A high-profile clash between Justin Sun, a prominent blockchain entrepreneur behind TRON and advisor to crypto exchange HTX, and World Liberty Financial (WLFI), a new crypto project linked to the TRUMP memecoin, has escalated after WLFI froze a massive $107 million worth of Sun’s unlocked tokens, sparking debate over protocol governance and investor rights.
Sun claims hidden freeze mechanism behind token lock
Sun emerged as the leading backer of WLFI in late 2024, initially investing $30 million and eventually scaling his exposure to $75 million by January 2025, at which point he was also named as an advisor to the project. Additionally, he committed $100 million to the related TRUMP-themed memecoin, reaching a total stake near $175 million.
The WLFI token officially hit the market on September 1, 2025, starting at $0.25 and peaking close to $0.33, with only 20% of presale tokens unlocked at launch. Just days later, on-chain data shows Sun transferring roughly 50 million tokens to HTX, a platform where he serves in an advisory role.
During this period, HTX began offering large yield incentives for depositing and locking WLFI tokens. Allegations soon surfaced from WLFI, accusing Sun of selling tokens on the exchange, including balances linked to locked user funds.
WLFI has claimed that Sun planned to exit early, using locked retail tokens as liquidity and refilling balances over time with future vestings. Project officials stated that logs supported these accusations, prompting the move to freeze Sun’s wallet on the grounds of breaching the investment agreement.
The freeze action locked approximately 595 million of Sun’s unlocked tokens, valued at $107 million, together with billions more subject to vesting schedules. Nansen blockchain analytics data revealed that Sun’s wallet transfer occurred after a price decline, not before, countering some criticism.
Sun went public, describing himself as “the first and single largest victim” of what he called a hidden backdoor blacklist function in the contract. He argued that governance voting authorizing the freeze had undisclosed elements and outcomes determined in advance.
WLFI’s DeFi loans and fund movements draw further questions
In early 2026, the WLFI treasury began leveraging Dolomite, a decentralized lending platform, by depositing its stablecoin and governance token as collateral and borrowing against this position.
Public blockchain records show that by April 9, 2026, WLFI had posted 5 billion tokens as collateral and borrowed about $75 million in stablecoins, sending over $40 million of that to Coinbase Prime—a platform often tapped by institutions for direct fiat transactions.
The Dolomite platform was co-founded by Corey Caplan, who advises WLFI and has operated in a technical leadership capacity. At one point, over half of Dolomite’s liquidity consisted of WLFI tokens.
Due to the substantial utilization of the USD1 pool on Dolomite, most depositors could not withdraw funds during this period. The $40 million transfer to Coinbase Prime coincided with U.S.-Iran diplomatic announcements involving former President Trump, heightening scrutiny on the moves.
WLFI rejected the criticism as misinformation, explaining that their position was nowhere near liquidation and characterizing themselves as an “anchor borrower” driving returns for other platform users.
Public exchanges on X escalated as WLFI’s official account directly addressed Sun, telling him,
“See you in court pal.”
Sun, for his part, challenged the project’s anonymous leadership to reveal themselves and face accountability.
World Liberty Financial, the project at the center of this dispute, describes itself as an ecosystem supporting the TRUMP memecoin and related DeFi protocols. Justin Sun is the founder of TRON and is recognized for his influential presence and investments in multiple blockchain ventures, holding advisory roles at exchanges including HTX.
