World Liberty Financial, the crypto DeFi project co-founded by Donald Trump and his family, has filed a defamation lawsuit against Justin Sun in a Florida state court, marking a sharp escalation in what has quickly become one of the most high-profile disputes in the crypto space. Here’s what we know so far about the escalating dispute.
Allegations by World Liberty Financial
According to the lawsuit, World Liberty Financial alleges that Justin Sun, founder of the TRON blockchain and one of crypto’s most prominent entrepreneurs, orchestrated a “public smear campaign” aimed at damaging the Trump crypto project’s reputation.
The filing claims that Sun improperly transferred WLFI tokens, which are the native token of World Liberty Financial, used in DeFi services and carrying governance and voting rights, to Binance. It also alleges that Sun engaged in short selling, betting against the token’s price in an effort to drive it down during its public market listing.
“Justin Sun engaged in a defamatory campaign to torch World Liberty Financial’s reputation. He knew his claims were false and made them anyway to harm WLFI token holders,” said Zach Witkoff, CEO of World Liberty, in a separate post on X.
According to the lawsuit, the alleged misconduct goes beyond isolated actions. World Liberty describes it as “a large, deliberate, short-selling campaign designed to suppress $WLFI’s price at the moment of its public launch,” linking the activity to Sun-affiliated wallets that reportedly moved $300 million to Binance.
In response, World Liberty said it exercised its contractual rights to freeze WLFI tokens associated with Sun’s entities. The company argued that this step was necessary to prevent further damage to both the project and its community.
“Sun’s claims are demonstrably false. The authorized freeze function Sun complains about was disclosed in our Terms of Sale and his own agreements. The governance process is transparent and community-driven. Yet he weaponized his platform to spread lies to more than 4 million followers,” the lawsuit said.
The filing repeatedly emphasizes that Sun was fully aware of these restrictions before making his public statements.
World Liberty Financial is seeking damages, legal costs, and a retraction of Sun’s statements as part of the crypto lawsuit.
Justin Sun Responds, Calls Lawsuit a ‘PR Stunt
Sun, however, has pushed back strongly against the accusations. In his own post on X, he dismissed the lawsuit as baseless.
“The alleged defamation lawsuit that World Liberty announced on X today is nothing more than a meritless PR stunt. I stand by my actions and look forward to defeating the case in court,” he said.
His response signals that the dispute is unlikely to be resolved quickly, with both sides appearing prepared for a prolonged legal battle.
Legal experts note that dual claims of defamation and market manipulation could further complicate proceedings, especially as both parties attempt to frame the narrative in their favor.
This legal clash is not happening in isolation. Back in April, Sun had already filed a lawsuit against World Liberty, accusing the company of illegally freezing the tokens he had purchased. He claimed that the project secretly implemented mechanisms to block him from selling his holdings after the token became tradable in September 2025. In that case, Sun also denied engaging in any short selling of WLFI.
WLFI token price fluctuations before this event
Following news of the Trump crypto lawsuit, WLFI saw a short-term price increase of around 12% within 24 hours.
WLFI is the native token of World Liberty Financial, serving both governance functions and playing a role within its broader DeFi ecosystem, which includes lending and borrowing activities.
However, the broader trend remains negative, with the token still down 72% since its launch on September 1. Justin Sun’s holdings, estimated at 4 billion WLFI tokens, are currently valued at around $264 million.
For investors who trusted in this project, what we are seeing here is a clear split between short-term hype and long-term uncertainty. A recent governance vote also approved the unlocking of 62 billion WLFI tokens under a two-year lock-up and five-year vesting schedule, a move that may limit immediate sell pressure but raises longer-term dilution concerns.
While you might benefit from sudden price spikes driven by news, the overall downtrend suggests that market confidence in WLFI remains fragile, especially as the crypto legal battle between World Liberty Financial and Justin Sun continues to unfold.
From allies to enemies between Justin Sun and Trump family
The crypto legal conflict marks a dramatic shift in the relationship between Justin Sun and World Liberty Financial.
Sun was previously one of the project’s earliest and most important backers, investing $45 million and serving as an adviser during its early stages in late 2024 and early 2025.
That partnership has now evolved into a high-stakes crypto lawsuit.
World Liberty Financial remains one of the most prominent ventures in the Trump crypto ecosystem. According to a Reuters analysis, the Trump family has reportedly generated over $1 billion from the project, with company bylaws stating that 75% of revenue from WLFI token sales is allocated to the Trumps. This underscores the financial and political significance of the ongoing crypto legal battle.
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