Cryptocurrency billionaire Justin Sun is suing World Liberty Financial, a crypto venture co-founded by President Donald Trump and his sons, alleging the company illegally blocked him from selling digital tokens worth up to $1 billion.

The lawsuit, filed on Tuesday in California federal court, also accuses World Liberty Financial of trying to pressure Sun into investing "hundreds of millions of dollars to mint USD1, World Liberty's stablecoin." The complaint alleges that the company froze his World Liberty Financial tokens after Sun refused to commit more money to the business.

Sun also alleged that World Liberty Financial secretly changed contractual rules governing when owners of its tokens could sell their holdings, giving the company "blacklisting power" over who could transfer the tokens.

"There was no governance proposal (let alone a vote of token holders) on whether World Liberty should have this power, nor did World Liberty announce to token holders what the company was doing. World Liberty simply took the power for itself," the complaint alleged.

Reached for comment, World Liberty Financial pointed to social media posts from co-founder and CEO Zach Witkoff and co-founder Eric Trump. Witkoff dismissed Sun's allegations as "entirely meritless."

"Justin Sun's recent lawsuit against [World Liberty Financial] is a desperate attempt to deflect attention from Sun's own misconduct," Witkoff wrote on social media on Wednesday. "He engaged in misconduct that required World Liberty to take action to protect itself and its users. World Liberty will continue to take all necessary steps to protect its community."

The litigation threatens to chill Sun's relationship with President Trump. The entrepreneur, best known as the founder of blockchain company Tron, revealed last year that he was the largest holder of another Trump-backed crypto token, dubbed $TRUMP.

"The only thing more ridiculous than this lawsuit is spending $6 million on a banana duct-taped to a wall. We are incredibly proud of the [World Liberty Financial] team," Eric Trump wrote in a Wednesday social media post, referring to Sun's 2024 purchase of an art piece called "Comedian."

"Fraudulent scheme"
In a social media post on his rationale for the lawsuit, Sun said he remains a supporter of Mr. Trump and blamed "certain individuals" for the alleged issues.

"They wrongfully froze all of my tokens, stripped me of my right to vote on governance proposals, and have threatened to permanently destroy my tokens by 'burning' them — all without any proper justification," he wrote. "I do not believe President Trump would condone these actions if he knew about them."

Sun's complaint also accused World Liberty Financial executives, including co-founder Chase Herro, of seeking to "leverage the Trump brand" to illegally drive profits.

"Even though Mr. Sun was one of World Liberty's anchor investors and biggest supporters, that did not stop Mr. Herro and the company's other principals from making Mr. Sun a prime target of their fraudulent scheme."

Diminishing returns
Sun portrayed his support of World Liberty Financial as key to its early success, claiming in the lawsuit that its tokens, which trade under the $WLFI ticker, saw "lackluster demand" and generated just $22 million in sales in the first month. After he bought $45 million worth of tokens, investors poured in, with the company eventually raising about $550 million, he claims.

Once the World Liberty tokens became tradable on Sept. 1, however, Sun alleges he was blocked from selling them. Sun and his businesses "will be unable to realize any economic value from their tokens — which have at times been valued at $1 billion or more — as long as the tokens are unlawfully frozen," the complaint states.

Since Sept. 1, $WLFI tokens have lost about 25% of their value, according to CoinGecko.

The complaint also alleges World Liberty borrowed at least $75 million in stablecoins by pledging billions of its own $WLFI tokens as collateral, then converted a portion of those funds into cash. That activity could add downward pressure on the token's price and make it harder for holders to trade the crypto, the suit alleges.

The lawsuit further claims that these developments point to mounting financial strain at World Liberty and alleges the company could struggle to meet its obligations. It cited those concerns as one reason the court should block World Liberty from invalidating Sun's tokens.

"World Liberty's collateral is rapidly deteriorating, its governance credibility has been undermined and market confidence in the company is eroding," the complaint alleges.

Source