World Liberty Financial has filed a defamation lawsuit against Justin Sun, alleging he orchestrated a paid smear campaign after the platform froze tokens linked to him.
Summary
WLFI, a Trump-linked crypto venture, has sued Justin Sun, accusing him of coordinating a campaign to damage the value of its $WLFI token.
The firm claims a Sun-associated entity violated token sale terms, triggering a freeze, after which a coordinated effort used influencers and bots to spread negative claims.
The dispute escalates an ongoing legal clash, coming weeks after Sun filed his own lawsuit over frozen assets and alleged misconduct by WLFI.
WLFI accuses Sun of smear campaign
According to WLFI, an entity tied to Sun—Blue Anthem—purchased $WLFI tokens in November 2024 and later moved a portion to Binance. The project says this violated pre-disclosed sale conditions, prompting it to freeze those tokens.
WLFI alleges that instead of resolving the issue through legal or contractual channels, Sun initiated a coordinated campaign to harm the project’s reputation. The firm claims influencers and automated bot networks were paid to spread allegations to over 4 million followers, branding WLFI governance as fraudulent and accusing it of having hidden “backdoor” controls.
The company maintains that its token freeze mechanisms were transparently disclosed and are designed to protect users, insisting its governance remains community-driven. It says legal action is necessary to defend both its reputation and token holders.
Ongoing legal battle intensifies
The lawsuit comes in response to an earlier complaint filed by Sun in a U.S. federal court. In that filing, he alleged WLFI secretly implemented a blacklist function in its smart contracts, enabling it to freeze tokens arbitrarily.
Sun claimed that after refusing to invest additional funds, his wallet was blacklisted and a significant portion of his holdings—worth hundreds of millions of dollars—was frozen. He described the move as an unlawful seizure and accused WLFI of fraud, defamation, and extortion.
Reports suggest Sun once held between 3 billion and 4 billion WLFI tokens, valued at as much as $1 billion at peak prices. He also alleged that a token freeze in September 2025 prevented him from selling as the asset declined by roughly 25%.
Dispute raises broader industry questions
WLFI has defended its actions, stating that freeze and blacklist tools were used to safeguard the ecosystem. The firm previously disclosed restrictions on over 270 wallets, citing concerns such as misuse of funds.
The ongoing dispute highlights a wider debate in crypto: how far projects can go in exercising on-chain control mechanisms without raising concerns about investor rights and asset ownership.
The case also carries political and financial implications, given WLFI’s reported ties to the Trump family and Sun’s position as one of its major early backers.
