World Liberty Financial (WLFI), the cryptocurrency venture tied to the U.S. President Donald Trump and his family, has filed a defamation lawsuit against Justin Sun in Florida state court today. The filing marks a massive escalation in a month-long legal battle over token control, fraud allegations, and the project’s “decentralized” governance.
In a series of posts on X, WLFI alleged that Sun made false claims about its operations as part of what it described as a coordinated effort to damage its reputation. It also alleged that Sun sought to pressure the project into releasing cryptocurrency that had been frozen and linked to his entities.
Sun publicly responded to the lawsuit on X, calling it a “a meritless PR stunt,” while affirming he stands by his prior actions and intends to prevail in court. The case brings renewed attention to governance and transparency issues in crypto projects, especially around token custody and decision-making.
Dispute over tokens and governance
The conflict traces back to late 2024, when Sun-linked entity Blue Anthem became the project’s largest backer with a $75 million investment. However, WLFI later used an embedded smart contract “blacklist” function to freeze Sun’s entire stake—roughly 2.94 billion tokens.
The decision to freeze the assets drew criticism from Sun, who publicly called WLFI’s governance a “scam” and raised concerns about possible “backdoors” in the system. WLFI rejected the claims, saying its governance model is transparent and community-led.
The company also alleged that Sun spread negative narratives through social media and third parties. In a statement, WLFI said Sun’s comments were aimed at harming the token’s value, adding that the freeze mechanism was clearly outlined in its contractual terms. It framed Sun’s reaction as retaliation rather than a legitimate governance dispute.
Broader scrutiny and political links
The dispute comes as World Liberty Financial faces broader scrutiny over its fundraising activities. The project has raised more than $550 million and later conducted additional private token sales involving about 5.9 billion tokens, generating hundreds of millions of dollars.
Under the project’s disclosures, DT Marks DEFI LLC, an entity affiliated with the Trump family, is entitled to receive 75% of the net proceeds from these sales. Critics argue the project’s structure allows insiders to profit while early retail buyers remain locked out of 80% of their holdings with no clear unlock schedule.
WLFI has rejected criticism of its operations and pushed back on media coverage, including reporting by The New York Times, saying, “They should be ashamed of themselves.” The White House has denied any wrongdoing, stating that the administration supports crypto innovation while maintaining compliance with legal standards.
The lawsuit between WLFI and Sun now adds another layer of tension to broader debates over governance, fundraising practices, and influence in the crypto sector.
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