World Liberty Accuses Justin Sun of Misconduct as Legal Battle Over Frozen WLFI Tokens Escalates

Justin Sun has filed a lawsuit against World Liberty Financial in the U.S. District Court for the Northern District of California, alleging the company illegally froze roughly four billion WLFI tokens that he values at about $1 billion. The Trump-family-backed decentralized finance project has publicly dismissed the lawsuit as a “desperate” attempt to deflect blame while accusing Sun of unspecified misconduct, though it has not provided detailed evidence supporting those claims.

The dispute marks a sharp reversal in relations, as co-founder Eric Trump who had praised Sun months earlier — mocked the lawsuit on social media, comparing it to the infamous $6 million duct-taped banana artwork and calling the legal action “ridiculous.” Fellow co-founder Zach Witkoff also alleged misconduct by Sun but declined to elaborate, while a company spokesperson referred inquiries to statements made by Witkoff and Trump online.

Sun’s complaint outlines several accusations he says were privately made against him by World Liberty without supporting evidence. These include claims that he caused a roughly 40% price crash in WLFI on Sept. 1, 2025, the first day the token became tradable. According to the filing, the company also accused him of short-selling perpetual futures on centralized exchanges to drive down the token’s price. Sun denied these allegations, noting that his token transfers occurred hours after the steepest price drop, which he argues weakens the claim that he influenced the crash.

The lawsuit further states that World Liberty objected to Sun’s $100 million purchase of TRUMP tokens tied to another Trump-backed crypto venture. Sun claims the purchase had approval from a Trump family member involved in both projects. The company also allegedly accused him of acting as a straw purchaser for other investors in violation of his token purchase agreement.

Additional allegations cited in the filing include conducting prohibited transfers to exchanges such as HTX and Binance, as well as submitting inadequate know-your-customer documentation. Sun claims these accusations were vague and unsupported, adding that on Sept. 25, 2025, an individual identified as Chase Herro allegedly threatened to report him to U.S. criminal authorities over unspecified KYC concerns, despite repeated requests for clarification.

World Liberty has not yet filed a formal legal response to the lawsuit, leaving the allegations and counterclaims largely confined to public statements and court filings for now.

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