World Liberty Financial (WLFI), a decentralized finance project backed by the Trump family, has initiated a defamation lawsuit against Tron founder Justin Sun. The project announced the legal action via a thread on X, accusing Sun of orchestrating a coordinated smear campaign to damage its reputation and drive down the price of its native $WLFI token. This lawsuit represents the latest escalation in a bitter legal dispute between the two parties.
According to WLFI, the conflict began after an entity linked to Sun, identified as Blue Anthem, purchased WLFI tokens in November 2024. The project later stated that Sun-linked entities engaged in prohibited transactions, including the transfer of WLFI tokens to the Binance exchange. In response, WLFI exercised its right to freeze the tokens, a mechanism it claims was clearly disclosed in its Terms of Sale and associated agreements. WLFI asserts that this freeze function was utilized to protect the project's ecosystem and community.
Following the token freeze, WLFI alleges that Justin Sun launched a coordinated media campaign against it. The project claims Sun used public posts on social media, paid influencers, and bot networks to broadcast accusations to over 4 million followers. Sun allegedly labeled WLFI's governance a 'scam' and accused the project of treating the community as an 'ATM,' also claiming that the project's smart contracts contained a hidden 'backdoor' used to arbitrarily freeze user funds. WLFI vehemently denies these claims, asserting that its governance 'is transparent and community-driven' and that the freeze function was a known and disclosed part of the token sale.
This new defamation suit comes just weeks after Justin Sun filed his own federal complaint against World Liberty Financial in a California court. In his earlier lawsuit, Sun alleged that WLFI secretly installed an undisclosed 'blacklisting function' in its smart contracts, which was used to freeze his tokens and strip him of his governance voting rights. Sun described the action as an 'illegal asset seizure scheme' and accused the project of 'wrongful token freeze, fraudulent misrepresentation, defamation, and running an extortion racket.' Reuters reported that Sun claims he was blacklisted after refusing to commit additional capital to the project.
The dispute has attracted significant attention due to its intersection with high-profile political figures and major players in the crypto space. WLFI is backed by the family of U.S. President Donald Trump, while Justin Sun was one of its largest private investors, with an initial commitment of approximately $75 million. Court filings indicate that Sun at one point controlled between 3 billion and 4 billion WLFI tokens, an investment he valued at up to $1 billion at its peak. The legal battle has raised fundamental questions about the use of control features like blacklists and freeze functions in supposedly decentralized token projects, testing the boundaries between community protection and asset confiscation.
