Trump’s crypto empire descends into warring lawsuits

For a little while, crypto mogul Justin Sun represented everything the digital currency industry could want from Donald Trump. But Blockchain Camelot is over, and the dueling lawsuits are here.

Sun, a Chinese-born crypto-billionaire known for his antics—he is the guy who paid $6.2 million for a banana duct-taped to a wall at Art Basel—was already facing a slew of civil fraud allegations leveled by the Biden-era SEC when he entered the Trumps’ orbit. Shortly after the 2024 election, Sun made a huge investment in digital tokens issue by World Liberty Financial, the newly launched crypto firm run by the Trump family and their allies.

Sun tweeted loudly about his, and the crypto industry’s, love for Donald Trump, and when the new administration came to power, his regulatory and legal troubles eased. The SEC agreed to put its lawsuit against him on hold; he recently settled the case for the relatively low sum of $10 million. Sun and Trump, it seemed, embodied a new political and economic order.

But it didn’t last.

Two weeks ago—after a months-long dispute—Sun filed a lawsuit against World Liberty Financial, accusing the company of “engaging in an illegal scheme to seize property” by preventing him from selling his tokens. On Monday, World Liberty Financial hit back, filing a defamation lawsuit that accuses Sun of trying to ruin the company with lies. Sun, who usually doesn’t hold back his opinions on anything, quickly responded, insisting that the suit was “nothing more than a meritless PR stunt.”

The details of what exactly each side is alleging are also quite representative of the crypto industry—complicated, arcane, and full of protestations of transparency and insistence that the other side is not what it seems. But here’s the gist:

Sun owns 4 billion World Liberty tokens, including 1 billion that the company awarded to him in exchange for serving on a World Liberty advisory board. The tokens were awarded very early in the company’s existence, and company rules barred him from selling them quickly. The tokens are supposed to grant holders the right to vote on major decisions about World Liberty’s future.

Sun said in his lawsuit that he should have become eligible sell some of his tokens last September. But without warning, according to Sun, World Liberty froze his accounts, blocked the sale of his tokens, and wouldn’t tell him why. In addition, Sun claims, World Liberty’s management never allowed Sun, or any other token holders, any substantial amount of say in company decision-making and instead have focused on enriching themselves.

In its own lawsuit, filed Monday, World Liberty Financial said it knows Sun’s secrets. The company claims he engaged in transactions with World Liberty tokens when he shouldn’t have; improperly purchased tokens for other people; and secretly engaged in short-selling.

In short, World Liberty says Sun has been a bad investor who secretly seeks to undermine the company. And Sun says World Liberty has been a bad company that secretly seeks to undermine its investors.

One thing that is clear is that the price of World Liberty—or WLFI, for short—tokens has been plummeting for months. WLFI first hit the market last August, at $0.45. That turned out to be its peak price. Since then, it’s fallen more than 80 percent (though it did rise on Monday). It’s now worth about 7 cents per token.

The people involved are what makes this otherwise extremely complicated, crypto-bro fight more than just a blockchain nerd squabble. Sun may own 4 billion WLFI tokens, but Donald Trump and his family own about 22.5 billion. The Trumps have a controlling interest in the company. But one of other partners is Sheikh Tahnoon bin Zayed Al Nahyan, aka the brother of the United Arab Emirates’ monarch, who controls a trillion-dollar investment fund and runs the small Arab country’s intelligence apparatus. He paid $500 million for his stake. And a World Liberty Financial affiliate has signed deals with Pakistan’s government, under the watchful eye of that country’s army chief.

So this odd little crypto company and its sliding token price are suddenly in the middle of everything.