The dispute stems from WLFI’s decision to freeze tokens linked to a Sun-affiliated entity after they were transferred to Binance, with WLFI stating the action was permitted under disclosed token sale terms. Sun responded with his own lawsuit, alleging that WLFI used a hidden blacklisting function to freeze his holdings as part of an illegal asset seizure.
WLFI Takes Legal Action Against Justin Sun
World Liberty Financial (WLFI) decided to escalate its dispute with Justin Sun into a full-scale legal battle, and accused the Tron founder of defamation after a series of public allegations tied to the project’s token controls and governance structure.
The conflict centers on WLFI’s decision to freeze tokens linked to a Sun-affiliated entity, Blue Anthem, after it purchased WLFI tokens in late 2024 and later transferred a portion to Binance. According to WLFI, the freeze was executed under conditions that were explicitly outlined in its token sale documentation, and the project holds firm that these controls were always part of its compliance and risk management framework.
Rather than resolving the issue in private, WLFI claims Sun initiated a coordinated campaign to damage its reputation, and alleged that influencers and automated bot networks were used to spread claims that WLFI’s governance is fraudulent and that its smart contracts contain a hidden mechanism allowing arbitrary fund freezes.
The project firmly denied these accusations by stating that its governance remains transparent and community-driven, and that the freeze functionality was clearly disclosed from the outset. WLFI is now committed to pursuing legal action to defend its reputation and its token holders.
The dispute intensified even more with Sun’s own lawsuit that was filed in California, where he alleges that WLFI secretly embedded a “backdoor blacklisting function” into its smart contracts. He claims this mechanism was used to freeze a big portion of his holdings after he declined to inject additional capital into the project.
Sun’s complaint frames the incident as an illegal asset seizure, alongside allegations of fraudulent misrepresentation and defamation. Reports indicate that at one point, Sun controlled billions of WLFI tokens, and his investment reached a peak valuation close to $1 billion before the freeze occurred.
WLFI pushed back by explaining that its use of blacklist and freeze tools is intended to protect users. However, critics question whether these controls were really transparent or appropriately governed.
WLFI’s price action over the past 24 hours (Source: CoinCodex)
WLFI’s price action over the past 24 hours has shown some resilience. The token climbed by over 4%, trading around $0.061, with a steady upward trend after earlier volatility. Still, with lawsuits now unfolding on both sides, WLFI’s trajectory may hinge not just on market sentiment, but on legal outcomes.
