Trump-Backed Crypto Project Freezes Justin Sun’s Wallet in Decentralization Paradox

Justin Sun, the founder of Tron and a high-profile advocate for U.S. President Donald Trump, has found himself at the center of a controversy after his cryptocurrency wallet was reportedly frozen by the Trump family-backed project World Liberty Financial. The development comes days after Sun transferred $9 million worth of the WLFI token, which is part of the Trump-linked crypto initiative. Sun described the move as “unreasonable” and claimed that the freeze violated the core principles of decentralization and blockchain technology [1].

According to blockchain tracking data from Arkham Intelligence, Sun’s wallet was flagged for the $9 million transfer of WLFI tokens. In a public post on X, Sun asserted that he had not sold any of his holdings and did not contribute to the 40% price drop the token experienced since becoming tradable on Monday [1]. He further emphasized that he had no involvement in selling activity and even proposed purchasing $20 million worth of Trump-linked assets in a bid to demonstrate his continued support for the project [1].

World Liberty Financial has defended its decision, stating that it acts only when alerted to “malicious or high-risk activity that could harm community members.” The project, which was launched in October and is co-founded by Donald Trump and his sons, aims to develop a decentralized finance application. However, this incident has sparked criticism and raised questions about the project’s commitment to the core values of transparency and decentralization [1].

The controversy has also drawn attention to the broader challenges facing decentralized finance platforms. Analysts have pointed out that automated compliance tools, which WLFI and similar projects often rely on, can sometimes produce flawed or misleading risk assessments. For example, one of the tools used to flag Sun’s transactions reportedly identified past interactions with DeFi contracts and a mixer service as high risk. Critics argue that such tools can be overly sensitive and fail to account for the context of transactions [3].

The freeze has not been an isolated incident. Bruno Skvorc, a blockchain developer and contributor to Ethereum 2.0, has also accused World Liberty Financial of refusing to unlock his tokens. In a public post, Skvorc claimed that WLFI had labeled his wallet as “high risk” due to blockchain exposure and refused to release his funds. He described the situation as an example of “new age mafia” behavior, citing the lack of transparency and accountability in the project’s actions [3].

The situation has added to the growing scrutiny of Trump-linked crypto projects. Justin Sun had previously been one of the largest investors in these initiatives, including the Trump memecoin. His support, along with his substantial financial contributions, has raised concerns about potential influence-peddling, particularly given the ongoing SEC lawsuit against him over alleged securities violations [1].

Sun has denied any wrongdoing and has stated that he and his legal team are working on a potential resolution with the SEC. Despite these challenges, his recent public support for World Liberty Financial highlights the continued importance of high-profile backers in the crypto space. However, the recent wallet freeze and the broader controversy suggest that such alliances may not always be stable or mutually beneficial.

As the debate around compliance and decentralization continues, the incident involving Justin Sun and World Liberty Financial serves as a reminder of the complexities inherent in the crypto ecosystem. For investors and developers, the balance between risk management and the principles of open and trustless systems remains a critical issue. The outcome of this dispute could have broader implications for how decentralized finance projects manage compliance and investor relations [3].

Source:

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

[2] Coin Telegraph (https://cointelegraph.com/news/justin-sun-trump-wlfi-unlock-frozen-token)

[3] Coin Telegraph (https://cointelegraph.com/news/developer-trump-wlfi-stealing-tokens)