Justin Sun Calls Out Trump-Backed WLFI Over Controversial Governance Proposal

Tron founder Justin Sun has publicly criticized a governance proposal from World Liberty Financial (WLFI), the cryptocurrency project linked to former President Donald Trump, calling the vote mechanism "absurd" and accusing the team of consolidating power at the expense of token holders.

Controversial Lockup and Burn Proposal

The disputed governance proposal seeks to impose sweeping changes across the WLFI token ecosystem. More than 62 billion WLFI tokens would be subjected to new multi-year lockup periods and vesting schedules under the plan. The proposal also includes provisions to permanently burn up to 4.5 billion tokens.

According to the terms outlined, insiders—including team members, advisors, and partners—would face a two-year lockup period followed by a three-year gradual release schedule. Those who opt into the new terms would also see 10% of their tokens burned. Early supporters would be subject to slightly shorter vesting periods without the burn requirement.

Critically, token holders who reject the new terms would have their tokens locked indefinitely, according to the proposal text. This provision has drawn sharp criticism from Sun and other prominent voices in the crypto community.

Sun Alleges Vote Manipulation and Exclusion

In a detailed post on X (formerly Twitter), Sun claimed the governance process was engineered to punish dissent. He alleged that token holders voting against the proposal would face indefinite token lockups, effectively coercing compliance.

Sun further stated that he and other major holders had been excluded from meaningful participation. He claimed that tokens representing approximately 4% of voting power under his control had been frozen, preventing him from exercising governance rights.

Beyond the lockup mechanics, Sun questioned the legitimacy of the entire voting process. He alleged that ultimate control over the protocol rests with anonymous wallet addresses, including a multisignature setup capable of overriding vote outcomes and a separate account with blacklisting authority.

"This proposal is not governance," Sun wrote. "It is an exercise of power by the selected few who are carefully engineering a further power consolidation and property expropriation operation."

Industry Figures Join Criticism

Sun wasn't the only figure in the crypto space to condemn the proposal. Simon Dedic, founder of Moonrock Capital, characterized the situation as early investors being "rugged" by the Trump family themselves.

"All the $WLFI early investors who thought they were sitting on solid profits just got rugged," Dedic posted on X, describing the move as giving the project another opportunity to extract value from investors while engaging in what he called "blatant misconduct."

WLFI Defends Long-Term Alignment Strategy

A World Liberty Financial spokesperson defended the proposal to CoinDesk, stating it "was designed to further align all the participants in the WLFI ecosystem for the long-run." The representative added that the measures aim to "optimally ensure long-term participation in our ecosystem and help ensure healthy market supply."

Deteriorating Relationship Between Sun and WLFI

The governance dispute represents the latest chapter in an increasingly hostile relationship between Sun and the Trump-linked project. Earlier this week, WLFI threatened legal action against Sun, claiming to have "contracts" and "evidence" after he accused the team of exploiting users through DeFi transactions.

The friction has been building since September, when WLFI blacklisted a blockchain address linked to Sun that held approximately $107 million worth of governance tokens. This action marked a dramatic reversal from late 2024, when Sun invested $30 million in WLFI tokens and joined the project in an advisory capacity.

Tensions escalated further after WLFI deposited 5 billion of its own tokens into lending protocol Dolomite—where one of its advisers serves as co-founder—and borrowed roughly $75 million in stablecoins. The tokens subsequently fell 12% to a record low the following day, prompting Sun to publicly accuse the project of treating users as "personal ATMs," which triggered the latest legal threats.

Coinasity's Take

This governance controversy highlights the persistent challenges surrounding decentralization and fair token distribution in crypto projects, particularly those with high-profile political affiliations. The WLFI proposal raises serious questions about whether projects can claim to be decentralized while maintaining override mechanisms and blacklist capabilities. Sun's criticisms—particularly regarding indefinite lockups for dissenters and frozen voting power—point to governance design that may prioritize insider control over genuine community participation. Regardless of the legitimacy of either side's claims, the public deterioration of this relationship serves as a cautionary tale about the importance of transparent governance structures and the risks inherent in crypto projects with centralized control mechanisms.