- Justin Sun alleges WLFI froze 2.94 billion tokens and removed his voting rights.
- Sun filed a lawsuit after private attempts to resolve the dispute failed.
- WLFI has proposed governance changes that could lock tokens for holders who do not consent.
Justin Sun has filed a lawsuit in a federal court in California against World Liberty Financial (WLFI), claiming the project froze his holdings of 2.94 billion WLFI tokens and stripped him of key investor rights without justification.
The suit escalates a public dispute between one of crypto’s best-known entrepreneurs and a project that markets itself around decentralised governance and early-stage token distribution.
In a public statement, Sun said he is pursuing legal protection of his rights as a WLFI token holder.
He stressed the lawsuit is focused on investor treatment and token governance rather than politics, and that it does not alter his political views or his stated support for pro-crypto policies.
Frozen tokens and removed voting rights
At the heart of the case, Sun asserts that WLFI froze all 2.94 billion of his tokens — roughly 540 million unlocked tokens and 2.4 billion tokens that were locked — preventing him from transferring, selling, or otherwise using his holdings.
Sun says the dollar value of those holdings fell from more than $107 million when they were frozen in September 2025 to an estimated $43–$60 million by April 2026.
He also alleges WLFI revoked his governance voting rights tied to those tokens, blocking his participation in major protocol decisions including recent governance changes proposed by the project team.
Sun claims WLFI went further by threatening to permanently destroy part of his holdings through token “burning.” He says these measures were imposed without clear explanation and without giving him a fair chance to respond.
According to the complaint, Sun tried to resolve the matter privately with WLFI, but the project declined to restore access to his tokens or reinstate his governance rights, leaving him no choice but to seek relief in court.
Sun frames his demand simply: he wants the same treatment as other early investors who received WLFI tokens — no special exemptions, and no restrictions applied selectively.
Dispute over WLFI governance proposal
The lawsuit coincides with Sun’s public opposition to a WLFI governance proposal released on April 15. He argues the proposal introduces terms that could leave users’ tokens locked indefinitely unless they actively accept updated conditions.
The proposal reportedly requires a permanent burn of 10% of advisor tokens and sets a structure for early purchaser allocations with a two-year cliff followed by two years of vesting.
Under the draft rules, token holders who do not explicitly accept the new terms could see their tokens locked without a clear path to recovery.
Sun contends this creates an uneven system where investor rights depend on after-the-fact active consent. He also highlights a structural conflict in his own case: because his tokens are frozen, he cannot vote for or against the proposal even though it directly affects him.
That inability to participate in governance has intensified the dispute, as voting and governance are central features in token-based ecosystems.
WLFI’s response and broader implications
WLFI has disputed Sun’s account, saying token restrictions were imposed for security and compliance reasons. The project maintains its governance framework includes administrative controls intended to protect the platform and its participants.
The disagreement underscores a larger tension in the crypto space between decentralised governance ideals and the retention of administrative, centralised controls such as token freezing or administrative overrides.
Sun’s lawsuit raises questions about whether those controls were adequately disclosed to investors and whether they can be applied to major early holders without clear procedural safeguards or recourse.
Because the dispute concerns 2.94 billion tokens and governance rights, the court’s outcome could help shape expectations about governance authority, investor protections, and the limits of administrative control in token-based projects going forward.