Billionaire Backer Sues Trump Family’s Crypto Firm Over Alleged Extortion
In a high-profile legal dispute, the Trump family’s cryptocurrency venture, World Liberty Financial, is facing a lawsuit filed by one of its billionaire investors, Justin Sun. The lawsuit, filed in a San Francisco federal court, accuses the company of engaging in an "illegal scheme" to seize Sun’s WLFI tokens—cryptocurrency issued by the firm—and alleges extortionate practices.
Allegations Against World Liberty Financial
Justin Sun, a prominent crypto entrepreneur and the founder of the multi-billion-dollar project TRON, claims that World Liberty Financial has unlawfully "frozen" all of his WLFI tokens and stripped him of the right to vote on governance issues tied to the tokens. Moreover, Sun alleges that the firm has threatened to permanently destroy a significant portion of his holdings by "burning" the tokens—effectively deleting them.
Sun initially invested $45 million (£33 million) in World Liberty Financial, motivated partly by the Trump family’s involvement and his strong support for cryptocurrencies. Over time, his WLFI tokens at points have been valued at over $1 billion. However, the value of WLFI tokens has sharply declined since September 2025, falling from 31 cents to just under 8 cents per token.
In a social media statement announcing the lawsuit, Sun expressed his frustration: "They wrongfully froze all of my tokens, stripped me of my right to vote on governance proposals, and have threatened to permanently destroy my tokens by ‘burning’ them—all without any proper justification."
Trump Family’s Response and Company Denials
World Liberty Financial, co-founded by former US President Donald Trump and his son Eric Trump, has categorically denied all allegations of wrongdoing. The company accused Sun of fabricating claims to deflect attention from his own inappropriate behavior. Zach Witkoff, another co-founder and son of President Trump’s Middle East envoy Steve Witkoff, described the lawsuit as a "desperate attempt to deflect attention from Sun’s own misconduct." He said the company took necessary actions to "protect itself and its users" due to Sun’s alleged behavior.
Eric Trump, also a co-founder, dismissed the lawsuit with a sarcastic remark: "The only thing more ridiculous than this lawsuit is spending $6 million on a banana duct-taped to a wall." This comment references Justin Sun’s 2024 purchase of an artwork by Maurizio Cattelan consisting of a banana taped to a wall—a piece Sun famously ate after acquiring it.
Background and Additional Context
Sun, an ardent supporter of Donald Trump and cryptocurrencies, has also invested heavily in other Trump-associated digital assets. In July 2025, he reportedly purchased $100 million worth of Trump’s meme coins. Despite his support, Sun’s lawsuit claims that certain individuals managing World Liberty have exploited the Trump brand to engage in fraudulent activities, contradicting the president’s values.
The complaint further contends that initial promises by World Liberty to allow token holders the ability to trade their holdings were misleading. While WLFI tokens became generally tradable, Sun alleges that the company blocked him from selling any of his tokens and is now threatening to "burn" them entirely.
World Liberty has also raised concern among investors by borrowing against the value of its tokens, adding to the complexity of the legal and financial challenges it currently faces.
Regulatory and Corporate Developments
Meanwhile, the US Securities and Exchange Commission (SEC) has dropped an investigation into Justin Sun. The inquiry had focused on allegations that Sun paid prominent social media influencers to promote his crypto projects without disclosing the payments. Senator Elizabeth Warren, a Democrat, questioned whether the SEC’s decision was influenced by Sun’s investments in Trump-related cryptocurrency ventures.
In a related development, Trump’s media business—linked to the Truth Social platform—underwent executive changes amid a steep decline in its stock value. Devin Nunes, former chief executive and former California congressman, was replaced temporarily by Kevin McGurn, an executive with experience at Hulu, Vevo, and T-Mobile. Over the past year, shares in Trump Media & Technology have plummeted by nearly two-thirds, with the platform struggling to attract users beyond Donald Trump himself, who regularly uses it for announcements.
Conclusion
The lawsuit against World Liberty Financial marks a significant and contentious moment in the intersection of cryptocurrency, high-profile political figures, and corporate governance disputes. As legal proceedings unfold in federal court, the controversy highlights ongoing challenges within the rapidly evolving crypto industry, particularly when tied to prominent personalities and political brands.
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