World Liberty Financial has filed a defamation lawsuit against crypto billionaire Justin Sun, escalating a legal battle that began when Sun sued the Trump-affiliated project last month over claims that it unfairly froze his WLFI token holdings. The back-and-forth pits two controversial players against each other in what amounts to a public finger-pointing contest, with World Liberty Financial tied closely to the Trump family through co-founders including Donald Trump Jr. and Eric Trump, who have helped oversee a venture that played a key role in reportedly generating more than $1.4 billion in crypto-related income for the family in 2025 alone.
From World Liberty Financial’s perspective, Sun crossed the line after the company froze his tokens to protect the ecosystem. In its X thread posted Monday morning, the project detailed how Sun’s entities allegedly engaged in prohibited transfers of WLFI tokens to Binance, straw purchases, and short sales while fully aware of the company’s contractual right to freeze holdings. It accused him of launching a coordinated smear campaign that is intended to tank the price of WLFI, which is already down more than 70% over the past year. The lawsuit seeks damages and a public retraction of Sun’s statements to his nearly 4 million X followers.
Today, we are filing a lawsuit against Justin Sun for defamation. Sun has launched a coordinated media smear campaign against World Liberty Financial and refused to stop even when confronted with the truth.
Here’s the story.🧵
— WLFI (@worldlibertyfi) May 4, 2026
Sun tells a different story. He began complaining about the freeze in September, shortly after WLFI tokens became tradable, and filed his own federal lawsuit in California last month. Court filings show he purchased around 3 billion WLFI tokens starting in 2024 (worth around $45 million at the time), in addition to another 1 billion he received as an advisor. He alleges the company secretly installed tools allowing it to freeze, restrict, or even burn his holdings without cause, stripped his voting rights, and pressured him to make additional investments up to $200 million in a related stablecoin. Notably, Sun ramped up his public attacks on World Liberty Financial only after the SEC settled its long-running case against him and his companies in March for $10 million. He has since referred to himself as a “victim” of the company.
World Liberty and Sun are both controversial entities in crypto. Each has faced a variety of accusations of wrongdoing, though Sun’s track record stretches back further because he entered the space much earlier than the Trump-linked project.
Recent controversies around World Liberty Financial include borrowing roughly $75 million in stablecoins by pledging 5 billion WLFI governance tokens as collateral on the closely affiliated Dolomite lending platform. Critics compared the move to FTX’s circular borrowing tactics before its 2022 collapse. Separately, a recent Bloomberg report revealed the project quietly sold an additional 5.9 billion WLFI tokens to private investors for hundreds of millions of dollars while early buyers remained locked out of 80% of their holdings with no clear unlock schedule.
Broader Trump administration corruption allegations have also swirled around the venture. A UAE investment firm linked to National Security Adviser Sheikh Tahnoon bin Zayed Al Nahyan bought a 49% stake for $500 million, with $187 million paid upfront to Trump family entities. That deal came right before the UAE gained approval to purchase hundreds of thousands of Nvidia AI chips that were previously blocked on national security grounds. Binance, whose co-founder Changpeng Zhao received a Trump pardon, holds about $2 billion in World Liberty Financial’s USD1 stablecoin, generating tens of millions in annual revenue for the project. Sun himself featured prominently in a letter to the SEC from House Democrats raising pay-to-play concerns over the crypto industry’s influence due to his large holdings in WLFI and the TRUMP memecoin.
8. Better white paper writing capability (Ctrl+C + Ctrl+V much higher efficiency than keyboard typing new content)
— vitalik.eth (@VitalikButerin) April 6, 2018
Sun’s own controversies date back to the industry’s early days. The SEC’s now-settled case accused him of orchestrating wash trading through more than 600,000 fake trades that inflated TRX volume and generated $31 million in proceeds from unregistered token sales, along with undisclosed payments to celebrities for promotions. In 2018, shortly after launching TRON, he faced plagiarism claims when the project’s whitepaper copied large sections, diagrams, and technical concepts from other crypto projects without credit. Even Ethereum co-founder Vitalik Buterin publicly mocked the effort. A Bloomberg report last year also found Sun controls 63% of all TRX tokens, fueling long-standing worries about centralization on the network he markets as decentralized. These are just a few examples of the seemingly endless number of controversies Sun has found himself in over the years.
All of this comes at a time when crypto is facing a crisis of purpose due to all of the centralization that has crept into the space over time, and hacks of crypto projects are at an all-time high. This legal battle between two alleged crypto grifters is obviously not helpful, as it reinforces the view that the entire space is a scam at a time when the crypto lobby is seeking regulatory clarity in Congress, and voters already don’t trust Trump to police the industry.
READ MORE: Crypto Investor at Center of Trump Corruption Allegations Now Sees Himself as ‘Victim’
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