- Justin Sun says WLFI froze 2.94 billion tokens and removed voting rights.
- Lawsuit filed after failed attempts to resolve the dispute privately.
- WLFI has introduced a Governance proposal that may lock tokens for non-consenting holders.
Justin Sun has filed a lawsuit in a California federal court against World Liberty Financial (WLFI), alleging that the project froze his holdings of 2.94 billion WLFI tokens and stripped him of key investor rights without justification.
The move escalates a growing dispute between one of crypto’s most recognisable entrepreneurs and a project that has positioned itself around decentralised governance and early-stage token distribution.
In his public statement, Sun confirmed that he is seeking legal protection of his rights as a WLFI token holder.
Sun also emphasised that the lawsuit does not change his political stance or his support for the Trump administration’s pro-crypto direction. According to him, the dispute is strictly about investor treatment and token governance, not politics.
Frozen tokens and removed voting rights
At the centre of the case is Sun’s claim that WLFI froze all 2.94 billion of his tokens (540 million of unlocked tokens and 2.4 billion locked tokens). He argues that this action made it impossible for him to transfer, sell, or otherwise use his holdings.
The value of the holdings has dropped from over $107 million at the September 2025, when they were frozen, to around $43–$60 million by April 2026.
Sun also alleges that WLFI removed his governance voting rights tied to those tokens. This means he was unable to participate in key decisions affecting the protocol, including recent governance changes introduced by the project team.
Sun further claims that WLFI went beyond freezing his position and threatened to permanently destroy part of his holdings through token “burning.”
According to his statement, these actions were taken without clear justification and without providing him a fair opportunity to respond.
He also says he attempted to resolve the issue privately with WLFI before taking legal action. However, he claims the project team refused to restore access to his tokens or reinstate his governance rights, leaving him with no option but to proceed to court.
Sun has described his position as straightforward: he wants to be treated the same as other early investors who received WLFI tokens, without special privileges and without restrictions that are not applied equally.
Justin Sun also disagrees with WLFI’s Governance proposal
The legal conflict comes alongside disagreement over a WLFI governance proposal released on April 15.
Sun has openly opposed the proposal, arguing that it introduces conditions that could lock users’ tokens indefinitely if they do not actively accept new terms.
The proposal reportedly includes a requirement for 10% of advisor tokens to be permanently burned. It also introduces a structure for early purchaser tokens involving a two-year cliff followed by a two-year vesting schedule.
Under the same framework, users who do not explicitly accept the new terms could have their tokens locked indefinitely.
Sun has raised concerns that this creates an uneven system where investor rights depend on active consent after the fact. He also pointed out a structural conflict in his own situation.
Because his tokens are currently frozen, he says he cannot vote either in favour of or against the proposal, despite being directly affected by it.
This has added another layer to the dispute, as governance participation is typically considered a core function in token-based systems.
World Liberty Financial (WLFI) position
WLFI has pushed back against Sun’s claims, arguing that token restrictions were applied due to internal concerns related to security and compliance.
The project maintains that its governance mechanisms include administrative controls that can be used to protect the platform and its participants.
The disagreement highlights a broader tension in crypto governance systems, particularly in projects that market themselves as decentralised while still retaining centralised control features such as token freezing or administrative overrides.
Sun’s lawsuit places the focus on whether such controls were properly disclosed and whether they can be applied to large early investors without clear procedural safeguards.
With 2.94 billion tokens at the centre of the dispute, the outcome could influence how governance authority and investor rights are interpreted in similar token-based ecosystems going forward.
