Justin Sun’s personal claims against World Liberty Financial will remain in California federal court following an August 20 hearing, while the parties work through which claims brought by two Sun-controlled companies must move into private arbitration.
Sun said U.S. District Judge James Donato kept his individual claims in open court and directed the parties to confer over claims brought by Blue Anthem Limited and Black Anthem Limited. The dispute is part of Sun et al. v. World Liberty Financial LLC, filed April 21 in the U.S. District Court for the Northern District of California.
World Liberty co-founder Zach Witkoff challenged Sun’s description of the hearing, saying the court had not issued a ruling and that several corporate claims must be arbitrated. World Liberty’s June motion sought arbitration for Blue Anthem and Black Anthem rather than Sun personally, while asking the court to stay any surviving personal claims if they were not dismissed.
WLFI Blacklist Remains at Center of Sun’s Lawsuit
The underlying case stems from World Liberty’s control over Sun’s WLFI holdings, a dispute that began publicly when his wallet was blacklisted shortly after WLFI became transferable in September 2025.
Sun’s complaint alleges World Liberty modified the WLFI smart contract on August 24, 2025 to add a blacklist function allowing designated addresses to freeze tokens without a governance vote or advance disclosure. Early purchasers received a 20% unlock on September 1, making 600 million of Sun’s purchased tokens transferable before his wallet was blacklisted days later.
Sun and his companies hold four billion WLFI tokens in total, including three billion acquired for $45 million and another one billion tied to an advisory allocation. The lawsuit alleges that freezing the holdings also removed their ability to transfer, stake and exercise governance rights.
The April WLFI lawsuit seeks damages and orders preventing World Liberty from destroying or reallocating the disputed tokens. Sun had already accused the project of operating a hidden freeze mechanism before filing the case.
World Liberty disputes those allegations and maintains that its authority to restrict addresses was disclosed through contractual terms and token documentation.
World Liberty Points to Tether Freezes and Sun’s Regulatory Record
The fight over blacklist controls has expanded beyond WLFI because issuer-level freezes are already common among centralized stablecoins. Tether, for example, has repeatedly frozen USDT on TRON in response to sanctions and law-enforcement actions.
A July OFAC action resulted in Tether freezing USDT across 131 TRON addresses associated with ISIS-K. Earlier blacklist activity had frozen about $515 million across Ethereum and TRON addresses over a 30-day period.
World Liberty has also attacked Sun’s broader regulatory record as the litigation has escalated. The SEC resolved its 2023 civil case against Sun and affiliated companies in March through a $10 million settlement, with Sun and the defendants making no admission of wrongdoing.
Separately, the UK sanctioned Huobi Global S.A. in May under its Russia sanctions regime, listing HTX and HTX Exchange as name variations. Sun and HTX challenged the designation, arguing that the sanctioned Panama entity is legally separate from the operating HTX exchange. Sun himself was not designated.
World Liberty’s Florida Lawsuit Keeps the Fight in Two Courts
World Liberty opened a second legal front in May by suing Sun for defamation in Florida. The company alleges Sun made false public accusations about its token controls and engaged in prohibited WLFI transfers and short-selling activity. Sun denies the allegations.
That lawsuit has become part of the California arbitration argument, with Sun’s lawyers contending that World Liberty cannot pursue public litigation against him in Florida while attempting to move related claims by his companies into private arbitration.
Judge Donato has not ruled on the merits of Sun’s fraud, contract and property claims. The court’s public docket had not yet posted a written order resolving the arbitration dispute following the August 20 hearing, while briefing on World Liberty’s separate motion to dismiss remains stayed pending further order.
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