Sun Yuchen: WLFI hides a blacklist and a freezing function, treating the community as an ATM

Tron founder Justin Sun publicly blasted World Liberty Financial (WLFI) on the X platform on April 12, accusing the crypto project—associated with Donald Trump—of secretly embedding a “blacklist” feature in its smart contracts that can freeze investors’ token ownership rights without prior notice or the provision of any remediation measures, and criticizing the team for “treating the crypto community like a personal ATM.”

Justin Sun’s Accusations: Hidden Backdoor in WLFI Smart Contracts

Justin Sun said in his post that his initial investment in WLFI was based on his belief in its public messaging about decentralized finance (DeFi) and broader retail access, but he later found a freezing function in the contract that had never been disclosed to investors. His personal wallet was blacklisted as early as the project’s launch in 2025. According to analysis by blockchain data firm Bubblemaps, this has already caused losses of more than $80 million.

Justin Sun clearly laid out four major accusations on X:

Hidden Backdoor Control: Secretly implanting the ability to control backdoors for users’ assets without disclosing it to investors

Freezing Funds Without Due Process: Freezing investors’ token ownership rights without disclosing it publicly or under any due governance procedures

Unauthorized Fees: Charging users fees without community authorization

Illegitimate Use of Community Funds: Criticizing that all actions taken by WLFI “have never been authorized by any fair, transparent, or good-faith community governance process”

From the Biggest Supporter to the Strongest Critic

Justin Sun is not a secondary holder of WLFI—he has put at least $75 million into WLFI tokens, making him one of the largest known supporters of the project. For that reason, his public accusations are far more damaging to the project’s reputation than criticisms from typical investors.

WLFI said the reason it marked Justin Sun’s wallet was because it suspected that the address had misappropriated funds belonging to other holders. Justin Sun denied that claim and re-framed the entire matter as specific evidence that WLFI retains centralized control capabilities while packaging them under the “DeFi” brand. He believes this approach directly betrays the core principles of decentralized finance.

WLFI Faces Multiple Pressures

Justin Sun’s public salvo comes as WLFI faces multiple pressures. On-chain data shows that the WLFI team pledged about $400 million worth of WLFI tokens as collateral and borrowed $150 million in stablecoins through a decentralized lending protocol, Dolomite, that has ties to WLFI advisors. This has drawn widespread questions from observers about liquidity risk, conflicts of interest involving related parties, and the liquidation pressure that could result if the token price drops further.

After investors digested the Dolomite loan report, the WLFI token price fell to near its all-time low of around $0.08. WLFI then tried to stabilize the market: on April 11, it announced it had repaid a $25 million loan, stating the loan position was “far from liquidation levels,” and pledged to publish a phased governance unlocking plan for early retail buyers.

Frequently Asked Questions

What are Justin Sun’s core accusations against WLFI?

Justin Sun accuses WLFI of hiding a blacklist function in its smart contracts that can freeze investors’ tokens, and that this function was never disclosed to investors. His personal wallet was blacklisted when the project launched in 2025, causing losses of more than $80 million, and he criticized WLFI for packaging the DeFi brand with opaque centralized control.

Why did WLFI put Justin Sun’s wallet on the blacklist?

WLFI said it was because it suspected that Justin Sun’s wallet had misappropriated funds from other holders. Justin Sun denied that claim and characterized it as specific proof that the project preserves centralized control capabilities, rather than a legitimate security measure.

What major risks does WLFI face right now?

In addition to Justin Sun’s public accusations, WLFI also faces: the token price dropping to its historical low of $0.08; liquidity risk from borrowing $150 million in stablecoins through Dolomite using about $400 million worth of WLFI as collateral; and potential issues involving conflicts of interest with related parties. WLFI has started repaying part of the loans and has committed to releasing a governance unlocking plan.