WLFI sues Justin Sun over alleged smear campaign to crash token price

WLFI alleges paid smear effort after token freeze.

World Liberty Financial has announced it is suing Justin Sun for defamation, alleging that after a Sun-affiliated entity called Blue Anthem bought $WLFI tokens in November 2024 and then transferred some of them to Binance, the project froze those holdings under terms that had been “clearly disclosed in the token sale documentation.”

WLFI says that instead of seeking a good-faith resolution, Sun responded by launching “a coordinated smear campaign,” allegedly paying influencers and deploying bot networks to broadcast claims to more than 4 million followers that WLFI governance is “a scam” and that its smart contracts contain a hidden “backdoor” used to arbitrarily freeze user funds.

In its statement, the project insists that the freeze function “was clearly disclosed in the sales terms,” that governance is “transparent and community-driven,” and that it will “pursue legal action against Justin Sun” to protect its reputation and token holders.

Duelling lawsuits over freezes, blacklists, and losses

The countersuit comes after Sun filed his own federal complaint in California, alleging that WLFI secretly installed a “backdoor blacklisting function” in its smart contracts and used it to freeze his tokens as part of what he called an “illegal asset seizure scheme.”

According to that complaint, Sun says WLFI blacklisted his address and froze hundreds of millions of dollars’ worth of $WLFI after he refused to commit additional capital, with Reuters reporting that he accuses the Trump-family-backed venture of “wrongful token freeze, fraudulent misrepresentation, defamation, and running an extortion racket.”

Filings cited by outlets like the Wall Street Journal and CBS News say Sun at one point controlled between 3 billion and 4 billion WLFI tokens — an investment he valued at up to $1 billion at peak — and claim that a September 2025 freeze left him unable to sell as the token dropped roughly 25% from early September levels.

WLFI has countered that it used blacklist and freeze tools to protect the community, saying in earlier statements that it had restricted tokens across 272 wallets and that some addresses were flagged for “misappropriation of other holders’ funds,” even as critics questioned whether those mechanisms were properly disclosed or governed.

In a recent crypto.news feature, the broader feud was framed as a test of how far token projects can go in using on-chain control features without crossing into what major investors describe as confiscation.

Another crypto.news analysis highlighted how the case intersects with U.S. politics, given WLFI’s Trump-family backing and Sun’s role as one of its largest private backers with an initial commitment of about $75 million.

A separate crypto.news overview focused on Sun’s allegation of “criminal extortion” via smart-contract blacklists, a charge WLFI now effectively mirrors in reverse by accusing him of a paid disinformation effort aimed at “crashing” its token.