The latest court ruling keeps potentially sensitive allegations in public view as the wider dispute continues.
Justin Sun said Thursday that a California federal judge ruled his individual claims against World Liberty Financial will stay in open court, rejecting the Trump-linked project’s push to force the dispute into private arbitration and seal the case from public view.
The ruling keeps alive one of crypto’s messiest ongoing legal fights, one that has grown from a token-freezing dispute into a broader case questioning whether World Liberty and its USD1 stablecoin can actually cover what they owe.
Sun Says Individual Claims Will Stay Public
Sun made the comments in a post on X after his counsel appeared in federal court in San Francisco to oppose World Liberty Financial’s request for arbitration and sealed proceedings.
“Today, my counsel appeared in California federal court to oppose World Liberty Financial’s efforts to force our dispute into secret arbitration proceedings and seal documents from public view,” Sun wrote. “The Court agreed with us.”
According to the crypto entrepreneur, the judge ruled that all of his individual claims will remain in open court. The judge also rejected World Liberty’s position that all company-related claims should be arbitrated, with the parties instead ordered to meet and confer over which of those claims should stay in court and which could proceed through arbitration.
Sun’s lawsuit dates back to April. He alleges that World Liberty froze his WLFI tokens, removed his governance rights, and threatened to burn the tokens. He is seeking hundreds of millions of dollars in damages.
The dispute escalated after the former Grenada diplomat questioned the project’s control over its token contracts. As CryptoPotato reported back in April, blockchain researcher banteg had identified a blacklist function added to a later version of the WLFI contract, along with a “batch reallocation” feature.
In his X post, he wrote that he has since learned World Liberty built the same freeze-and-burn capability into its USD1 stablecoin and warned USD1 holders that the company has already shown a willingness to use those functions.
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He also pointed to World Liberty depositing roughly 5 billion WLFI tokens, about half its treasury, as collateral on Dolomite, a lending platform co-founded by its own chief technology officer, to borrow at least $75 million in stablecoins, including its own USD1, a structure he said analysts have compared to the circular leverage that collapsed FTX.
Sun added that USD1’s reported $4 billion market cap is user collateral, not money that could be used to pay a court judgment, and stated that he has seen no sign that World Liberty holds enough capital to cover a claim worth hundreds of millions of dollars.
Dispute Has Widened Since April
The legal fight followed a governance dispute over more than 62 billion WLFI tokens, with Sun objecting back in April to a proposal that would place different groups of locked tokens under new vesting terms, as well as the alleged existence of a separate control structure involving an anonymous guardian address and a 3-of-5 multisignature group.
He argued that holders who rejected the proposal could face indefinite restrictions and called the arrangement “a dictatorship wearing the mask of a DAO.” World Liberty rejected his accusations, telling him on X:
“We have the contracts. We have the evidence. We have the truth. See you in court pal.”
The firm indeed filed its own defamation lawsuit in Florida, accusing Sun of spreading false claims, an accusation he dismissed as “nothing more than a meritless PR stunt.”
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