The conflict is entering a public phase. Justin Sun accused the World Liberty Financial project of having a hidden token-locking feature, and the WLFI team responded with the threat of legal action.
This is not just a dispute. It is a blow to trust in the very mechanism of governance in DeFi.
Allegations of Hidden Token Control
Sun stated that a hidden function is built into the WLFI smart contract. According to him, it allows the team to freeze, restrict, and effectively seize users’ assets.
He calls himself the main victim. His wallet was blocked back in September 2025 after moving tokens worth about $9 million.
Since then, the situation has only worsened. Estimates put the frozen amount at about 545 million WLFI tokens, and their value has dropped by more than $80 million amid the asset’s price decline.
The Conflict Escalates
Previously, Sun limited himself to mild criticism. Now, his rhetoric has changed.
He accuses the project not only of blocking funds, but also of manipulating governance and extracting fees without transparent procedures. According to him, votes within the project may have been predetermined in advance.
At the same time, he carefully separates politics from the conflict. Support for Donald Trump, with whom the project is associated, remains in his statements.
WLFI’s Response and Threat of Lawsuit
The project’s response came quickly. The official WLFI account accused Sun of trying to hide his own violations and called his statements unfounded.
The wording was harsh. The team stated that it has evidence and hinted at readiness for legal proceedings.
The phrase ‘see you in court’ became the key signal. The conflict is moving from a public spat to a legal arena.
Pressure Intensified After Treasury Actions
The scandal is unfolding against a backdrop of already weakened trust in the project. Earlier, it became known that the WLFI treasury used its own token as collateral to borrow about $75 million in stablecoins through the Dolomite protocol.
Some of the funds, according to on-chain analytics, were transferred to institutional platforms. This heightened market participants’ concerns.
An additional risk factor is high concentration. WLFI collateral accounts for more than half of the liquidity in the relevant pool, making the system sensitive to price fluctuations.
Liquidity and Trust in Question
At the moment, the pool’s load is approaching critical levels. This limits the ability to withdraw funds for participants trying to take advantage of high yield rates.
In such conditions, any new negative factor increases the pressure. The conflict with one of the largest investors has become just such a trigger.
Price Reflects Market Sentiment
The WLFI token is trading around $0.08. Market capitalization is holding at about $2.5 billion. At the same time, the dynamics remain weak. The asset has already set new all-time lows amid the latest news.
What Is Next?
The situation is entering a new phase. If the parties do proceed to litigation, it could drag out the conflict and increase pressure on the project.
This is an important case for the market. It raises a key question—how much do decentralized projects actually control users’ assets in practice.
If the allegations are confirmed, it will hit not only WLFI. It will affect trust in an entire segment of DeFi, where governance and control often remain opaque.
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