Justin Sun Accuses WLFI of Backdoor Control After Token Freeze

• Sun invested $75 million in WLFI and was named advisor before his wallet was frozen.
• WLFI alleges Sun used retail investors’ locked tokens as early exit liquidity on HTX.
• Sun calls the hidden freeze function a trap masquerading as a door and demands accountability.

Justin Sun invested $75 million in World Liberty Financial, was named a project advisor, and publicly backed its vision of decentralized finance for everyday Americans. This week, he accused it of secretly building a backdoor to freeze investor funds and called it a trap.

Here is exactly how the situation developed.

The Investment

In late 2024, Sun put $30 million into WLFI. By January 2025, he had scaled to $75 million and became an advisor. He separately committed $100 million to the TRUMP memecoin, bringing his total Trump-linked crypto exposure to approximately $175 million.

The Token Launch and the Move

The WLFI token launched on September 1, 2025, at $0.25 and hit a high near $0.33. Only 20% of presale tokens were unlocked at launch. Three days later, Sun moved 50 million WLFI tokens to HTX, the exchange where he sits on the advisory board, calling them test transactions.

Simultaneously, HTX began offering WLFI presale investors high yields to deposit and lock their newly unlocked tokens on the exchange.

What WLFI Alleges

WLFI says it identified a pattern. Retail investors were locking WLFI on HTX to earn yield. Sun was allegedly selling tokens on the back end of his own exchange, including tokens backing those user balances, planning to use future vesting unlocks to refill HTX balances later.

In plain terms, he allegedly used other people’s locked tokens as early exit liquidity for himself.

WLFI says it had documented evidence and froze Sun’s wallet for breaching his advisor agreement. The freeze covered 595 million unlocked tokens worth $107 million plus billions more in vesting tokens.

Sun’s Public Accusation

Rather than accept the freeze privately, Sun published a detailed public statement this week, reframing everything.

He accused WLFI of secretly embedding a backdoor blacklist function in its smart contract, giving the company unilateral power to freeze any token holder’s assets without notice or reason.

“This is the antithesis of decentralization. It is a trap masquerading as a door,” he wrote.

WLFI Fires Back

World Liberty Financial issued a firm response. They accused Justin of playing the victim and making baseless allegations to deflect from his own misconduct. The firm said it has contracts and evidence to support its position and indicated the matter will be addressed in court. 

Sun fired back, calling on those behind the WLFI account to step forward and identify themselves, while accusing the team of secretly implementing backdoor controls, freezing investor funds without due process, and acting without accountability.

Related: WLFI Hits New Low as World Liberty Defends Dolomite Loans