Sun Yuchen directly challenges WLF, the federal court officially files a case

Writing: Black

Investor rights enforcement takes effect! Sun Yuchen officially sues World Liberty Financial, alleging that tokens were frozen without cause and that infringement occurred

Recently, another major dispute has erupted in the crypto finance sector. Well-known investor and TRON founder Sun Yuchen has officially filed a lawsuit in the U.S. Federal Court in California, suing World Liberty Financial (hereinafter referred to as WLF), the project team behind it. As the core holder of the project, Sun Yuchen accuses the WLF project team of unilaterally and without reason freezing his WLFI tokens, illegally depriving users of their governance voting rights, and continuously threatening permanent destruction of users’ assets, seriously infringing the lawful rights and interests of both institutional and individual investors.

It is understood that Sun Yuchen is an early core strategic investor and project adviser of World Liberty Financial, and has been deeply involved in the project’s early development and market promotion, providing substantial resources and support for the ecosystem to take root, brand exposure, and market expansion. Based on long-term, in-depth cooperation and an investment layout, Sun Yuchen holds a large amount of WLFI token assets and is one of the project’s important investors. However, beginning in the later stage of the cooperation, the WLF project team has repeatedly unilaterally changed the project rules, disregarding early cooperation agreements and community governance standards, and has continued to damage the rights and interests of existing investors.

Sun Yuchen’s side states that his held WLFI tokens were frozen unilaterally by the project team without any violations, without prior notice, and without any reasonable grounds. After the assets were frozen, the corresponding community governance voting rights of the individual were also fully revoked, completely losing the qualification to participate in project decision-making and to exercise the rights of the holders. Not only that, the project team has repeatedly sent signals and claimed it would permanently destroy the tokens held by him, forming dual coercion over both assets and rights for investors, causing him tremendous asset losses and investment risks.

Before initiating a judicial lawsuit, Sun Yuchen’s team has always adhered to the principles of resolving disputes through negotiation and stabilizing them, and has repeatedly engaged in discussions with the WLF project team through various channels such as official coordination and private communication. They hoped that both sides would properly resolve disputes such as asset freezes and restricted rights, restore investors’ lawful rights, and maintain stability in the project community, based on early investment agreements and industry-standard governance rules. However, multiple rounds of communications and negotiations were rejected by the project team; the issue has remained unresolved for a long time, and the contradictions between the two sides’ cooperation have continued to escalate.

The key trigger for this dispute is World Liberty Financial’s release of a new governance proposal on April 15, 2026. The proposal introduces multiple highly controversial restrictive rules, severely harming the rights and interests of existing advisers and institutional investors. According to the proposal, the project team requires the forced destruction of 10% of the adviser team’s tokens, and also formulates stringent asset lock-up rules: for all token holders, if they do not proactively and explicitly approve this newly added provision, their tokens will be locked indefinitely by the project team, completely losing circulation, trading, and governance authority.

This proposal is a unilateral modification of governance rules and a forced change to investment commitments by the project team, breaking the governance system and lock-up mechanism that the project had previously publicized externally, and it contains clear “rule tyrant” clauses. In response, Sun Yuchen has publicly expressed strong opposition, believing that the proposal was not formulated based on principles of community co-governance, fairness, and transparency. Instead, it is a means for the project team to centralize power and harvest existing investors, severely violating the core purpose of decentralized finance projects, and greatly damaging investors’ asset security and the industry’s credibility.

Looking at the entire process of this dispute, from the WLF project team unilaterally freezing investors’ assets and depriving them of governance rights, to issuing a restrictive governance proposal and coercing holders to accept unequal terms, a series of actions has completely broken the cooperation consensus between the parties on investment and financing, and has also exposed industry problems where certain overseas crypto projects have opaque governance, arbitrary changes to rules, and no assurance of investor rights and interests.

Industry analysts point out that the core competitiveness of decentralized projects lies in openness and transparency, community co-governance, and stable rules. This is also the key to attracting global investors to participate in planning and deployment. If the project team arbitrarily modifies smart contract rules, freezes users’ assets, and forcibly locks up and destroys tokens, it will not only severely infringe on individual investors’ rights and interests, but also deal a heavy blow to market and community trust in the project, directly affecting the project’s market value and long-term ecosystem development. Since the release of this governance proposal and the outbreak of rights disputes, the price of the WLFI token has fallen sharply, its market capitalization has continued to shrink, negative sentiments in the community have spread, and this has already clearly reflected the market’s rejection of the project’s governance chaos.

After multiple rounds of failed negotiations and mediation, Sun Yuchen chose to safeguard his rights through judicial means, requesting that the U.S. Federal Court in California, in accordance with law, determine that the relevant actions of the WLF project team were in violation of laws and regulations. He also demanded that the project team immediately remove the token freezing restrictions, restore his full community voting and governance rights, revoke the unreasonable governance proposal terms, and at the same time compensate for all economic losses caused by this infringement.

As of now, World Liberty Financial’s official side has not yet released any formal response or official explanation regarding this lawsuit. As this lawsuit is an investor rights-enforcement case in the crypto finance sector in 2026 that has drawn extremely high attention, it not only concerns the lawful asset rights protection of individual investors, but will also provide important reference significance for overseas crypto projects’ governance standards, existing investors’ rights protection, and the compliant development of the industry. Going forward, the market will continue to monitor the progress of the judicial proceedings in this case and the final outcome.