World Liberty Financial faces intense criticism over controversial token vesting proposal
Prominent investor Justin Sun, a major stakeholder in World Liberty Financial, condemned the proposed token locking mechanism as "the most absurd governance scams I have ever seen," sparking widespread controversy.
World Liberty Financial, the cryptocurrency initiative backed by the Trump family, has come under significant scrutiny following the introduction of a controversial proposal that would require early-stage investors to keep their tokens locked for as long as four years, with some facing the possibility of permanent lockup.
On Wednesday, World Liberty published the contentious proposal on its governance discussion board, detailing how early-stage participants would see their World Liberty Financial (WLFI) tokens remain locked for an additional two-year period, followed by a gradual release schedule spanning another two years in multiple installments.
The proposal further stipulated that token owners who reject the newly proposed unlock timeline would "continue to have their tokens locked indefinitely."
The suggestion generated substantial pushback from the community, with Justin Sun, a cryptocurrency business mogul who serves as both an adviser to the platform and its largest financial backer, declaring via X on Wednesday that the scheme represented "one of the most absurd governance scams I have ever seen."
Sun, who revealed his ownership of a 4% position in World Liberty that remains currently frozen, has in recent times launched a succession of open criticisms targeting the platform, raising objections to another proposal while claiming the existence of mechanisms to blacklist wallet addresses, allegations that World Liberty has rejected.
Additional detractors of the governance proposal included Simon Dedic, who established the venture capital firm Moonrock Capital, stating on X that initial WLFI token purchasers "who thought they were sitting on solid profits just got rugged."
"This essentially gives them another shot at squeezing the same lemon they've been inflating with hot air for the past two years. Which, what a surprise, lines up perfectly with the remainder of [Donald Trump's] term," he added.
World Liberty Financial declined to address inquiries regarding the controversy, though spokesman David Wachsman provided Cointelegraph with a written statement via email explaining that the proposal "was designed to further align all the participants in the WLFI ecosystem for the long run."
Sun's particular objections focused on the strategy to permanently lock tokens belonging to those who oppose the proposal, characterizing the platform's approach as "coercion."
He additionally objected to being "forced out of this voting process" as a result of World Liberty's freezing of his token holdings and asserted that a "large number of holders with significant voting rights are in the same position."
Wachsman further noted that the voting period on the proposal would commence in the near future and would extend for a duration of one week.
The market value of the WLFI token has remained stagnant at 8 cents throughout the past 24 hours but has experienced a decline exceeding 40% year-to-date, mirroring a broader pullback across cryptocurrency and equity markets.
WLFI has plummeted more than 75% from its peak price of 33 cents recorded on Sept. 1, which marked the token's initial day of public market trading following a holder vote that authorized trading of the previously non-transferable digital asset.