Crypto billionaire Justin Sun and World Liberty Financial, a project co-founded by President Donald Trump, are now in a serious legal battle. Sun and his companies have filed a lawsuit in San Francisco federal court, accusing the project of running an illegal scheme and engaging in extortion.
Between 2024 and 2025, Sun invested $45 million to buy 3 billion WLFI tokens. He was also given an additional billion tokens for serving as an advisor to the project. The partnership fell apart mid-last year when Sun declined to invest further, and according to the complaint, World Liberty’s principals turned hostile once it became clear he was not going to keep writing checks.
According to Bloomberg, Sun’s legal team alleges that the project secretly gave itself the power to freeze his tokens, preventing him from selling them. The company also allegedly seized the ability to burn his tokens, even though they were held in his own digital wallet. By November, Sun says the project implemented changes allowing it to move tokens from one user to another at will, causing him hundreds of millions of dollars in damages.
World Liberty Financial’s aggressive tactics point to deeper problems within the project
The complaint also mentions that co-founder Chase Herro threatened to burn Sun’s tokens in September, when they were valued at $776 million. Sun further alleges that World Liberty threatened to report him to criminal authorities if he tried to assert his rights, which his filing describes as criminal extortion.
Sun believes the company was particularly upset because he had separately purchased $100 million worth of Trump’s memecoin. This legal drama is just one of many controversies surrounding the Trump administration, which has also been dealing with major appointments within federal health agencies.
Sun is also raising concerns about the overall health of the project. He claims World Liberty is close to collapse and has questioned whether it holds enough reserves to back its USD1 stablecoin.
The company has taken out a loan using WLFI tokens as collateral but has maintained it has enough capital to avoid defaulting. Sun has asked the court to unfreeze his tokens, stop the project from burning them, and award him monetary damages.
While this legal battle plays out, World Liberty Financial has been lobbying for stablecoin legislation. In February 2026, the company hosted three Idaho state legislators at a financial forum at President Trump’s Mar-a-Lago resort.
According to The Idaho Capital Sun, legislators – Senate President Pro Tempore Kelly Anthon, Sen. Todd Lakey, and Rep. Dustin Manwaring – said they paid their own travel and lodging costs, but lobbying reports show a lobbyist for the project paid for their meals at restaurants in Palm Beach. Trump has also been at the center of other international disputes, including instances where foreign leaders publicly contradicted Trump’s claims on live television.
The proposed legislation aimed to create a regulatory framework for stablecoin use at the state level, following the federal GENIUS Act signed in July. The bills sponsored by Manwaring and Anthon did not advance during the 2026 session. Still, the effort shows that World Liberty was pushing to integrate its stablecoin into government payment systems even while fighting with one of its largest investors.
Early investors in the project are also facing serious restrictions, as they remain unable to trade 80% of their tokens. There is even a proposal being considered that would delay trading access for at least two more years, with insiders potentially facing even longer wait times. As the legal battle between Sun and World Liberty continues, it serves as a clear reminder of the serious financial and legal risks that come with large-scale crypto ventures.
Published: Apr 22, 2026 12:30 pm