Not long after the 2024 presidential election, cryptocurrency entrepreneur Justin Sun bought $75 million worth of digital coins from World Liberty Financial, the Trump family’s crypto startup.
World Liberty said yes “honored” work with him. Mr. Sun, known for his global promotion of the crypto industry, called World Liberty an “excellent project.”
Now that partnership has collapsed. On Tuesday, Mr. Sun he sued World Liberty in the U.S. District Court for the Northern District of California, alleging that the company tried to pressure him into buying more of its digital coins and threatened to report him to law enforcement in the United States.
The lawsuit represented an extraordinary turning point in a business partnership that had once seemed mutually beneficial. Mr. Sun backed World Liberty as the company struggled to get its coin off the ground. The investment brought him into business with the Trump family while he was fighting a fraud lawsuit by the Securities and Exchange Commission, sparking a public outcry about the conflict of interest.
Mr. Sun paid a $10 million fine to settle the SEC suit in March. World Liberty denied that any of its deals were part of a political quid pro quo, and Mr Sun said he bought the coins because he believed in the “growth potential of this project”.
In a lawsuit filed on Tuesday, Mr. Sun said World Liberty prevented him from selling the coins he bought. World Liberty restricted his access after he resisted pressure from his managers to buy hundreds of millions of dollars of a new digital currency the company had recently created, the suit says.
Mr Sun accused World Liberty of “gross misconduct” and said company leaders “see the project as a unique opportunity to use the Trump brand to profit through fraud”.
A representative for Mr. Sun did not respond to a request for comment. On social media, World Liberty chief executive Zach Witkoff called Mr Sun’s claims “totally baseless”.
“He engaged in misconduct that required World Liberty to take steps to protect itself and its users,” Mr. Witkoff said.
The Trump family unveiled World Liberty in September 2024. It teamed up with President Trump’s friend Steve Witkoff, Mr. Witkoff’s sons Zach and Alex, and two little-known businessmen, Chase Herr and Zak Folkman.
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World Liberty began selling a cryptocurrency called $WLFI, with a large portion of the proceeds going to the Trumps. The coin was a “governance token” designed to give its buyers a degree of voting power over the development of the firm.
But the coins would be “locked”, meaning buyers wouldn’t be able to sell them on the open market, at least for a while.
Initial demand for $WLFI was insufficient. But after Mr. Sun bought, World Liberty saw total sales of more than $500 million, a significant gain for the Trumps.
Early last year, World Liberty created a second cryptocurrency, the so-called stablecoin, USD1, which was designed to maintain a price of $1. According to the lawsuit, World Liberty engaged in a “sustained and escalating campaign to pressure” Mr. Sun into buying $200 million of $1 and making an equity investment in World Liberty.
When it became clear that Mr. Sun did not want to invest, World Liberty’s leaders “became hostile toward Mr. Sun,” according to the suit.
In September, World Liberty began allowing $WLFI investors to sell coins, a potential profit opportunity for those early backers. Mr. Sun could not move his funds. World Liberty froze his assets “in retaliation for his refusal to capitulate to their demands,” the suit says.
After the dispute spilled over into social media, Mr. Herro, one of World Liberty’s founders, told Mr. Sun that the “know your customer” documentation he submitted when he bought $WLFI was insufficient, according to the suit. (Financial institutions often require this type of documentation, sometimes called KYC, to make sure customers aren’t involved in crimes.)
The complaint said Mr Herro threatened to report Mr Sun to US authorities “due to these unspecified KYC issues”.
“The so-called KYC issues appear to be nothing more than a contrived basis for an attempt to manipulate the plaintiffs,” the lawsuit states.
