WLFI faces potential legal battle after Justin Sun's public criticism
Tron founder Justin Sun takes aim at World Liberty Financial's DeFi platform as discontent among initial token purchasers continues to escalate.
Tron layer-1 blockchain network founder Justin Sun has publicly voiced his disapproval of World Liberty Financial (WLFI), a decentralized finance initiative co-founded by the sons of US President Donald Trump, citing concerns about extended lock-up periods imposed on the platform's governance token holders.
According to Sun, he put "significant capital" into WLFI as one of its early backers and raised questions about a governance proposal from March that determined token lock-up periods, noting that over 76% of the voting tokens involved came from just 10 wallets, suggesting a lack of transparency. In an X post published on Sunday, Sun stated (in translation):
"The governance votes cited to justify the above actions were not conducted through fair or transparent procedures. Key information was withheld from voters, meaningful participation was restricted, and outcomes were predetermined."
"Justin's favorite move is playing the victim while making baseless allegations to cover up his own misconduct," World Liberty Financial responded, issuing a threat of legal action against Sun for the claims he made.
The controversy emerged against a backdrop of growing community resistance to WLFI and revelations that the platform had been utilizing its own governance tokens as collateral for loans, leading to WLFI's price plummeting to an all-time low and sparking renewed criticism of Trump for his involvement in cryptocurrency ventures.
Cointelegraph contacted World Liberty Financial for comment but had not received a response at the time this article was published.
WLFI token sinks to all-time low as community backlash mounts
On Saturday, the WLFI token reached a new all-time low price point, dropping to just $0.07 in the wake of reports that the platform was utilizing WLFI tokens as collateral for borrowing stablecoins.
Cryptocurrency wallets associated with World Liberty Financial deployed WLFI tokens as collateral on Dolomite, a DeFi platform that was co-founded by Corey Caplan, who serves as the project's chief technology officer, in order to secure the stablecoin loan.
WLFI acknowledged that it serves as an "anchor" borrower, a role that creates yield for the platform and delivers value to token holders, further noting that it represents "one of the largest suppliers and borrowers" operating within the WLFI ecosystem.
"Treating the crypto community as a personal ATM is unjust and has never been authorized through any fair, transparent, good-faith community governance process," Sun said.