World Liberty freeze dispute

Justin Sun, the biggest publicly known buyer of World Liberty Financial’s token, accused the Trump-linked crypto venture on April 13 of secretly adding a tool to freeze holders’ tokens. (reuters.com) Sun said on X that World Liberty embedded a “backdoor blacklisting function” in the smart contracts behind WLFI, the project’s governance token. Reuters said Sun offered no evidence, and Reuters could not verify whether the tool exists or whether it has been used. (reuters.com) World Liberty answered on X the same day with a threat of legal action, writing: “We have the contracts. We have the evidence. We have the truth. See you in court pal.” CoinDesk reported the clash grew out of a separate fight over a $75 million decentralized-finance loan tied to WLFI tokens. (coindesk.com) WLFI is supposed to be a governance token, which means holders use it to vote on proposals rather than spend it like cash. World Liberty’s own documentation says the token’s “sole purpose” is governance and that voting power rises with the amount of WLFI a holder controls. (worldlibertyfinancial.com) That makes the freeze accusation more than a coding dispute. If one side can block tokens, it can also block voting power in a system where proposals are screened by World Liberty Financial LLC before they reach a vote. (worldlibertyfinancial.com) The dispute lands as World Liberty is already under pressure over how it used its own token as collateral. CoinDesk reported on April 9 that the project pledged 5 billion WLFI tokens on Dolomite to borrow $75 million in stablecoins, a move that left depositors unable to withdraw from one lending pool. (coindesk.com) CoinDesk later reported that WLFI fell to record lows after the team defended that borrowing position, and on April 13 it reported World Liberty minted $25 million of its USD1 stablecoin and burned $3 million days after saying it had repaid $25 million of the debt. (coindesk.com 1) (coindesk.com 2) Sun is not a minor outsider in this fight. Reuters reported he became the largest publicly known investor in late 2024, was named an adviser to the firm, and later said he held at least $75 million of WLFI tokens. (reuters.com) World Liberty is also not a typical leaderless crypto collective. Its governance page says formal proposals are screened by the company, proposal eligibility decisions are made at the company’s discretion, and those decisions are final. (worldlibertyfinancial.com) Reuters described World Liberty as the most prominent of several crypto businesses co-founded by the Trump family and said the company’s decentralized-finance app still had not launched as of April 13. The next step in this fight appears headed toward court, unless either side backs down first. (reuters.com)