Key Points
- Tron’s Justin Sun condemned WLFI’s governance proposal as “one of 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 those who opt out
- Sun alleges his 4% holdings have been frozen, preventing him from participating in governance votes
- Moonrock Capital’s Simon Dedic accused the Trump family of executing a “rug pull” on early backers
- World Liberty Financial defends the measure as necessary for “long-term participation” and ecosystem health
Donald Trump’s cryptocurrency venture World Liberty Financial is facing intense scrutiny following the unveiling of a governance proposal that would impose lengthy token lockups on early investors — with permanent freezes awaiting those who decline the updated terms.
The controversial measure, published on WLFI’s governance platform this Wednesday, targets over 62 billion WLFI tokens with restrictive vesting schedules. Project team members, strategic advisors, and partnership entities would see their holdings locked for two years, followed by a gradual three-year release period. Early project supporters receive marginally better conditions but still confront years of restricted access to their investments.
Those declining to accept these revised conditions face indefinite token lockups with no established timeline for release.
Additionally, the framework includes provisions for permanently destroying up to 4.5 billion tokens, while participants accepting the new structure would see 10% of their holdings burned immediately.
The announcement triggered fierce opposition from Justin Sun, Tron’s founder and among WLFI’s largest stakeholders. Sun branded the scheme “one of the most absurd governance scams I have ever seen” in an X platform statement.
Sun reports controlling approximately 4% of World Liberty’s token supply, but asserts these holdings are presently frozen. According to Sun, this freeze effectively bars him from exercising any voting rights in the governance process.
He additionally questioned the true power structure governing the protocol. Sun identified unnamed wallet addresses — including a multi-signature wallet with vote override capabilities and another account with user blacklisting authority — as the actual decision-makers.
“This proposal is not governance,” Sun declared. “It is an exercise of power by the selected few.”
Mounting Opposition from the Investment Community
Sun’s criticisms found support among other prominent investors. Simon Dedic, who founded Moonrock Capital, characterized the situation as early investors being “rugged” by those associated with the Trump family.
In his X post, Dedic suggested the maneuver seemed designed to give the project “another shot at squeezing the same lemon,” with timing that coincides with the duration of Donald Trump’s presidency.
He further condemned what he described as “blatant misconduct” executed with minimal attempts at concealment.
Long-Standing Tensions Between Sun and the Project
The conflict between Sun and WLFI traces back to September, when the project blacklisted a blockchain wallet connected to Sun containing approximately $107 million worth of governance tokens.
This action marked a dramatic shift from late 2024, when Sun committed $30 million to WLFI and accepted an advisory position with the project.
Relations deteriorated when WLFI deposited 5 billion of its native tokens into Dolomite, a lending platform co-created by one of its advisors, subsequently borrowing roughly $75 million in stablecoins. The WLFI token price plummeted 12% to a new low the next day.
Sun openly criticized the project for exploiting users as “personal ATMs.” World Liberty Financial countered with warnings of potential legal proceedings.
A WLFI representative informed CoinDesk that the proposal “aims to optimally ensure long-term participation in our ecosystem and help ensure healthy market supply.”
The voting period for this proposal will commence shortly and continue for seven days. WLFI tokens currently trade near 8 cents, representing a decline exceeding 40% year-to-date and more than 75% below the all-time peak of 33 cents.
