Trump-linked WLFI sues Justin Sun over alleged short-selling smear

World Liberty Financial, a group started by the Trump and Witkoff families, is accusing Justin Sun, a crypto billionaire and one of their investors, of waging a deliberate smear campaign to tank a crypto product he was allegedly betting against.

“Justin Sun chose to defame World Liberty — repeatedly, publicly and to millions of followers. World Liberty filed this lawsuit as a last resort to correct the record and to protect its token holders, its employees and all its stakeholders,” Tom Clare, World Liberty Financial’s attorney, said in a press release.

“We are eager to expose the falsity of Sun’s statements in court and in public.”

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Sun, a crypto dealmaker and the founder of TRON blockchain, a cryptocurrency platform, announced a $30 million investment of WLFI in November 2024, calling himself the company’s largest backer at the time.

“We are thrilled to invest $30 million in World Liberty Financial as its largest investor. The U.S. is becoming the blockchain hub and Bitcoin owes it to [President Donald Trump],” Sun wrote in a post to X.

Two years later, World Liberty Financial is accusing Sun of, first, violating his agreement with the company as an investor by shorting WLFI’s token — a position that set him up to profit if the company’s value declined.

In response, World Liberty Financial froze Sun’s assets.

Then, Sun threatened to publicly criticize the company to his millions of followers online if the company didn’t unlock his holdings, according to World Liberty Financial.

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“Justin Sun engaged in a defamatory campaign to torch World Liberty Financial’s reputation,” Zach Witkoff, the son of Trump’s Special Envoy to the Middle East, Steve Witkoff, posted on X. “He knew his claims were false and made them anyway to harm WLFI token holders. I look forward to the truth coming out in court.”

Eric and Donald Trump Jr. also took to X to amplify a thread posted by their company, which accused Sun of “a coordinated media smear campaign against World Liberty Financial” and said he “refused to stop even when confronted with the truth.”

World Liberty Financial claimed Sun praised the company online, calling it “one of the biggest and most important projects in crypto” and that he was “fully aligned with the mission.”

When the company didn’t unfreeze his assets, Sun published his criticisms of the company, blasting World Liberty Financial’s business and leadership structure and warning viewers to stay away from the organization. According to World Liberty Financial’s suit, Sun even used fake social media “bot” accounts to amplify the claims.

In a post that garnered over 2 million views, Sun claimed the company had built a feature that enabled them to seize users’ digital assets.

“This feature grants the company unilateral power to freeze, restrict, or effectively confiscate the property rights of any token holder—without notice, without reason and without any avenue for recourse,” Sun claimed.

Sun pointed to his own digital assets as evidence of his claims.

“The WLFI team’s conduct is eroding the community’s trust in the project. Unlock the tokens and uphold transparency to the community. Let us build with integrity, not with malfeasance,” Sun said in his post.

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Notably, the U.S. Securities and Exchange Commission (SEC) has accused Sun in the past of selling unregistered securities, manipulating the market to inflate the value of his assets and paying celebrities to promote his products without disclosures.

In that case, the SEC and Sun reached a settlement for $10 million earlier this year, although Sun denied any wrongdoing.