WLFI lawsuit: Justin Sun alleges token freeze and governance blackout

Justin Sun has filed a federal lawsuit against World Liberty Financial (WLFI), alleging the protocol froze his WLFI tokens and stripped governance rights through an “opaque” smart-contract blacklist. Sun says the blacklist logic is hidden in code, which he argues undermines decentralization, transparency, and user control. World Liberty CEO Zach Witkoff rejected the claims as baseless and said the case should be dismissed. He argued the measures were meant to protect users and to distract from alleged misconduct. The dispute centers on actions starting in September 2025, when Sun’s wallet was blacklisted and around 540M unlocked WLFI tokens were frozen after transfers to exchanges that looked like early selling. A later governance vote on April 15, 2026 added another constraint: holders who did not “affirmatively accept” new terms would be indefinitely locked, with a perpetual freeze risk; the proposal also included a mandatory 10% burn of advisor tokens. Because Sun’s tokens were already frozen, he could not vote. Market context: the article cites high concentration of WLFI voting power (about 10 wallets controlling ~76%). Traders reacted with divergence—BANANA (nearly +6%) rose on the headlines, while WLFI traded around ~$0.08, down sharply from ~$0.46 in Sep 2025 and near an all-time low. For WLFI traders, the near-term focus is legal and governance overhang: token-freeze claims and voting lock mechanics can increase uncertainty around liquidity and control, even as the project insists the blacklist is protective.