TLDR
- World Liberty Financial initiated defamation proceedings in Florida against Justin Sun
- Allegations include short-selling WLFI tokens and moving them to Binance to manipulate pricing
- Sun had previously initiated legal action against World Liberty in April over frozen tokens
- WLFI experienced a 12% surge following the lawsuit announcement but remains 72% below initial trading levels
- The Trump family has reportedly earned over $1 billion from World Liberty, receiving 75% of token revenues
World Liberty Financial, the cryptocurrency initiative co-founded by Donald Trump alongside his sons, has initiated defamation proceedings against Justin Sun, previously one of the project’s most prominent supporters.
The legal action was initiated in Florida’s state court system on May 4. World Liberty contends that Sun orchestrated a deliberate “public smear campaign” designed to tarnish the project’s standing.
According to the filing, Sun allegedly moved WLFI tokens carrying governance rights to cryptocurrency exchange Binance. The complaint further asserts he engaged in short-selling activities, wagering on the token’s decline precisely when public trading commenced in September 2025.
Sun has categorically rejected these accusations. He characterized the lawsuit as “a meritless PR stunt” and expressed confidence in defending himself through legal channels.
This marks the second courtroom confrontation between these parties. Sun filed his own lawsuit against World Liberty in April through San Francisco’s federal court system. His complaint alleged unlawful freezing of his token holdings, removal of his governance participation rights, and threats to completely eliminate his tokens.
World Liberty countered that token freezing capabilities were clearly outlined in the Terms of Sale documentation. The company accused Sun of improper behavior and labeled his legal action “a desperate attempt to deflect attention.”
From Major Backer to Legal Enemy
Sun previously stood as a crucial supporter of the initiative. His investment totaled $45 million across late 2024 and early 2025, earning him an advisory position. Additionally, he acquired $100 million in Trump’s meme coins during July 2025.
Eric Trump previously praised Sun as “a great friend and an icon in the crypto space.” On September 1, 2025, coinciding with WLFI’s trading launch, Sun publicly declared his belief that the project would become “one of the biggest and most important projects in crypto.”
That partnership has now completely deteriorated.
Token Price and Financial Stakes
Sun’s holdings consist of 4 billion WLFI tokens, presently valued at approximately $264 million. The token has plummeted from 31 cents to below 8 cents since trading began, representing roughly a 72% decline.
The token did experience a temporary 12% increase following Monday’s lawsuit disclosure.
Where the Money Goes
World Liberty’s governing documents allocate 75% of WLFI token sale proceeds to the Trump family. According to a Reuters investigation, the family has already generated more than $1 billion from this enterprise.
Sun alleged in his lawsuit that certain individuals running World Liberty are using the Trump brand “to profit through fraud.” World Liberty denies all wrongdoing.
The Securities and Exchange Commission previously investigated Sun regarding allegations that he compensated influencers to promote his businesses without proper disclosure. Following the investigation’s closure, Senator Elizabeth Warren raised questions about potential connections to Sun’s investments in Trump’s cryptocurrency ventures.
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