World Liberty Financial sues Justin Sun for defamation over token freeze dispute

World Liberty Financial filed a defamation lawsuit Monday against Tron founder Justin Sun, alleging his public statements falsely portrayed the Trump family-backed project as engaging in misconduct.

The complaint responds to Sun's April 22 federal court action in California claiming World Liberty froze his $75 million WLFI token position without cause. Sun demanded release of 2.9 billion tokens, restoration of voting rights, and cessation of threats to burn assets.

World Liberty contends Sun violated investment terms through unauthorized transfers to Binance, short-selling, and representing undisclosed third parties. The freeze protected users and the protocol, per court papers.

Sun's social media posts and interviews accused the project of criminal extortion and backdoor blacklisting in smart contracts. World Liberty called these entirely meritless, launched amid SEC fraud settlement.

Project spokespeople highlighted Sun's pattern of praise followed by attacks after investment refusal. Private demands for hundreds of millions in additional funding preceded litigation.

WLFI token value fell from 31 cents to 8 cents since September amid governance changes requiring holder consent. Non-compliant tokens face permanent lockup.

Sun positioned himself as President Trump's supporter while seeking favorable treatment. World Liberty denied exploitation claims, vowing defense.

The suit seeks damages for reputational harm and lost partnerships. Filing follows SEC dismissal of charges against Sun's firm with $10 million penalty.

Eric Trump stepped back from public leadership last week amid scrutiny. Zach Witkoff and others manage operations.

Legal battle unfolds in California federal court. Industry watches implications for governance and investor rights.

Sun settled prior SEC market manipulation claims without admitting wrongdoing. Tron handles WLFI trading.

World Liberty emphasizes decentralized principles in response. Token holders vote on future terms.