WLFI
Tron founder Justin Sun is seeking sanctions against World Liberty Financial and its legal team, accusing the Trump-linked crypto venture of failing to disclose its connections to the United Arab Emirates until months after his lawsuit over frozen $WLFI tokens began.
In a post on X, Sun said World Liberty initially informed a California federal court that it was a citizen of Florida. However, several months later, the company amended its corporate disclosure to include the UAE among the jurisdictions connected to its ownership structure. Sun argues that the timing of the change raises serious questions about whether the company withheld information that could have affected the legal proceedings from the beginning.
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The dispute dates back to April, when Sun filed a lawsuit against World Liberty after the company froze his tokens. Sun alleges that the project induced him to invest through fraud and subsequently prevented him from accessing assets he had purchased. World Liberty has previously defended its decision to freeze the tokens.
Sun was one of the project's earliest and largest investors. He initially agreed to purchase $30 million worth of $WLFI tokens in November 2024, later increasing his investment to $45 million. His investment made him a major financial backer of the decentralized finance project, which has close ties to President Donald Trump and his family.
A central issue in the lawsuit is whether the dispute should be handled in public federal court or through private arbitration. World Liberty sought to move the case into arbitration in April, but Sun opposed the request. At an August hearing, the court ruled that some of his claims could proceed in public court, while others would be referred to arbitration.
Less than a week after that hearing, World Liberty revised its corporate disclosure. According to Sun, the updated filing identified 22 entities in the company's ownership chain and listed connections to Florida, Delaware, Puerto Rico and the UAE. The change could have significant consequences for the case because federal courts generally require opposing parties in certain civil disputes to be citizens of different states, and foreign citizenship on both sides can undermine federal diversity jurisdiction.
World Liberty is now arguing that the court lacks jurisdiction, potentially creating another obstacle for Sun's lawsuit. Sun maintains that the company's foreign ownership structure should have been disclosed at the outset, arguing that the delayed disclosure forced his legal team to spend months and hundreds of thousands of dollars contesting the arbitration request.
"World Liberty was proudly American when it was selling tokens," Sun wrote on X, arguing that the company only acknowledged its UAE connections when those ties became useful in challenging the court's authority.
According to Sun, World Liberty's lawyers have said they learned about the UAE citizenship after submitting the original disclosure. The company has not publicly responded to the latest allegations, and it could not be reached for comment.
The dispute now extends beyond the frozen tokens themselves. The question of when World Liberty disclosed its ownership structure could influence where the case is heard and whether Sun can continue pursuing his claims in federal court. Any sanctions request will also put the company's legal disclosures and its handling of the dispute under closer scrutiny.
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