Key Points
- Tron founder Justin Sun described the WLFI governance proposal as among “the most absurd governance scams” in crypto
- More than 62 billion WLFI tokens face lockup periods extending to four years under the new plan
- Token holders refusing the new conditions would see their assets frozen permanently
- Simon Dedic of Moonrock Capital accused the Trump family of executing a “rug pull” on early backers
- World Liberty Financial defends the move as necessary for “long-term participation” and ecosystem health
World Liberty Financial, the cryptocurrency venture associated with Donald Trump, faces intense scrutiny following the release of a governance proposal that could freeze investor tokens for extended periods — potentially forever for those who decline the new conditions.
The contentious proposal appeared on WLFI’s governance platform this Wednesday, outlining strict lockup requirements affecting over 62 billion WLFI tokens. According to the terms, team members, strategic advisers, and partners would experience a two-year complete lockup, followed by an additional three-year gradual token release schedule. Early project supporters face somewhat reduced vesting periods but still confront multi-year restrictions before gaining access to their holdings.
Those who choose to reject these revised terms would see their tokens locked with no definite timeline for release.
The proposal also includes provisions for burning up to 4.5 billion tokens permanently, while insiders accepting the terms would face a 10% token burn penalty.
The plan triggered fierce backlash from Justin Sun, Tron’s founder and a prominent WLFI investor. In a social media statement, Sun characterized the proposal as “one of the most absurd governance scams I have ever seen.”
Sun disclosed that he controls approximately 4% of World Liberty’s tokens, but these holdings are presently frozen. This restriction, he argues, effectively disenfranchises him from participating in the governance vote.
He further questioned the legitimacy of the protocol’s power structure. According to Sun, unidentified wallet addresses — including a multi-signature wallet with veto authority and another account capable of blacklisting participants — wield disproportionate influence over decision-making.
“This proposal is not governance,” Sun stated. “It is an exercise of power by the selected few.”
Mounting Opposition From Investors
Sun’s criticism found company among other prominent voices. Simon Dedic, who founded Moonrock Capital, claimed that early-stage investors had been subjected to a “rug pull” orchestrated by the Trump family.
In his X post, Dedic suggested the maneuver seemed designed to give the project “another shot at squeezing the same lemon,” with timing that coincidentally aligns with Donald Trump’s remaining presidential term.
He condemned what he characterized as “blatant misconduct” executed with minimal attempts at concealment.
An Escalating Conflict With Deep Roots
The confrontation between Sun and WLFI originated last September, when the project blacklisted a blockchain wallet associated with Sun containing approximately $107 million worth of governance tokens.
This action represented a dramatic shift from their relationship in late 2024, when Sun committed $30 million to WLFI and accepted an advisory position with the project.
Relations deteriorated further when WLFI deposited 5 billion of its native tokens into Dolomite, a lending protocol co-created by one of its own advisers, subsequently borrowing roughly $75 million in stablecoins. The token price plummeted 12% to an all-time low the next trading day.
Sun openly criticized the project for exploiting users as “personal ATMs.” World Liberty Financial countered with warnings of potential legal consequences.
A WLFI representative told CoinDesk the proposal “aims to optimally ensure long-term participation in our ecosystem and help ensure healthy market supply.”
The voting period for this proposal will commence shortly and continue for seven days. WLFI tokens currently trade around 8 cents, representing a decline exceeding 40% year-to-date and more than 75% below the peak price of 33 cents.
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