Four Outrageous Details Hidden in Sun Yuchen’s Lawsuit Against WLFI
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Four Outrageous Details Hidden in Sun Yuchen’s Lawsuit Against WLFI
The report specifically notes that Chase Herro, co-founder of WLFI, is a businessman with a complicated past.
Navigating Web3 tides with focused insightsBy Aleks Gilbert
Translated by Chopper, Foresight News
Cryptocurrency billionaire Justin Sun seeks to maintain a cordial relationship with Donald Trump—but has taken a hard line against the president’s business partners.
In a lawsuit filed Tuesday, Sun accused executives of World Liberty Financial of fraud, theft, and other illegal activities.
The allegations avoid dense, jargon-laden legalese. Instead, the complaint emphasizes that World Liberty Financial faces “impending insolvency and potential bankruptcy,” struggling to stay afloat.
Sun directs his most incisive accusations at one individual: Chase Herro, co-founder of World Liberty, whom the complaint labels a serial fraudster and tax evader.
Some details have been reported previously. Claims about World Liberty’s imminent collapse, however, remain speculative. Nonetheless, the lawsuit provides ample ammunition for the company’s critics—including disgruntled investors and opposition lawmakers waiting for an opening.
On Wednesday, when asked about the lawsuit, a World Liberty Financial spokesperson pointed to public statements made by the company’s co-founders on social media.
Zach Witkoff, CEO of World Liberty Financial, called the lawsuit “a desperate ploy by Justin Sun to divert attention from his own misconduct.”
Herro did not directly respond to the lawsuit. He instead shared an inspirational poem by Rudyard Kipling alongside Witkoff’s statement, adding: “Building is never easy—it is filled with both success and failure, like navigating a vast maze you must traverse.”
Below are four of the most notable allegations and details from the 52-page complaint.
Herro’s Past
Mainstream media reports have already documented Herro’s troubled history—including prior incarceration, inflammatory rhetoric, questionable business practices, and participation in a DeFi protocol in 2024 that lost nearly all its crypto assets due to a hack.
The complaint recaps all these points and adds several new details.
It states: “Herro’s pattern of commercial misconduct is egregious; around 2010, defrauded customers and business partners launched a website named ChaseHeroScam.com.”
That website was inaccessible as of Thursday, and DL News could not independently verify whether the site ever contained the content cited in Sun’s complaint.
The complaint further alleges that Herro has received four federal tax liens and that a property he owns in Florida was subject to a tax deed conveyance.
It also claims Herro “publicly boasted” about visiting Little Saint James Island—a private island owned by disgraced financier Jeffrey Epstein—though no evidence supporting this claim is provided in the complaint, and DL News has not yet verified whether Herro made such remarks.
The “Secret” Upgrade
From the outset, holders of World Liberty Financial’s governance token, WLFI, had extremely limited rights.
According to company documents, token holders had no authority over World Liberty Financial’s operations but could vote on technical upgrades to the underlying infrastructure.
Sun alleges that World Liberty executives breached this commitment by unilaterally implementing two technical upgrades last year—without any governance vote or disclosure to WLFI holders.
These upgrades allegedly granted World Liberty Financial the power to freeze and seize WLFI tokens—and that power has reportedly already been used against Sun. Sun describes the upgrade as “devastating.”
“Although the upgrade is visible on the public blockchain, World Liberty Financial buried it deep within the code and failed to inform token holders of its existence or potential consequences,” the complaint states. “The company secretly added a ‘blacklist’ function that can be activated at will.”
World Liberty Financial says the freezing functionality exists solely to protect users.
In his statement, Witkoff said: “Justin Sun engaged in violations, compelling World Liberty Financial to act in defense of its own interests and those of its users. World Liberty Financial will continue taking all necessary measures to safeguard the community ecosystem.”
The TRUMP Meme Coin
World Liberty Financial’s allegations regarding Sun’s purported misconduct have remained vague. Yet Sun claims company executives privately offered more specific justifications.
These include executives’ belief that Sun’s token sales caused WLFI’s price to drop by 40%, his alleged unauthorized purchase of tokens on behalf of others, and violations of the “Token Purchase Agreement.”
But the complaint identifies another catalyst for the dispute: the TRUMP meme coin.
“World Liberty Financial stated that one reason for freezing Sun’s WLFI tokens was its objection to Sun’s purchase of $100 million worth of TRUMP tokens—issued by another Trump-endorsed project,” the complaint reads. The next sentence contains redacted text, but its concluding portion notes that a certain action (most likely the TRUMP token purchase) “was pre-approved by a member of the Trump family who is also a partner in both projects.”
The complaint does not explain why World Liberty Financial opposes Sun’s purchase of TRUMP tokens.
Unlicensed Money Transmission
Last year, two cryptocurrency developers were sentenced to prison for operating an unlicensed money transmission business, while a third was convicted on the same charge and awaits sentencing.
Sun alleges World Liberty Financial violated the same regulation.
The complaint contends that World Liberty Financial effectively became a money transmitter by granting itself the authority to transfer tokens on behalf of others.
“World Liberty Financial’s highly centralized control over WLFI tokens contradicts DeFi principles entirely—and demonstrates that it operates as an unregistered, unlicensed money transmitter, violating numerous U.S. federal and state criminal laws.”
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