Justin Sun Accuses Trump-Backed Crypto Venture of Concealing Tool to Freeze User Holdings

LONDON, - A Controversy Erupts in the Crypto World

A major investor in U.S. President Donald Trump's World Liberty Financial crypto venture, Justin Sun, has made a serious allegation against the company. In a social media post on Sunday, Sun claimed that World Liberty had secretly embedded a tool to unilaterally freeze and restrict private holdings of its WLFI token. Sun, a crypto entrepreneur, alleged that the company had implemented a "backdoor blacklisting function" in the blockchain-based contracts used for the tokens.

According to Sun, this move gave World Liberty "unilateral power" to "freeze, restrict, and effectively confiscate the property rights" of any token holder, without cause and without recourse. The news agency Reuters was unable to establish if World Liberty has such a tool or is using it. The article also reports that Reuters was unable to ascertain any specifics about Sun's trading activities.

In response to Sun's allegations, the official World Liberty account on X posted a reply: "We have the contracts. We have the evidence. We have the truth. See you in court pal." When contacted for comment, a spokesperson for the company directed Reuters to its posts on X. Sun did not respond to a message from Reuters on Telegram, and a spokesperson for him did not reply to a Reuters request for comment.

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World Liberty is the most prominent of several lucrative crypto businesses co-founded by the Trump family. At its 2024 launch, the crypto company said it would give power over financial flows to small investors via a "decentralised finance" app, which remains unlaunched. It generated more than $460 million in income for the Trump family during the first half of 2025, according to a Reuters analysis published last year.

Sun became the largest publicly known investor in the then-fledgling World Liberty in late 2024, spending tens of millions of dollars on the WLFI token and being named as an adviser to the firm. He later upped his holdings to at least $75 million of the tokens, according to his social media posts from January 2025. In 2024, Sun told a New York Times reporter that his investment was a vote of confidence in what he called the Trump family's "excellent project".

| Comparison of Crypto Companies' Freezing Policies | | --- | --- | --- | | Company | Freezing Policy | Reasons for Freezing | | World Liberty | Can block and freeze wallet addresses and associated tokens | Illegality or activity that violates its terms | | Tether | Can freeze users' tokens | Suspects illegal usage or after requests from law enforcement |

In March, the Securities and Exchange Commission settled a 2023 lawsuit against Sun for $10 million. The lawsuit had alleged fraud, selling unregistered crypto securities, and hiding payments to celebrities to promote his products. Sun made no admission of wrongdoing.

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World Liberty's risk disclosures state that the company can block and freeze wallet addresses and associated tokens that it determines are associated with illegality or activity that violates its terms. Other crypto companies, such as Tether, issuer of the world's largest stablecoin, also have the ability to freeze users' tokens. The firm generally does so where it suspects illegal usage, or after requests from law enforcement, according to previous statements by Tether.

The SEC declined to comment on U.S. rules surrounding such freezes. Crypto remains a regulatory grey area in the United States, with the SEC lacking overarching jurisdiction over the sector. In Sunday's post on X, Sun claimed he was the "first and single largest victim" of the alleged World Liberty tool, pointing to the freezing of his holdings of the token in September. At the time, World Liberty said it did not seek to blacklist anyone, and that it responded to "malicious or high-risk activity that could harm community members". On Monday, Sun on X cited unspecified blockchain records that he said showed how his digital wallet was "blacklisted" by a single account with special administrative powers.