Crypto tycoon Justin Sun sued the Trump family's crypto venture, accusing World Liberty Financial of "criminal extortion" for freezing valuable digital tokens over his refusal to invest more money with the company.
The lawsuit, filed late Tuesday in a California federal court, said Sun remains "an ardent supporter of President Trump and the Trump family," but that World Liberty's managers "see the project as a golden opportunity to leverage the Trump brand to profit through fraud."
The lawsuit underscored Sun's dramatic turn from early and vocal supporter of the Trump-backed company to its critic-in-chief.
The Chinese-born billionaire accused World Liberty of blocking him from selling WLFI tokens he began to amass in late 2024, just after Trump's re-election. Sun initially bought $30 million's worth of WLFI tokens, making him the first significant investor in the then nascent project.
World Liberty's Chief Executive, Zach Witkoff, said the lawsuit was a "desperate attempt to deflect attention from Sun's own misconduct," calling the claims "entirely meritless."
"He engaged in misconduct that required World Liberty to take action to protect itself and its users," Witkoff wrote on X.
Earlier this month, after Sun aired criticism on X, World Liberty tweeted, "See you in court pal."
At the time of his WLFI purchase, Sun was facing fraud charges by the Securities and Exchange Commission. The SEC requested a court halt the lawsuit soon after, and last month Sun settled the case without admitting wrongdoing. A spokesperson for Sun has said his investment decisions weren't politically motivated.
Early investors in WLFI, a so-called governance token that grants holders the ability to vote on some of World Liberty's operations, weren't initially permitted to sell their tokens. That changed last September, when World Liberty said it would allow 20% of their holdings to be traded. Sun's tokens, however, were blocked from sale.
World Liberty said at the time on X: "We respond when alerted to malicious or high-risk activity that could harm community members," without mentioning Sun.
The company told Sun privately that identification information he submitted when he bought the WLFI tokens was inadequate, according to the lawsuit, but World Liberty later refused to provide Sun additional information on the matter.
The lawsuit accused Chase Herro, a World Liberty executive who co-founded the company along with Trump's three sons, of threatening to report Sun to U.S. authorities over the alleged inadequate identification if Sun tried to unfreeze his tokens through litigation.
Sun's lawyers called the alleged threat "a pressure tactic that itself qualifies as criminal extortion."
If World Liberty hadn't frozen Sun's WLFI tokens, he could have made $276 million from their sale in September, the lawsuit said, requesting the company pay damages.
In the lawsuit, Sun said he believed the company froze his tokens because he was unwilling to support World Liberty's USD1 stablecoin, the company's flagship product, which launched early last year as a tool for international payments.
Stablecoins are cryptocurrencies designed to match the value of a traditional currency, in USD1's case the dollar. World Liberty invests the dollars backing its stablecoin's value in Treasury bills and keeps the interest income. The more USD1 in circulation, the more the company earns.
World Liberty's team tried to convince him last year to buy hundreds of millions of dollars of USD1, and promote its use on his Tron blockchain network, since retail demand for the tokens was "underwhelming," the lawsuit said. By August, Sun hadn't agreed to buy USD1, so he alleged World Liberty restricted his ability to transfer his WLFI.
USD1 has a market value of $4.2 billion, making it the fifth-largest stablecoin. World Liberty said this month it expects to earn about $160 million from the stablecoin's reserves over the next year. USD1 first drew major support when an Emirati state investor used the stablecoin to invest $2 billion in the Binance crypto exchange. Binance took steps to boost usage of the stablecoin while its founder, Changpeng Zhao, sought a pardon from Trump, The Wall Street Journal has reported.
Binance has said neither the exchange nor Zhao has helped or financed World Liberty. World Liberty has said it never facilitated or influenced Trump's decision to pardon Zhao. White House press secretary Karoline Leavitt has said previously that "neither the president nor his family have ever engaged, or will ever engage, in conflicts of interest."
The lawsuit also alleges World Liberty froze Sun's WLFI tokens because the company was upset he had bought $100 million of the $ TRUMP memecoin, which was sold by a different Trump-backed company called Fight Fight Fight. Sun has said the purchase made him the biggest holder of $TRUMP coins.
Last May, he attended a VIP dinner at Trump's golf club outside Washington, D.C., with other $TRUMP investors.
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