Justin Sun, the largest investor in World Liberty Financial, filed a lawsuit on Tuesday in the U.S. District Court for the Northern District of California, alleging the company illegally froze his holdings of WLFI tokens, according to the lawsuit. Sun purchased $45 million worth of WLFI tokens, approximately 3 billion tokens, and was later awarded an additional 1 billion tokens after being named an adviser, the lawsuit states. Sun claims the company is misleading investors and has set up a system that grants company officials unilateral power over user accounts, including the ability to freeze them, according to his allegations. In September, Sun claimed on social media that the company had frozen his token holdings, a high-confidence fact. Earlier this month, he alleged on X that World Liberty had secretly embedded a 'backdoor blacklisting function' in blockchain contracts, giving them unilateral power to freeze, restrict, and confiscate property rights, according to his posts. World Liberty responded to Sun's allegations on X with: 'We have the contracts. We have the evidence. We have the truth. See you in court pal,' a high-confidence fact. The company also accused Sun of engaging in misconduct that warranted the freeze and seemed to threaten a lawsuit, according to its response.
The financial stakes in the dispute are significant. Sun said he spent at least $75 million on World Liberty tokens, at one point becoming its largest investor, according to his statements. However, the lawsuit states he bought $45 million of WLFI tokens, a discrepancy that could affect the credibility of Sun's claims and the scale of his alleged losses. According to Reuters calculations, Sun's portfolio of 4 billion WLFI tokens is worth roughly $320 million. But analysis by Bubblemaps, a blockchain analytics firm, indicates that the value of Sun's frozen holdings declined by more than $80 million, to about $43 million, according to the firm's report. The huge difference in valuation likely stems from different token prices at different times, affecting the reported financial impact of the freeze. The value of World Liberty's primary token, WLFI, has lost 74% of its value since August, and as of Monday it was trading at around 8 cents, according to market data.
World Liberty Financial is the most prominent of several lucrative crypto businesses co-founded or controlled by the Trump family, according to a Reuters report. The company was launched in 2024 during Trump's third presidential campaign and was co-founded by Trump's three sons, with Trump listed as a co-founder emeritus, according to company disclosures. Trump was removed from any official positions at World Liberty upon taking office, and the White House has said Trump is not involved in managing his family's crypto holdings, according to official statements. The Trump family has already made more than $1 billion from World Liberty, according to a Reuters analysis. World Liberty's bylaws state that 75% of revenue from WLFI token sales is routed to the Trumps, according to the company's governing documents. The White House did not immediately respond to a request for comment on the lawsuit, according to a spokesperson.
World Liberty is under increasing scrutiny from some investors who have complained about lack of transparency, centralized governance, and failure to respond to community complaints, according to a Reuters report. WLFI tokens do not carry ownership in the company and holders are not entitled to dividends, though they gain a limited say in governance, according to the token's terms. The legal basis for World Liberty's ability to freeze tokens remains unclear, and it is unknown how many other investors have complained about the company's practices. Eric Trump, who is involved with the company, will be the keynote speaker at the Bitcoin 2026 conference, according to event organizers.
Sun has a history of legal troubles with U.S. regulators. The Securities and Exchange Commission charged Sun in 2023 with fraud over crypto trades and illicit promotion; the case was dismissed after he agreed to pay a $10 million fine, according to court records. World Liberty Financial declined to comment on the lawsuit, according to a company representative. A spokesperson for the company said Sun is not an advisor and has never held an operational role in the company, according to the spokesperson. The specific misconduct that World Liberty alleges Sun engaged in to justify the freeze has not been disclosed. The exact current value of Sun's frozen WLFI tokens also remains unknown, as does whether the White House or President Trump will comment on the lawsuit.