World Liberty Finance (WLFI) has filed a defamation lawsuit against cryptocurrency entrepreneur Justin Sun, alleging he orchestrated a coordinated smear campaign to spread false information about the project and harm its reputation.
In legal documents and public statements, WLFI accuses Sun of running a "defamatory smear campaign," utilizing influencers and automated bot accounts on social media platform X to disseminate damaging claims. The company asserts these actions were "coordinated, paid for, and deliberate," aiming to undermine the platform's credibility and depress its token's market value.
The lawsuit escalates an ongoing dispute between the parties. Earlier, Justin Sun had filed a lawsuit in a California court against World Liberty Finance, claiming his tokens were frozen, his governance voting rights were removed, and he was improperly excluded from decision-making processes. Sun stated he attempted private resolution before legal action, alleging the platform imposed strict new governance rules and maintained hidden controls—claims WLFI denies.
WLFI traces the conflict's origin to November 2024, when an entity linked to Sun, identified as Blue Anthem, acquired a significant quantity of WLFI tokens. The company later accused Sun's affiliated entities of engaging in "prohibited transactions," including transferring tokens to the major cryptocurrency exchange Binance. Tensions reportedly intensified after WLFI exercised a contractual provision to freeze certain tokens, a measure it states was designed to "protect the ecosystem" and was clearly disclosed in its terms.
In response to the freeze, WLFI alleges Sun launched public attacks, labeling the platform's governance a "scam" and accusing it of installing "backdoors" to exploit its community. WLFI's lawsuit seeks to hold Sun accountable for the alleged reputational and financial damage caused by these statements.
The company has also criticized coverage from major media outlets, including The New York Times, for amplifying Sun's claims. In its statement, WLFI referenced Sun's past regulatory scrutiny, noting the U.S. Securities and Exchange Commission has previously accused him of fraud. The company suggested media bias and hinted at political motivations behind the coverage, mentioning connections to the Donald Trump and Witkoff families without providing detailed elaboration.
"This is about the integrity of decentralized finance," WLFI stated, emphasizing its legal action is a defense against what it perceives as an attack that risks undermining trust across the broader cryptocurrency ecosystem.
The legal proceedings mark a significant public clash within the decentralized finance sector, highlighting ongoing tensions around governance, investor rights, and reputational warfare in the digital asset space.