Tron founder Justin Sun has filed a federal lawsuit against World Liberty Financial (WLFI), the Trump-family-backed DeFi platform, accusing it of fraud, token confiscation, and operating a project now described in the complaint as being on the verge of financial collapse.
Lawsuit filed in California federal court
Sun filed the suit on Tuesday, April 22, 2026, in a California federal court. The complaint, filed as YUCHEN “JUSTIN” SUN et al. vs. WORLD LIBERTY FINANCIAL LLC, lists multiple causes of action: breach of contract, anticipatory breach of contract, fraud in the inducement, conversion, unjust enrichment, breach of implied covenant of good faith and fair dealing, and declaratory relief.
Sun and his companies are seeking a jury trial. Their demands include an order compelling WLFI to unfreeze his tokens, monetary damages to be determined at trial, permanent injunctive relief blocking WLFI from seizing, burning, or destroying any of his holdings, and restitution in the alternative to breach of contract damages.
In a post on X announcing the filing, Sun said he had made repeated good-faith attempts to resolve the dispute privately before resorting to litigation. “The project team has refused my requests to unfreeze my tokens and restore my rights as a token holder,” he wrote. “They have left me with no choice but to turn to the courts.” Sun added that the lawsuit does not affect his support for President Donald Trump or his administration’s pro-crypto policy agenda, and pointed to what he described as individuals within the WLFI team acting against Trump’s values.
Your completely free resource hub designed to boost your knowledge of cryptocurrencies
The backstory: a $75 million bet turned frozen
Sun became WLFI‘s largest outside investor in November 2024, committing an initial $30 million and joining the project in an advisory capacity. In January 2025, he added $45 million more, bringing his total direct investment to $75 million. His broader exposure to Trump-affiliated crypto projects, including the TRUMP memecoin, reached approximately $175 million. At the time, WLFI co-founder Zak Folkman publicly credited Sun at Consensus Hong Kong with helping rescue the project from a slow fundraising start.
The relationship soured in September 2025, when WLFI tokens became transferable. Sun moved approximately $9 million worth to external wallets, describing the transactions as routine test deposits. WLFI flagged the moves as a potential breach of his investor agreement and activated a blacklist function embedded in the token’s smart contract, freezing around 595 million of his unlocked tokens, then valued at over $107 million. By April 2026, the continued decline of WLFI’s token price had reduced that frozen position to approximately $43 million.
On-chain reports indicate the original WLFI token contract deployed in September 2024 did not include a blacklist or seizure mechanism. A blacklisting function was reportedly added in August 2025, just before trading opened, and a second contract upgrade in November 2025 introduced a batch reallocation mechanism. Sun has argued these additions were never disclosed to investors and gave the WLFI team unilateral power to confiscate tokens without notice or governance approval.
What the complaint alleges
The filing accuses WLFI of inducing Sun’s investments through fraudulent misrepresentations, improperly freezing his tokens on multiple occasions, threatening to burn his holdings, defaming him, and causing substantial financial harm. The complaint also states that WLFI is now in severe financial insolvency and has allegedly planned to pay up to 95% of token sale proceeds to company insiders. Sun’s complaint notes that his early backing helped WLFI grow its total token sales to approximately $550 million, a 2,400% increase from before his public endorsement.
A months-long public feud
The lawsuit follows weeks of escalating hostility. Sun went public on April 12 with accusations that WLFI had embedded a backdoor blacklisting function in its smart contract, calling the project centralized finance in a decentralisation costume and demanding the anonymous wallet controllers identify themselves. WLFI responded the same day on X, dismissing the allegations as a repeated victim playbook and declaring: “We have the contracts. We have the evidence. We have the truth. See you in court pal.” The following day, WLFI’s legal team issued a cease-and-desist threatening a multi-billion dollar defamation suit.
Further controversy arose on April 15, when WLFI released a governance proposal covering more than 62 billion WLFI tokens, imposing multi-year lockups and up to 4.5 billion token burns. Sun alleged the structure penalises dissent by locking out any holder who does not opt in, and that his own frozen tokens prevented him from participating in a vote directly affecting his holdings. Simon Dedic, founder of Moonrock Capital, backed Sun on X, stating that early investors had been effectively rugged by the Trump family.
Wider implications
The case raises a question central to DeFi’s legitimacy: whether a governance token sold as a decentralised ownership stake can legally carry undisclosed admin controls allowing the issuing team to freeze or confiscate investor holdings at will. WLFI has defended the blacklist function as a regulatory compliance measure under the 2025 CLARITY Act. Sun argues the function’s existence, regardless of its purpose, was never disclosed and contradicts the project’s core DeFi promises. If the case advances to court, both sides will be required to produce the contracts and on-chain evidence they have each publicly cited.
