Justin Sun has accused World Liberty Financial (WLFI) of embedding hidden controls in its system that could allow the platform to freeze users’ wallets without warning.
Summary
Justin Sun alleged WLFI included blacklist controls capable of freezing wallets without notice.
Onchain data linked the project to large-scale token-backed borrowing, raising further concerns.
WLFI faced mounting pressure as its token price declined and liquidity risks intensified.
Allegations of hidden controls
Justin Sun said he initially supported WLFI because it positioned itself as a decentralized finance platform aimed at expanding financial access. However, he later claimed the project operates with centralized controls that contradict its stated vision.
In his statement, he alleged that WLFI’s smart contract contains a “backdoor blacklisting function,” which could enable the platform to freeze, restrict, or even confiscate user assets without prior notice or recourse. As of now, WLFI has not publicly responded to these claims.
Claim of wallet blacklisting
Sun further stated that he was personally affected, describing himself as “the first and single largest victim” of the system. He claimed his wallet was blacklisted in 2025, calling the move a violation of investor rights and core blockchain principles such as transparency and fairness.
He also criticized WLFI’s governance structure, arguing that voting processes were neither transparent nor fair. According to him, key details were withheld from participants, and decisions were effectively predetermined.
Borrowing activity under scrutiny
The controversy comes amid increased scrutiny of WLFI’s financial activity. Reports indicate the project used self-issued tokens and stablecoins as collateral to secure external liquidity.
Onchain data cited shows that WLFI deployed around $14 million in USD1 to borrow approximately $11.4 million in USDC in February. Additional transactions reportedly pushed total borrowing beyond $75 million, with the project accounting for a significant share of liquidity on certain DeFi platforms.
Price pressure and rising concerns
Market performance has added to the pressure. WLFI’s token has dropped over 21% in the past month, trading below $0.08 as concerns over liquidity and governance intensified.
Data also suggested that USD1 pool utilization approached 93%, while billions of tokens were moved in early April—further raising questions among observers.
Justin Sun concluded by urging the project to unlock tokens and improve transparency as scrutiny around WLFI continues to grow.
