A bitter public confrontation between Justin Sun and World Liberty Financial has erupted over hidden token controls, with both sides digging in for what could become a courtroom battle. Sun claims the WLFI token contract includes a backdoor function that gives the project team the ability to freeze or restrict user assets without prior notice, directly contradicting the decentralization principles promised to investors.
Sun calls out personal losses; project fires back
Sun described himself as one of the most affected participants, pointing to a wallet blacklisted by World Liberty in September 2025 after he moved millions of tokens. He argued that the freeze locked him into a position that lost significant value as the token declined. Despite the attack on the project's management, Sun reaffirmed his support for Donald Trump's crypto-friendly stance, stressing that his criticism targets individuals running World Liberty, not its broader affiliations.
World Liberty Financial responded within hours, rejecting the accusations and questioning Sun's credibility. The team accused him of making baseless claims to distract from his own conduct and signaled readiness to defend via legal channels, claiming they have evidence to counter the allegations. Sun countered by demanding that those behind the project's official account reveal their identities publicly, further escalating the war of words.
Treasury moves and token slump deepen scrutiny
The controversy unfolds against a grim backdrop for WLFI. The token recently dropped to an all-time low, putting the project's treasury operations under a microscope. Reports showed World Liberty pledged billions of tokens on Dolomite as collateral for loans, borrowing roughly $75 million in stablecoins, with a significant portion moved to Coinbase Prime. This triggered questions about risk exposure and the sustainability of the financial strategy.
Lending pool utilization climbed to elevated levels, hinting at potential liquidity stress. Corey Caplan, an advisor to WLFI, faced scrutiny over his dual role. World Liberty Financial maintained its position is stable and that more collateral can be added if needed, dismissing liquidation fears. The team also confirmed plans to introduce a governance proposal addressing token unlock schedules. Sun's frozen holdings, estimated in the hundreds of millions of tokens, have lost considerable value as WLFI's market slide continues. The dispute underscores growing concerns about transparency and governance in decentralized finance, with both sides showing no signs of backing down.