World Liberty Financial sues Justin Sun over alleged token freeze

World Liberty Financial has told major investor Justin Sun it will see him in court after Sun accused the firm of embedding an undisclosed token-freeze in the WLFI smart contract that blacklisted his wallet and restricted his assets.

The dispute follows a months-long investor relationship that included more than $75 million in funding. WLFI disclosed a $30 million injection tied to Sun in November 2024. In December 2024 the project sold a cbBTC position worth $10.4 million to acquire wrapped bitcoin and named Sun an advisor the next day.

On-chain records show Sun’s WLFI wallet was flagged and placed on a blacklist in September 2025 after outbound transfers, including one for about $9 million. Sun says the contract contained a hidden mechanism that allowed WLFI to restrict token holders’ balances without notice and that the freeze left him unable to sell, hedge or rebalance, producing roughly $60 million in unrealized losses by his estimate. WLFI has denied the claims and posted: “We have the contracts. We have the evidence. We have the truth. See you in court pal.”

WLFI’s token price has fallen sharply since the dispute surfaced. Tokens hit a record low of $0.077 on April 11 and were trading at $0.079 at press time, down about 76% from an all-time high of $0.30 set last September.

A DeFi analyst flagged that Dolomite, a lending protocol, is allowing roughly $292 million to be borrowed against about $400 million in WLFI tokens used as collateral, with $158 million already drawn in a USD-pegged product. The analyst noted Dolomite’s founder is WLFI’s chief technology officer, a connection that raises questions about potential conflicts between the lending activity and WLFI token governance.

No legal papers related to the dispute have appeared in public court dockets as of this report. Market participants and on-chain observers are watching for formal filings that could clarify whether a contractual or technical freeze exists in the token code, whether it was disclosed to investors and whether any party exceeded authorized powers.

Token freeze and blacklist functions are sometimes included in smart contracts for emergency security or regulatory reasons. Such features draw scrutiny when they are undisclosed, when governance is unclear, or when they are applied in ways investors view as arbitrary.