Sun Yuchen Sues Trump Family: Paid $75 Million for Nothing but a Blacklist
TechFlow Selected TechFlow Selected
Sun Yuchen Sues Trump Family: Paid $75 Million for Nothing but a Blacklist
A person renowned in the crypto world for shrewdness and calculation discovers he has become a mere pawn in someone else’s calculations.
Navigating Web3 tides with focused insightsAuthor: Ada, TechFlow
Sun Yuchen invested $75 million—and in return received only an advisory title, a pile of frozen tokens, and a federal court summons.
On April 22, the TRON founder formally sued World Liberty Financial (WLF) in U.S. federal court in San Francisco, accusing it of making him “the primary target of its fraudulent scheme” and causing “hundreds of millions of dollars in losses” to him and his company. He further alleged that WLF is now “on the verge of collapse” and “severely insolvent,” and plans to allocate “95% of token sale proceeds to insiders.”
The crypto industry’s most calculating figure has, this time, been calculated against.
A $75-Million “Letter of Allegiance”
Let’s rewind to late 2024.
World Liberty Financial had just launched sales of its WLFI token—but the launch was painfully quiet, generating only $22 million in sales during its first month.
Sun Yuchen stepped in. He first invested $30 million, later increasing his commitment to $45 million. Combined with 1 billion WLFI tokens awarded for advisory services, his total investment reached approximately $75 million—making him WLF’s largest publicly disclosed investor.
After Sun’s investment, other investors followed suit, pushing WLF’s total fundraising to roughly $550 million. WLF later publicly acknowledged that Sun Yuchen had “resuscitated” the project.
At the time, the SEC was suing Sun Yuchen, accusing him of market manipulation, selling unregistered securities, and paying celebrities to promote TRON without proper disclosures. Yet after Donald Trump’s inauguration in January 2025, the SEC voluntarily paused its case against Sun. In March 2026, the two parties settled for $10 million—with Sun admitting no wrongdoing.
A $30 million investment erased what could have been a financially ruinous lawsuit. Sun knew exactly how to balance the books.
Refusing to Bail Them Out—Then Instant Blacklisting
The honeymoon didn’t last long.
According to the complaint, WLF repeatedly pressured Sun Yuchen to make additional investments throughout 2025—including asking him to mint WLF’s USD1 stablecoin on the TRON network. Sun refused.
By July 2025, relations had fully collapsed.
What followed was less a commercial dispute—and more a chain-based manhunt.
In August 2025, WLF modified the WLFI token’s smart contract to introduce a “blacklist” function. The project team could unilaterally freeze any holder’s tokens—no notice, no justification, no governance vote required.
A month later, when Sun attempted to transfer his WLFI tokens, his wallet was blacklisted—freezing approximately $107 million worth of governance tokens and stripping him of voting rights.
WLF then threatened to “burn” (permanently destroy) his tokens. In blockchain terms, burning means irreversible annihilation—the assets would cease to exist.
Sun claimed he tried to resolve the matter “in good faith,” but WLF refused to unfreeze his tokens or restore his rights.
“They left me no choice but to turn to the courts,” he wrote on X.
Zach Witkoff, CEO of World Liberty Financial, responded that Sun’s allegations were “completely baseless” and accused Sun of “improper conduct,” forcing WLF to act “to protect itself and its users.”
No one explained what that “improper conduct” actually entailed.
The President’s ATM
To understand why Sun Yuchen’s tokens were frozen, we must first examine what World Liberty Financial truly is.
On the surface, it presents itself as a “decentralized finance” (DeFi) project promising retail investors full control over their funds. It issues a governance token (WLFI), a stablecoin (USD1), and DeFi lending products.
But peel back the layers, and its core structure is simply a profit pipeline.
The Trump family receives 75% of net proceeds from WLFI token sales. By December 2025, the family had already pocketed $1 billion—and still holds unsold tokens valued at $3 billion. USD1’s reserve assets are invested in U.S. Treasury securities, with interest income flowing directly into Trump-family-controlled entities. With a $4.2 billion market cap and current Treasury yields, the stablecoin alone generates roughly $160 million in annual income.
And that’s not even the largest chunk.
In January 2025—four days before Trump’s inauguration—Sheikh Tahnoon bin Zayed Al Nahyan, a member of Abu Dhabi’s royal family, acquired a 49% stake in World Liberty Financial for $500 million through his investment vehicle. The agreement was signed by Eric Trump. Of that amount, $187 million flowed directly into Trump-family-controlled entities, and at least $31 million went to entities linked to the Witkoff family.
Zach Witkoff, CEO and co-founder of World Liberty Financial, is the son of Steve Witkoff, U.S. Special Envoy to the Middle East.
Senator Elizabeth Warren labeled the arrangement “blatant corruption.” The House of Representatives subsequently launched an investigation. Trump himself claimed he was “unaware” of the deal.
Dolomite: Borrowing From Yourself
In early 2026, on-chain data revealed that World Liberty Financial deposited 5 billion of its own WLFI tokens into the DeFi lending platform Dolomite as collateral—borrowing approximately $75 million in stablecoins. Over $40 million of those borrowed funds were transferred to Coinbase Prime, typically indicating conversion into fiat currency.
Corey Caplan, co-founder of Dolomite, also serves as an advisor to World Liberty Financial.
So: their own tokens, deposited into a platform run by their own advisor, used to borrow their own stablecoin—and then cashed out.
This maneuver pushed Dolomite’s USD1 lending pool utilization to 100%. Ordinary depositors were locked in, unable to withdraw their funds. Meanwhile, World Liberty Financial’s collateral accounted for 55% of Dolomite’s total value locked (TVL).
WLF’s official response? “We acted as anchor borrowers, creating attractive yields for the platform.”
In other words: they pledged their own tokens on a platform advised by one of their own, borrowed their own stablecoin, and converted it into cash. In traditional finance, that’s a related-party transaction—requiring independent audit and public disclosure. In DeFi? Not even an announcement.
On April 12, Sun Yuchen publicly challenged WLF, accusing its team of treating users as a “personal ATM”—and declaring himself “the first and largest victim.” Three days later, WLF unveiled a governance proposal.
An Ultimatum
The April 15 governance proposal, nominally titled “governance restructuring,” in reality stipulated that 6.228 billion WLFI tokens—62% of total supply—would be subject to a new unlocking schedule. Tokens held by founders, team members, and advisors—totaling 45.2 billion—would face a mandatory 10% burn (~4.5 billion tokens), followed by a two-year lock-up and three-year linear release.
Holders refusing the new terms would see their tokens frozen indefinitely.
Sun called the proposal “one of the most absurd governance scams I’ve ever seen.” But he couldn’t vote against it—his tokens had already been frozen.
Consider voting power distribution: in a USD1 governance proposal passed in January 2026, the top nine wallets controlled nearly 60% of voting power.
WLFI’s price tells the whole story. It peaked at $0.46 in September 2025—then entered a steep decline. On April 11, it hit an all-time low of $0.0767—a drop of 84% from its high.
Early buyers who purchased at $0.015 remain in the green. But if you’re Sun Yuchen, your $75 million investment once commanded over $1 billion in token value—and is now frozen, possibly facing permanent destruction.
The Same Mirror
Sun Yuchen is no innocent victim.
He’s been accused by the SEC of market manipulation and fraud—and his timing of this investment aligned precisely with his legal predicament.
It’s precisely because he isn’t innocent that this case is so compelling.
A figure who built his fortune by “harvesting韭菜 (chives)” has now been treated in identical fashion by a larger power structure. That irony speaks louder than any whitepaper.
World Liberty Financial promised “decentralized finance”: user-owned assets, no intermediaries, no censorship.
In practice, its smart contracts contain backdoors; the team can freeze your tokens at will; governance votes are controlled by nine wallets; and founders lend themselves money using your deposits.
Sun’s exact words on X: “Unfortunately, certain individuals within the World Liberty Financial project team have operated the project in ways inconsistent with President Trump’s values.”
Even at the moment of filing suit, he carefully preserved Trump’s image. A man who spent $75 million—and saw all his assets frozen—still meticulously distinguished between “President Trump” and “certain individuals within the project team” in his complaint.
The most intriguing question here isn’t whether Sun can recover his tokens. It’s how the court will classify WLFI. If deemed a security, WLF’s unilateral contract modifications and asset freezes—conducted without shareholder vote—could constitute fraud under federal securities law.
WLFI currently trades at $0.078—down ~84% from its peak. Questions loom over USD1’s reserve adequacy. Risks surrounding Dolomite’s lending pool remain unresolved. The House investigation continues. Meanwhile, the Trump family has already cashed out over $1 billion.
Sun’s convertible bond has its earliest maturity window in 2027. Court scheduling may take over a year. During that time, WLFI tokens will continue unlocking—and more holders will face the binary choice: “accept the new terms, or face indefinite freezing.”
Join TechFlow official community to stay tuned
Telegram:https://t.me/TechFlowDaily
X (Twitter):https://x.com/TechFlowPost
X (Twitter) EN:https://x.com/BlockFlow_News
深潮TechFlow
