Tron Founder Justin Sun Seeks Sanctions Against Trump-Backed World Liberty Financial
Key Takeaways
Tron founder Justin Sun is seeking $263,821 in sanctions against World Liberty Financial and its attorneys, alleging the company concealed its UAE ownership ties during litigation over his frozen WLFI tokens.Sun claims World Liberty initially disclosed only Florida citizenship before revealing 22 individuals and entities in its ownership chain, including UAE connections, shortly after a federal judge questioned its efforts to move the case into private arbitration.Sun’s attorneys argue the delayed disclosure wasted months of litigation and undermined federal jurisdiction, forcing the case toward California state court.
Sun Seeks Sanctions
In a motion filed Monday in the U.S. District Court for the Northern District of California, Sun and two affiliated companies alleged that World Liberty submitted inaccurate corporate disclosures that allowed the parties to spend months litigating a dispute the federal court may have lacked jurisdiction to hear.
Sun highlighted the filing in a Tuesday post on X, accusing World Liberty of revealing its foreign ownership connections only after a judge questioned the company’s efforts to move the dispute into private arbitration.
The filing traces the controversy to June 2, when World Liberty submitted a disclosure identifying Florida as its only state of citizenship. However, an amended filing submitted August 26 identified 22 individuals and entities in the company’s ownership chain, with citizenship extending to Delaware, Puerto Rico, and the UAE.
That disclosure could defeat federal jurisdiction because Sun and his co-plaintiffs are foreign parties, while World Liberty is also considered a foreign citizen for jurisdictional purposes through its ownership structure.
According to the motion, the timing was particularly troubling because the revised disclosure came six days after an Aug. 20 hearing at which U.S. District Judge James Donato challenged World Liberty’s argument that all of Sun’s claims belonged in arbitration.
Sun’s attorneys contend that World Liberty’s amended disclosure effectively derailed months of litigation after the company encountered resistance to its arbitration arguments, alleging that the “timing… smacks of gamesmanship.” They argue that World Liberty and its lawyers should have identified the relevant ownership information before submitting their original disclosure.
World Liberty’s attorneys previously said they had only recently learned of the additional citizenship information. Sun’s lawyers subsequently requested documents, a deposition, and explanations of how the original disclosure was prepared.
According to the filing, World Liberty produced limited documentation, but declined to provide a deposition or details about its lawyers’ investigation into the company’s ownership structure.
Sun’s attorneys are requesting $263,821.20 in legal fees and costs incurred while opposing World Liberty’s arbitration motion. The amount covers work performed by four lawyers at Cahill Gordon & Reindel and excludes additional legal expenses incurred by other attorneys.
The motion seeks sanctions under the court’s inherent authority and a federal statute governing attorneys who unreasonably prolong litigation. A hearing is scheduled for December 10.
Justin Sun vs. Trump’s Crypto Company
The dispute stems from Sun’s April 21 lawsuit alleging that World Liberty fraudulently induced him to purchase tens of millions of dollars in WLFI tokens under a November 2024 agreement, before improperly freezing his holdings and restricting his governance rights.
As previously reported by Bitcoin.com News, Sun alleged that the company used a smart contract function to freeze approximately 2.9 billion WLFI tokens. World Liberty defended its restrictions as security measures intended to protect the platform.
The conflict escalated further in May when World Liberty filed a separate defamation lawsuit against Sun, accusing him of spreading misleading claims and engaging in trading activities intended to damage WLFI’s market value. Sun denied those allegations.
The newly disputed UAE connections also come amid wider scrutiny of World Liberty’s international financial relationships, including separate litigation involving a reported $500 million UAE-backed investment and transactions involving the project’s USD1 stablecoin.
Sun’s attorneys say the federal case will need to be refiled in California state court because of the jurisdictional issue. However, they argue the federal judge can still impose sanctions for conduct that occurred before dismissal.
“I will keep fighting for the transparency this community deserves,” Sun wrote on X regarding the filing.
Bitcoin.com News reached out to World Liberty Financial for comment on Sun’s latest move in the case, and will update this story if a response is sent.
