Mystery Deepens as Trump-Backed Crypto Freezes Investor Assets

World Liberty Financial, a decentralized finance (DeFi) project backed by former U.S. President Donald Trump and his family, has drawn significant scrutiny following the freezing of tokens belonging to one of its major investors, Justin Sun, a Chinese cryptocurrency entrepreneur. The incident has sparked questions about governance, transparency, and the project’s adherence to its purported principles of financial freedom and decentralization.

Sun, whose Tron blockchain ranks among the top 10 crypto networks globally, initially invested $30 million in World Liberty Financial’s token, WLFI, in 2024 and later increased his stake to $75 million in January 2025. His involvement played a key role in boosting early fundraising efforts for the project. However, on September 5, Sun announced on X that his WLFI tokens had been frozen, effectively restricting his ability to transfer or sell them. He described the move as "unreasonable" and called for an immediate unlocking of his assets to maintain trust and momentum in the project [1].

The freezing of Sun’s tokens occurred amid a broader trend of WLFI implementing wallet restrictions. According to Galaxy Digital researchers, more than 200 wallets that invested in WLFI had their tokens frozen prior to and after the token’s public trading debut on September 1. By September 4, that number had risen to 272 wallets. Some of the blocklists were reportedly tied to pre-launch KYC checks, while others may have been in response to perceived high-risk activity [4]. The project cited efforts to prevent hacking attempts and safeguard a "Lockbox" of tokens during its public launch [4].

WLFI is a governance token designed to grant holders a voice in the project’s future decisions, a mechanism often used in crypto projects to gradually decentralize control. However, the recent actions have highlighted a centralization of authority, with the project’s team able to impose restrictions on token holders. This has led to criticism from industry observers, including Alex Thorn of Galaxy, who noted that while the project promotes “freedom and community rule,” the execution of such principles is undermined by centralized control mechanisms [1].

Sun, in an effort to reassure investors, stated that no selling or buying had occurred in his recent wallet transactions and offered to invest an additional $10 million in WLFI and another $10 million in a publicly traded U.S. stock tied to the project. He also emphasized his belief in the project’s long-term success and his commitment to growing alongside the team [2]. The move appears to be an attempt to mitigate potential reputational damage, as the project is now under intense public and regulatory scrutiny.

World Liberty Financial has not responded directly to requests for comment, nor has it addressed Sun’s public statements. In a vague response on its social media channels, the project stated it does not seek to blacklist individuals but acts in response to “malicious or high-risk activity that could harm community members” [2]. The lack of transparency and communication has further fueled speculation about the true motivations behind the recent restrictions.

The situation also raises concerns about potential conflicts of interest, as the Trump family’s stake in World Liberty Financial has generated significant financial returns through token sales. This has drawn attention from critics who argue that the project’s backers have historically faced regulatory challenges, including the ongoing SEC lawsuit against Sun. While the case is reportedly being explored for resolution, its outcome could impact both Sun and the broader legitimacy of World Liberty Financial.

As the project navigates these challenges, the incident underscores the growing scrutiny of DeFi projects that claim to prioritize decentralization yet retain centralized control over key functions like wallet access and transaction permissions. For WLFI’s community, the situation represents a critical test of whether the project can align its operational practices with its ideological messaging.

Source:

[1] title1 (https://www.axios.com/2025/09/05/trump-justin-sun-world-liberty-financial)

[2] title2 (https://fortune.com/crypto/2025/09/05/justin-sun-donald-trump-world-liberty-financial-blacklisted-crypto-address-wlfi/)

[3] title3 (https://www.reuters.com/business/finance/top-trump-crypto-backer-justin-sun-says-his-world-liberty-tokens-unreasonably-2025-09-05/)

[4] title4 (https://cryptoslate.com/insights/apart-from-justin-suns-wallet-world-liberty-financial-has-blacklisted-over-270-additional-wallets/)