Billionaire takes Trump-backed firm to court

By TheStreet Roundtable

about 22 hours ago

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One of crypto's most recognizable billionaires has taken a Trump family-backed company to a California federal court.

On April 22, Tron founder Justin Sun filed a lawsuit against World Liberty Financial, a decentralized finance project launched in late 2024 and backed by President Donald Trump and his family.

It is the issuer behind the WLFI token and USD1 stablecoin. Eric Trump and Donald Trump Jr. are actively involved in its management.

The fallout between Justin Sun and World Liberty

Sun invested $75 million in World Liberty Financial in late 2024, taking on an advisory role at a time when the project was still finding its footing.

World Liberty once even publicly credited Sun with helping rescue the project from a slow start.

That goodwill collapsed in September 2025. World Liberty blacklisted Sun's wallet, freezing roughly $107 million worth of WLFI governance tokens after he attempted to move them.

Sun denied any wrongdoing.

The dispute might have remained a behind-the-scenes grievance, but a report published on April 9, 2026, reignited it publicly.

The investigation revealed that World Liberty had deposited five billion of its own WLFI tokens into Dolomite, a DeFi lending platform co-founded by a World Liberty adviser, as collateral, and borrowed approximately $75 million in stablecoins against them.

The move pushed Dolomite's USD1 lending pool to 100% utilisation, temporarily locking ordinary depositors out of their own funds.

Three days later, Sun went public. He accused World Liberty's team of treating its users like a "personal ATM," calling himself the project's "first and single largest victim."

Sun alleged that governance votes had been neither fair nor transparent. He also surfaced a more serious claim that World Liberty had secretly embedded a "backdoor blacklisting function" into its smart contract, giving company insiders unilateral power to freeze any token holder's assets without notice, without a governance vote, and without recourse.

World Liberty hit back, accusing Sun of "playing the victim while making baseless allegations to cover up his own misconduct," and posting a thinly veiled legal threat, "See you in court pal." They have not filed any suit.

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Sun alleges breach of contract

Filed on April 21, 2026, in the U.S. District Court for the Northern District of California, the lawsuit was brought by Sun and his two British Virgin Islands companies, Blue Anthem Limited and Black Anthem Limited, against World Liberty Financial.

As per the lawsuit, Sun invested $45 million in WLFI tokens between November 2024 and January 2025, and received an additional one billion tokens as an advisor.

Sun is suing for breach of contract, fraud, and conversion, seeking damages and injunctive relief.

He alleges World Liberty secretly embedded a blacklisting function in its smart contract, froze his tokens twice, stripped his governance voting rights, threatened to permanently burn his holdings, and attempted to extort him into minting $200 million in USD1.

Soon after, in a post on X, Sun wrote that he has always been and will continue being a supporter of President Donald Trump and the administration for their support in making the United States crypto-friendly.

"Unfortunately, certain individuals on the World Liberty project team have been operating the project in a manner that goes against President Trump's values. 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."

Sun added that he had attempted to resolve the dispute privately before turning to litigation.

"I do not believe President Trump would condone these actions if he knew about them," he said.

TheStreet Roundtable has reached out to World Liberty Financial for a comment and has not received any response by the time of publication.

The governance proposal at the heart of the dispute

Sun's lawsuit also took direct aim at a governance proposal World Liberty published on April 15, which he argued is designed to punish investors who do not actively comply with its new terms.

Under the proposal, all advisor, founder, team, and partner tokens, totalling over 45 billion WLFI tokens, would be assigned a two-year cliff followed by a three-year linear vesting schedule. There is also a mandatory 10% burn on opt-in, permanently destroying up to 4.5 billion tokens.

Early supporter tokens, over 17 billion WLFI, face a two-year cliff and two-year vest, though with no burn penalty.

The sting is in what happens to those who do not actively accept. Their tokens are locked indefinitely under existing terms.

Because World Liberty froze Sun's holdings in September, he cannot vote his early investor tokens for or against the proposal at all.

"This proposal is bad for the community," Sun wrote, "but because World Liberty has frozen my early investor tokens, I cannot vote them for or against the proposal."

World Liberty, for its part, framed the measure as a long-term governance commitment, arguing that 62 billion tokens remaining locked for at least two years demonstrated the ecosystem's seriousness.

The courts may yet decide who is right.