World Liberty Financial (WLFI) opened a legal counteroffensive against Justin Sun, accusing one of crypto’s most prominent billionaires of defamation after he sued the Trump-linked venture over frozen WLFI tokens that he says were once worth more than $1 billion.
The lawsuit, filed in Florida state court, escalates a dispute that has turned Sun from one of World Liberty’s earliest major backers into its most visible public adversary.
The company alleges that Sun made false statements to millions of followers on X after World Liberty froze tokens held by entities affiliated with him, while Sun says the case is an attempt to distract from the company’s own conduct.
He wrote on X:
“The alleged defamation lawsuit that World Liberty announced on X today is nothing more than a meritless PR stunt. I stand by my actions and look forward to defeating the case in court.”
The clash puts World Liberty, a crypto venture associated with President Donald Trump and his family, against a figure who has long occupied the center of digital-asset markets.
Sun founded the Tron blockchain and is closely associated with several crypto businesses and exchanges. At the same time, he has also spent years cultivating a public image as one of the industry’s most aggressive dealmakers.
Meanwhile, he was an early supporter of World Liberty, buying billions of WLFI tokens through an affiliated entity before the relationship collapsed.
World Liberty’s complaint alleges that Sun violated token agreements, engaged in prohibited transfers, used straw purchases, and participated in short-selling activity around WLFI’s public trading debut.
It also accuses him of launching a public campaign that damaged the company’s reputation after it enforced restrictions on his tokens.
Sun’s separate lawsuit casts the same events differently. He says World Liberty froze his WLFI assets without proper justification, stripped him of governance rights, and threatened to destroy his tokens after he refused to provide additional support for the company’s stablecoin strategy.
No court has ruled on either side’s allegations.
From early backer to legal opponent
Sun’s involvement with World Liberty began before WLFI became tradable. World Liberty says Blue Anthem, an entity wholly owned by Sun, bought 2 billion nontransferable WLFI tokens for $30 million in November 2024.
The company says Blue Anthem received another 1 billion tokens in connection with an advisory-board role and later bought about 1 billion more tokens in January 2025, bringing its holdings to roughly 4 billion WLFI.
That early support gave Sun a major position in the project and attached one of crypto’s best-known names to World Liberty at a time when the venture was still building credibility with investors.
Sun later said he invested because he believed World Liberty would advance decentralized finance and financial freedom.
However, the relationship soured after World Liberty restricted tokens linked to Sun before WLFI’s public trading launch.
Sun says the freeze prevented him from selling and from voting on governance matters. World Liberty says the tokens were subject to transfer restrictions from the start and that Sun knew the company had the authority to act against prohibited transfers.
World Liberty alleges market misconduct
World Liberty’s Florida complaint goes beyond reputational damage. It alleges that Sun or his affiliates engaged in conduct that created risk for WLFI holders before the token opened for public trading.
The company claims entities linked to Sun acquired WLFI for undisclosed parties through straw purchases and violated agreements governing the token.
It also alleges that Sun or his affiliates engaged in short selling or similar transactions despite his advisory role and large locked-token position.
World Liberty points to a series of transfers on Aug. 31, 2025, when an HTX-associated wallet allegedly moved three blocks of about $100 million in USDT each to a Binance deposit address less than 24 hours before WLFI began public trading.
The company says WLFI fell roughly 26% on Sept. 1 while open short bets rose about 23%, which it describes as consistent with a deliberate short-selling campaign.
Those claims remain allegations. Sun has denied wrongdoing and says World Liberty is trying to justify an improper freeze in retrospect.
Sun says WLFI used hidden control over investor assets
On the other hand, Sun’s April lawsuit attacks World Liberty’s token controls, arguing that the company marketed WLFI as part of a decentralized project while retaining the power to freeze holders through the smart contract.
In an April 12 post cited by World Liberty’s complaint, Sun said the company embedded what he described as a “backdoor blacklisting function” in the WLFI contract. He accused the project of freezing investor funds without disclosure or due process and said the controls violated basic blockchain principles.
World Liberty says that the statement was false and defamatory. The company argues its freezing authority was disclosed in the terms of sale, the token unlock agreement, and public blockchain information.
It also pointed out that Sun had praised WLFI after learning of the same authority he later attacked.
However, Sun’s position is that the disclosure was inadequate and that World Liberty’s use of the freeze function destroyed the practical rights attached to his holdings.
Considering the above, that dispute could become one of the central issues in the litigation: whether WLFI investors were clearly warned that the issuer could restrict transfers, and whether the company used that authority within the limits of its agreements.
Stablecoin pressure adds another layer
Meanwhile, Sun’s case also links the token freeze to World Liberty’s stablecoin ambitions.
The Tron founder alleges that World Liberty pressured him to support USD1, the company’s dollar-backed stablecoin, including by making purchases and distributing it on Tron.
Sun says the company restricted his WLFI after he declined to commit additional capital or promote USD1 at the scale World Liberty wanted.
World Liberty has denied that framing and says the freeze was tied to misconduct involving WLFI, not retaliation over USD1.
The stablecoin angle adds commercial weight to the fight. USD1 is central to World Liberty’s business model because dollar-backed stablecoins can generate revenue from cash-like assets, such as Treasury bills.
For a company using the Trump brand to compete in crypto, broader stablecoin adoption could be more important than WLFI trading alone.
A political and regulatory backdrop
Meanwhile, the dispute carries added weight because of World Liberty’s ties to the Trump family and Sun’s own regulatory history.
World Liberty is one of the highest-profile crypto ventures associated with Trump and his family. The project was co-founded by Trump and his sons, and its bylaws route 75% of WLFI token-sale revenue to the Trumps.
Sun has also been a politically sensitive figure in crypto. In March, he reached a $10 million settlement with the Securities and Exchange Commission (SEC) in a 2023 civil case alleging fraud, unregistered crypto securities sales, and undisclosed celebrity promotions. Sun made no admission of wrongdoing.
Those facts are not central to deciding whether World Liberty lawfully froze his tokens or whether Sun defamed the company.
They do, however, explain why the case has drawn attention beyond a normal contract fight between a token issuer and an investor.
What remains unresolved?
So far, the legal record now contains two competing stories.
Sun says World Liberty sold a decentralization narrative while retaining hidden powers that allow insiders to freeze, control, and potentially destroy investors’ assets. World Liberty says Sun knew the rules, violated them, and then used his public profile to damage the company after it enforced contractual restrictions.
The next phase will turn on evidence that has not yet been tested in court: the wording of the token agreements, the smart-contract changes, the circumstances around Sun’s frozen wallets, the alleged USD1 pressure campaign, the alleged short-selling activity, and whether Sun’s public statements were protected opinion or defamatory claims of fact.
For WLFI holders, the fight has already exposed a central tension in crypto finance: a token can trade on public blockchains while still being governed by private agreements, issuer-controlled smart contracts, and off-chain legal rights.
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