World Liberty Financial (WLFI) filed a defamation lawsuit against Justin Sun in Florida state court this week, escalating a legal battle that started when Sun sued the firm over frozen tokens. WLFI alleges the Tron founder made false statements on X after the company froze tokens held by entities tied to him. Sun called the suit a 'meritless PR stunt' and said he would defend himself in court.
The defamation claim
WLFI's complaint centers on statements Sun posted after the company froze tokens linked to Sun and his affiliates. The company argues those posts were false and damaging. No court has ruled on any of the allegations from either side.
The token tie-up
Sun became an early major backer of WLFI through his entity Blue Anthem, which bought 2 billion WLFI tokens for $30 million in November 2024. That entity also received 1 billion tokens for an advisory role and bought roughly 1 billion more in January 2025 — bringing the total to about 4 billion WLFI tokens.
The dispute exploded when WLFI froze those holdings. Sun then filed his own lawsuit, claiming the freeze lacked proper justification, that the company stripped him of governance rights, and that it threatened to destroy his tokens after he refused to support the firm's stablecoin strategy. WLFI counters that Sun knew about transfer restrictions from the start and that it had authority to act against prohibited transfers.
The alleged short-selling
WLFI's defamation filing also accuses Sun of violating token agreements, engaging in prohibited transfers, using straw purchases, and participating in short-selling activity around WLFI's public trading debut. Specifically, WLFI points to a series of transfers on August 31, 2025, where an HTX-associated wallet moved about $100 million in USDT to a Binance deposit address. The next day, WLFI's price dropped 26% and open short bets rose 23%.
Sun has claimed WLFI embedded a 'backdoor blacklisting function' in its token contract, allowing it to freeze holders without disclosure or due process. WLFI denies that characterization.
What happens next
Both lawsuits are in their early stages in Florida state court. No hearings have been set. The core question — whether WLFI had the right to freeze Sun's tokens, and whether Sun's statements crossed into defamation — remains unresolved. For now, both sides are trading legal papers and public barbs.
