Justin Sun has filed a $45 million defamation lawsuit against World Liberty Financial in San Francisco federal court, according to reports from Bloomberg. The lawsuit centers on Sun's claims that WLF blocked his transfers of WLF crypto tokens he values at $45 million, largely in retaliation for his refusal to invest more than that in the firm. Sun says WLF management has threatened to "burn" his tokens, or render them permanently worthless, and to report him to U.S. criminal authorities if he continues to refuse. The lawsuit alleges that Sun acquired WLFI tokens for undisclosed individuals through straw purchases and conducted unauthorized token transfers and short sales of WLFI tokens. Days before filing his lawsuit, Sun issued a lengthy broadside against WLF on X, labeling the firm "World Tyranny" Financial, as reported by Bloomberg. WLF has agreed, in the meantime, to not burn or dispose of Sun's tokens until the case is decided or settled, according to court filings.
World Liberty Financial was launched in 2024 with a two-hour online livestream featuring President Trump, as reported by Bloomberg. The firm identifies his sons Donald Jr., Eric and Barron as co-founders, with President Trump listed as a co-founder emeritus. A business entity controlled by the Trump family owns 38% of WLF and receives up to 75% of the revenue from sales of its crypto token WLFI, according to Bloomberg. Sun stepped in, spending $45 million between November 2024 and January this year to acquire 3 billion WLFI tokens, as reported by Bloomberg. Sun proclaimed himself WLF's largest investor and wrote on X: "The U.S. is becoming the blockchain hub, and Bitcoin owes it to @realDonaldTrump!" WLF responded by naming Sun a corporate advisor and gifting him an additional billion tokens, then valued at $15 million. After Sun's investment became public, he asserts in his lawsuit, "World Liberty took off," ultimately raising $550 million through WLFI sales, as reported by Bloomberg.
The legal dispute centers on WLFI's decision to freeze tokens linked to Sun's entities in November 2024, as reported by Crypto.news. WLFI claimed Sun's entity, Blue Anthem, bought WLFI tokens in November 2024, and later accused Sun's affiliated entities of engaging in "prohibited transactions," including transferring tokens to the major crypto exchange Binance. The project stated it used its right to freeze the tokens to protect the ecosystem, with the freeze function allowed under its Terms of Sale and Sun's own agreements. But last year, just before Sun's WLF tokens were to become tradable, the firm "secretly" changed its rules to allow it to restrict token transfers by specific holders, according to Bloomberg. Although token holders supposedly held the right to vote on any such change, Sun claims, no vote was held: "World Liberty simply took the power for itself," the lawsuit states, as reported by Bloomberg.
The lawsuit alleges that Sun is suspected of improper transfers, conducting straw purchases, and short selling $WLFI tokens, according to Business Wire. The complaint alleges that Sun acquired WLFI tokens for undisclosed individuals through straw purchases and conducted unauthorized token transfers and short sales of WLFI tokens. The lawsuit further alleges that Sun was fully aware of World Liberty's right to freeze user tokens to protect its token holders and its community, yet chose to defame the project publicly. In the months before that change, Sun asserts, its management had been trying to pressure him into investing more in WLF, as reported by Bloomberg. "To ratchet up the pressure," his lawsuit says, the firm "froze his tokens," meaning they could not be transferred to anyone, according to Bloomberg.
Sun has accused WLFI of adding backdoors, harming governance, and treating holders unfairly, according to Crypto.news. WLFI denied those claims and said Sun used public posts, influencers, and bot activity to spread his position. The project wrote that Sun called its governance a "scam" and accused the project of treating the community as an "ATM." WLFI said those claims were false and damaging, stating the dispute raises wider questions about trust in decentralized finance. WLF Chief Executive Zach Witkoff responded to Sun's lawsuit by tweeting that the lawsuit "is a desperate attempt to deflect attention from Sun's own misconduct. His claims are entirely meritless and World Liberty looks forward to getting the case thrown out promptly," as reported by Bloomberg. Witkoff also criticized major media outlets, including The New York Times, for allegedly amplifying Sun's claims, as reported by Coinpedia. The company pointed out that Sun has previously faced scrutiny from the U.S. Securities and Exchange Commission, which has accused him of fraud in earlier cases.
