Justin Sun alleges a WLFI ‘backdoor’ – What does it mean for USD1 holders?
Why is the Tron founder warning investors about WLF and USD1?
Justin Sun, Founder of TRON, has once again taken a jab against President Donald Trump-linked World Liberty Financial (WLF). In his recent X post, Sun warned investors about the risks he believes exist around WLFI and its stablecoin, USD1.
Sun says his lawyers appeared in a California federal court because WLF wanted the dispute moved into private arbitration and wanted certain documents sealed.
Justin Sun vs. World Liberty Financial
However, Sun was completely against this idea, as he wanted the case to remain publicly accessible.
We argued forcefully that this case belongs in open court—and the Court agreed with us.
That said, the judge too wants Sun and WLF to discuss which company-related claims should remain in federal court and which, if any, should proceed through arbitration. This alone has made Sun think,
This is a significant win.
However, it does not mean he has won the underlying lawsuit.
For context, Sun was one of WLF’s earliest and largest investors and had invested $45 million in WLF and received WLFI tokens in return. However, he claimed,
World Liberty secretly embedded a backdoor into the $WLFI smart contract that gave themselves unilateral power to freeze, restrict, and burn any holder’s tokens without notice or due process.
WLF threatens Tron’s founder
Sun further alleges that WLF used this capability against his own WLFI tokens, which he describes as an unlawful seizure of his property. He also claims that when he attempted to exercise his legal rights, WLF threatened him with criminal referrals.
After filing the lawsuit, Sun says he obtained a court order preventing WLF from burning, destroying, reallocating, or permanently disposing of his WLFI tokens.
He claims the order was necessary because WLF had allegedly threatened to destroy the tokens and had the technical ability to do so. Not only this, but Sun even claimed that USD1 also has administrative controls that could allow WLF to freeze or potentially destroy tokens.
Not the first time!
Well, this isn’t the first time Tron’s founder has alleged WLF. Back in April 2026, Sun also alleged that WLF deposited around 5 billion WLFI tokens as collateral on Dolomite and borrowed at least $75 million in stablecoins, including USD1.
However, defying all claims, WLFI had filed a defamation lawsuit against the billionaire crypto investor in May 2026.
Therefore, this time Sun put it best when he said,
In my opinion, there is serious reason to be cautious about both $WLFI and USD1.
Final Summary
- Tron founder slams Trump’s WLF, pointing out the risks that exist around WLFI and USD1.
- Justin Sun alleges that WLF threatened him with criminal referrals when he attempted to exercise his legal rights.
