Justin Sun sues World Liberty over $75M frozen WLFI tokens

Justin Sun filed a lawsuit in U.S. District Court in California on April 2, 2026, accusing World Liberty Financial of wrongfully freezing at least $75 million worth of his WLFI tokens. Sun asks a jury to unfreeze the tokens, award damages and issue an injunction to prevent the tokens from being destroyed.

The complaint alleges World Liberty used a hidden blacklist function in its smart contracts to freeze Sun’s holdings and has threatened to burn the tokens, which Sun says blocks his ability to vote on governance proposals. The filing lists claims including fraud in the inducement, unjust enrichment, conversion and breach of contract.

Sun’s filing says the project is marketed as decentralized but operates with centralized controls. On-chain data cited in the complaint indicates a small cluster of wallets controls about 60% of governance voting power. The complaint cites recent protocol proposals that would lock early investor tokens until 2030 and could allow permanent freezes of dissenting holders’ balances. Sun wrote in the complaint, ‘This proposal is bad for the community, but because World Liberty has frozen my early investor tokens, I cannot vote for or against the proposal.’

The complaint cites the project’s ‘Gold Paper’ as showing nearly 75% of net income allocated to entities linked to former President Donald Trump while ordinary token holders receive no share of protocol revenue. Sun and other critics say project leaders used billions of WLFI tokens as collateral for a $75 million stablecoin loan. The filing describes the project as ‘on the verge of collapse’ and alleges an extortion scheme.

World Liberty has pushed back, calling the claims baseless and saying the freeze was a compliance measure after it determined Sun sold WLFI on the HTX exchange while urging retail investors to lock their tokens for yield. The project points to its risk disclosures, which allow blocking and freezing addresses linked to illegal activity or terms violations, and says Sun breached his investor agreement. World Liberty says the freeze involved roughly 595 million tokens.

The dispute has created a rift among Trump-aligned crypto supporters. Sen. Elizabeth Warren called the case an example of ‘presidential crypto corruption,’ arguing the administration favors wealthy backers while retail investors have suffered as WLFI’s price fell more than 90% from earlier levels.

The case remains in federal court in California. World Liberty’s executives say they will defend the company’s actions as lawful compliance. The litigation adds to legal and political scrutiny of how governance power, smart-contract code and business arrangements operate in high-profile crypto projects.