Key Points
- Justin Sun labeled WLFI’s governance proposal “one of the most absurd governance scams” in recent memory
- More than 62 billion WLFI tokens would be locked for as long as four years under the new terms, with indefinite freezing for non-participants
- Sun reports his 4% holdings have been frozen, preventing his participation in governance votes
- Simon Dedic, founder of Moonrock Capital, accused the Trump family of executing a “rug pull” on early backers
- World Liberty Financial defends the proposal as a mechanism to “align all participants in the ecosystem for the long run”
World Liberty Financial, the cryptocurrency venture associated with Donald Trump, faces mounting controversy following the release of a governance proposal that would impose extended lockup periods on early investor tokens — with indefinite freezing awaiting those who decline participation.
Published on WLFI’s governance platform Wednesday, the proposal targets over 62 billion WLFI tokens with new restriction rules. Team members, advisory personnel, and strategic partners would experience a two-year lockup period followed by three years of gradual token release. Early backers receive moderately reduced vesting schedules while still confronting years of restricted access.
Anyone refusing these updated conditions would see their holdings locked permanently, with no established mechanism for future access.
The framework also includes provisions for burning up to 4.5 billion tokens, while insiders accepting the terms would face a 10% token burn upon enrollment.
Justin Sun, founder of Tron and among WLFI’s largest stakeholders, delivered scathing criticism of the initiative. Sun characterized the plan as “one of the most absurd governance scams I have ever seen” in a statement posted to X.
Sun reports owning approximately 4% of World Liberty, though his tokens remain frozen. He maintains this restriction has completely excluded him from participating in governance decisions.
He further questioned the true power structure within the protocol. Sun identified anonymous wallet addresses — including a multisignature wallet capable of vote overrides and another account with user blacklisting capabilities — as holding genuine control over protocol decisions.
“This proposal is not governance,” Sun stated. “It is an exercise of power by the selected few.”
Mounting Opposition From Investors
Sun found support from other voices in the community. Simon Dedic, who founded Moonrock Capital, declared that early investors had suffered a “rug pull” orchestrated by the Trump family.
Writing on X, Dedic suggested the maneuver seemed designed to give the project “another shot at squeezing the same lemon,” with timing aligned to the remainder of Donald Trump’s presidential administration.
He further condemned what he described as “blatant misconduct” executed with minimal attempts at concealment.
Long-Running Tensions Between Sun and WLFI
The conflict between Sun and WLFI originated in September, when the project blacklisted a blockchain address connected to Sun containing approximately $107 million worth of governance tokens.
This action marked a dramatic shift from late 2024, when Sun committed $30 million to WLFI and accepted an advisory position.
The relationship deteriorated further when WLFI deposited 5 billion of its native tokens into Dolomite, a lending protocol co-created by one of its advisers, borrowing roughly $75 million in stablecoins. The token price dropped 12% to a new record low the next day.
Sun openly criticized the project for using participants as “personal ATMs.” World Liberty Financial countered with threats of litigation.
A World Liberty Financial representative told CoinDesk the proposal “aims to optimally ensure long-term participation in our ecosystem and help ensure healthy market supply.”
The voting period for the proposal will commence shortly and continue for seven days. WLFI tokens currently trade near 8 cents, reflecting a decline exceeding 40% year-to-date and more than 75% below the all-time peak of 33 cents.
