Key Takeaways
- Tron founder Justin Sun labeled WLFI’s governance proposal among “the most absurd governance scams” in crypto
- More than 62 billion WLFI tokens face lockup periods extending up to four years, with indefinite freezes for non-participants
- Sun alleges his 4% ownership stake has been frozen, preventing him from participating in governance decisions
- Moonrock Capital’s Simon Dedic accused the Trump family of executing a “rug pull” on early backers
- World Liberty Financial defends the move as necessary for “long-term participation” and ecosystem health
World Liberty Financial, the cryptocurrency initiative backed by Donald Trump, faces mounting criticism following the announcement of a governance proposal that would impose years-long token lockups on early investors — with permanent freezes for those who decline.
Published on WLFI’s governance platform this Wednesday, the proposal targets over 62 billion WLFI tokens with stringent new vesting requirements. According to the terms, team members, advisers, and strategic partners would endure a two-year complete lockup, followed by an additional three years of gradual token release. Early project supporters receive moderately relaxed conditions but still confront substantial multi-year waiting periods before gaining access to their holdings.
Those declining to accept these revised terms would see their tokens frozen permanently, with no defined mechanism for future release.
Additionally, the proposal includes provisions for burning as many as 4.5 billion tokens, while insiders accepting the new terms would face a 10% reduction in their token allocations.
The plan triggered fierce opposition from Justin Sun, Tron’s founder and a major WLFI investor. In a statement posted to X, Sun characterized the proposal as “one of the most absurd governance scams I have ever seen.”
Sun maintains he owns approximately 4% of World Liberty Financial, yet his tokens remain frozen. According to his account, this freeze effectively blocks his participation in the governance vote.
He further questioned the true power structure behind the protocol. Sun identified anonymous wallet addresses — including a multi-signature wallet capable of vetoing governance decisions and another account with user blacklisting capabilities — as the actual decision-makers.
“This proposal is not governance,” Sun stated. “It is an exercise of power by the selected few.”
Community Outrage Intensifies
Sun’s objections echoed across the investor community. Simon Dedic, who founded Moonrock Capital, accused the Trump family of executing a “rug pull” against initial investors.
In his X post, Dedic suggested the maneuver represented an attempt to give the project “another shot at squeezing the same lemon,” with timing that conveniently aligned with Donald Trump’s remaining presidential tenure.
He further condemned what he described as “blatant misconduct” conducted with minimal attempt at concealment.
Long-Running Conflict Reaches Boiling Point
The confrontation between Sun and WLFI traces back to September, when the project blacklisted a blockchain wallet connected to Sun containing approximately $107 million in governance tokens.
This represented a dramatic shift from late 2024, when Sun committed $30 million to WLFI and accepted an advisory position with the project.
Relations deteriorated further when WLFI deposited 5 billion of its native tokens into Dolomite, a lending protocol created by one of its own advisers, borrowing roughly $75 million in stablecoins against them. The token’s value plummeted 12% to an all-time low within 24 hours.
Sun publicly denounced the project for treating participants like “personal ATMs.” World Liberty Financial countered with threats of legal proceedings.
A World Liberty Financial representative told CoinDesk the proposal “aims to optimally ensure long-term participation in our ecosystem and help ensure healthy market supply.”
The voting period for the controversial proposal is scheduled to commence shortly and will remain open for seven days. At present, the WLFI token trades around 8 cents, representing a decline exceeding 40% year-to-date and a drop of more than 75% from its peak value of 33 cents.
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