Justin Sun Sues Trump-Backed Crypto Venture Over Frozen Tokens

Justin Sun has filed a lawsuit against World Liberty Financial, a crypto venture backed by former US President Donald Trump, over frozen WLFI tokens and governance rights. The lawsuit was filed in California federal court and seeks to unfreeze Sun's tokens, restore his voting rights, and prevent the destruction of his holdings.

The dispute centers on an April 15 governance proposal that would have kept 80% of early investor tokens from trading until 2030. According to the proposal, tokens would be subject to a two-year cliff followed by a two-year vesting schedule. This move has been met with criticism from investors who argue it punishes dissenting holders and blocks fair participation in governance.

Sun claimed that World Liberty had frozen all his tokens, revoked his voting rights, and left him unable to participate in governance decisions related to the project. He also accused the project of using a hidden blacklist function in its smart contracts, which he said gave the team power to freeze wallets and reallocate tokens.

The lawsuit arrives as World Liberty faces wider scrutiny over its finances and structure. Sun claimed that the project is near collapse, has pulled liquidity from USD1 pools, and lacks sufficient reserves to support redemptions.