Key Highlights
Justin Sun filed suit against World Liberty Financial in California federal court on April 21.
Sun claims WLFI embedded an undisclosed blacklist function in its token smart contract and later used it to freeze his position.
His frozen position spans 595 million unlocked and 2.4 billion locked WLFI tokens, worth over $100 million at the time of the freeze.
The public dispute between Justin Sun and World Liberty Financial has moved into federal court. Sun filed a lawsuit on April 21 in California alleging that the Trump family-backed crypto project defrauded him out of his investment and used hidden smart contract controls to coerce him into minting its stablecoin. WLFI said it had no comment on the complaint.
The central technical allegation centres on a contract modification WLFI made in August 2025. According to Sun's filing, the project quietly added a blacklisting function to the WLFI token smart contract without disclosing it to investors or putting it to a governance vote. Control of the function sits with an anonymous 3-of-5 multisig wallet and a separate guardian wallet, giving WLFI the unilateral ability to freeze, restrict, or confiscate any holder's tokens. Sun's complaint states: "What was never disclosed, to me or to any investor, is that World Liberty embedded a backdoor blacklisting function in the smart contract used to deploy WLFI tokens."
The freeze came in September 2025, shortly after WLFI tokens were listed and Sun transferred approximately $9 million worth of tokens. WLFI subsequently pressured Sun to mint $200 million of USD1 on the Tron blockchain, threatened to report him to law enforcement, and, according to the complaint, threatened to burn his holdings outright. Sun says he invested an initial $30 million in late 2024, ultimately building a position worth around $75 million, partly on the strength of the Trump family association.
The dispute escalated in April. WLFI deposited 5 billion WLFI tokens into the Dolomite lending protocol on April 9 and borrowed $75 million against them. Bloomberg reported a broader investor revolt at WLFI on April 12. Sun publicly called a WLFI governance proposal published April 15 an "absurd governance scam" before filing his complaint six days later. He is seeking a court order to unfreeze his tokens, monetary damages, and injunctive relief barring WLFI from seizing or destroying his position. In his filing, Sun was careful to distance the legal action from Trump personally, writing that he "still strongly supports President Trump and the administration's pro-crypto stance."
