Olga Kharif
Crypto billionaire Justin Sun and his companies sued World Liberty Financial, a crypto project co-founded by President Donald Trump, accusing the company of extortion and an “illegal scheme” to seize his tokens.
In a complaint filed in San Francisco federal court, Sun also claimed that “World Liberty is on the verge of collapse” and questioned whether it holds enough reserves to back its USD1 stablecoin.
Sun invested a total of $US45 million ($62.9 million) to buy three billion of World Liberty’s WLFI tokens in 2024 and 2025, and was awarded another billion WLFI tokens for advising the project, according to the suit.
But he says his relationship with World Liberty’s team soured mid-last year, after he declined to provide more investment and support to the project. In recent weeks, Sun and World Liberty have been exchanging punches on social network X amid the project’s deepening clash with early investors.
World Liberty declined to comment. Eric Trump, a co-founder of the project, took to X to respond, poking fun at Sun, who achieved notoriety in 2024 when he bought then ate a piece of conceptual art consisting of a simple banana, duct-taped to a wall, for $US6.2 million.
“Unfortunately, certain individuals on the World Liberty project team have been operating the project in a manner that goes against President Trump’s values,” Sun said in a post on X.
In the complaint, Sun alleged that he and his companies suffered “hundreds of millions of dollars in damages” when World Liberty “secretly installed powers” that enabled the company to freeze Sun’s tokens and prevented him from selling any.
Burn tokens
The company also seized the power to burn Sun’s tokens, even though they are located in his own digital wallet, and acquired new blacklisting powers to restrict the transfer of users’ tokens, according to the complaint. In November, Sun said, World Liberty implemented a change that allowed it to reallocate WLFI tokens from any user to another.
Sun alleged that World Liberty has been “trying to pressure” him to invest in its USD1 stablecoin and promote its use on the Tron blockchain, which he started, as well as “attempting to extract an equity investment in World Liberty’s holding company.” When by July it became clear he wouldn’t commit, “World Liberty principals became hostile toward Mr. Sun,” according to the complaint.
In September, a co-founder of the project, Chase Herro, threatened to burn Sun’s tokens, which were then worth $US776 million, according to the complaint. World Liberty also threatened to report Sun to criminal authorities if he tried to vindicate his rights, “a pressure tactic that itself qualifies as criminal extortion,” according to the complaint.
Sun says World Liberty said it froze his WLFI tokens in part because the company was upset he purchased $US100 million of Trump’s memecoin.
Herro didn’t immediately respond to a request for comment outside regular business hours.
World Liberty agreed in December not to burn Sun’s tokens during negotiations that continued until late February, according to the complaint.
Sun alleged that World Liberty “appears to be in financial distress.” World Liberty recently took out a loan using WLFI tokens as collateral. The company has said it has enough capital to avoid defaulting on that loan.
Sun asked the court to unfreeze his tokens, award unspecified monetary damages and prevent World Liberty from burning or encumbering his tokens.
Early investors in the project are still unable to trade 80 per cent of their tokens. A proposal currently being considered would delay access to trading the tokens for at least two years. The project’s insiders won’t have access to their tokens for even longer under the proposal.
Bloomberg
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Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: www.smh.com.au
