SEC, Justin Sun Settle TRON Lawsuit

World Liberty Financial (WLFI) was co-founded by U.S. President Donald Trump and his son. Justin Sun invested $45 million from 2024 to 2025 to acquire 3 billion WLFI tokens and received another 1 billion through his role as an adviser. His tokens were frozen after WLFI began trading on September 1, 2025, raising questions about investor rights, token governance and the credibility of the Trump family's crypto venture.

Sun sued in federal court in California on April 21, 2026, alleging that tokens once worth as much as $1 billion had been unlawfully frozen. WLFI responded on May 4 with a defamation lawsuit in Florida state court, accusing him of improper transfers, purchases through nominees, short selling and a coordinated smear campaign. It sought damages and the retraction of his statements. Sun denied shorting the token and called the countersuit a “baseless publicity stunt.” At the time of the filing, his 4 billion-token holding was worth about $264 million.

World Liberty Financial is a cryptocurrency venture co-founded by the Trump family that issues the $WLFI governance token and USD1 dollar-backed stablecoin. TRON founder Justin Sun spent $45 million to acquire 3 billion $WLFI tokens in 2024 and 2025 and received another 1 billion tokens for serving as an adviser, making him the venture's largest investor at the time. The dispute also highlights the risks surrounding token governance and control of digital assets.

Sun sued World Liberty Financial in federal court in California on April 21, 2026, alleging that it had unlawfully frozen his 4 billion $WLFI tokens since September 2025. The tokens were worth about $320 million when the lawsuit was filed. He also alleged that the company pressured him to buy $200 million of USD1 and invest in its parent company, then threatened to destroy his tokens after he refused. On May 4, WLFI filed counterclaims against Sun in Florida, accusing him of defamation, unauthorized token transfers and short-selling the token. Sun denied the allegations.

World Liberty Financial, or WLFI, a Trump family-backed venture, issues a governance token and the USD1 stablecoin. Tron founder Justin Sun was previously one of its largest outside backers. The dispute involves related-party lending, token liquidity and depositors' access to withdrawals, highlighting governance and conflict-of-interest risks in DeFi protocols.

On April 9, 2026, it was revealed that WLFI had pledged 5 billion WLFI tokens as collateral on Dolomite to borrow about $75 million in stablecoins. Utilization of the USD1 pool briefly reached 100%, temporarily preventing depositors from withdrawing, while more than $40 million later flowed to Coinbase Prime. Sun accused the team on April 12 of treating the community as a “personal ATM.” WLFI denied the allegation on April 13 and threatened legal action.

The U.S. Securities and Exchange Commission sued TRON founder Justin Sun, the Tron Foundation, the BitTorrent Foundation and Rainberry on March 22, 2023, alleging that TRX and BTT were offered as unregistered securities. The agency also alleged that wash trading inflated TRX trading volumes between 2018 and 2019, raising broader questions over how the United States classifies crypto assets under securities law.

The SEC submitted a proposed settlement to the U.S. District Court for the Southern District of New York on March 5, 2026, and the court entered final judgment on March 9. Without admitting or denying the allegations, Rainberry must pay a $10 million civil penalty within 30 days of the judgment and permanently cease the related violations. The SEC dismissed its remaining claims against Sun, the Tron Foundation and the BitTorrent Foundation.