ChainCatcher reported that Sun Yuchen said his lawyers recently appeared in federal court in California to oppose World Liberty Financial’s attempt to force the dispute into confidential arbitration and seal court records.
According to Sun, the court ruled that all of his personal claims will continue to be heard in open court. The court also rejected the position that all company-related claims should automatically be sent to arbitration, and instructed the parties to determine which claims should remain in court and which should move to arbitration.
Court ruling and claims outlined by Sun
Sun called the decision a major victory and said token holders have a right to know how a project treats those who trusted it. He also said he was one of World Liberty’s earliest and largest investors, and that he invested $45 million to obtain WLFI tokens.
In the complaint, Sun alleges that after his investment helped token sales raise about $550 million, the project secretly inserted backdoor functions into the smart contract. He said those functions allowed the project to unilaterally freeze, restrict, or destroy holders’ tokens, and that it then used those powers to unlawfully withhold his tokens. He also alleged that the project threatened criminal complaints when he sought to defend his rights. The lawsuit seeks hundreds of millions of dollars in damages.
Sun added that he had previously obtained a court injunction barring the other side from destroying or disposing of his tokens.
Concerns raised over USD1, collateral use and public litigation records
Sun also said World Liberty built similar backdoor capabilities into its USD1 stablecoin. He further cited public information including the project’s use of a large amount of WLFI tokens as collateral for borrowing on Dolomite, as well as past litigation related to Dough Finance involving a co-founder. Based on those points, he said he is concerned about the project’s solvency and transparency and urged investors to conduct their own due diligence and remain cautious.
The statements and allegations above are solely Sun Yuchen’s account.