2025 to add a 'blacklisting' function, allowing it to freeze tokens in specific wallets without disclosing this change to investors. This modification was made without a governance vote, even as token holders had approved a proposal to make a portion of the supply tradable.
The lawsuit argues that World Liberty's actions served a dual purpose: pressuring Sun to mint $200 million of the company's USD1 stablecoin on his Tron blockchain and manipulating the market price of $WLFI tokens by preventing one of the largest holders from selling. By freezing Sun's tokens, the company allegedly 'artificially propped up the market price of $WLFI tokens' held by World Liberty's founders and corporate treasury. The lawsuit raises regulatory questions, suggesting that World Liberty's ability to issue, freeze, and reassign tokens may qualify it as a money transmitter under US Financial Crimes Enforcement Network rules, subjecting it to registration and anti-money laundering requirements.
Other allegations include threats made by World Liberty's co-founder, Chase Herro, to burn Sun's $WLFI tokens and falsely claim that Sun's know-your-customer documentation was inadequate, with a threat to report him to US authorities. Portions of the lawsuit have been redacted, with Sun's team giving World Liberty the opportunity to decide whether these provisions should remain sealed.
In a post, Sun stated that he had tried to resolve the situation in good faith and sought to be treated the same as other early investors. He also expressed opposition to World Liberty's new governance proposal published on April 15. This development comes after Sun settled charges with the US Securities and Exchange Commission last month, agreeing to pay a $10 million fine to resolve a case brought by the previous presidential administration.