Justin Sun wins procedural victory in World Liberty Financial lawsuit

Justin Sun has secured a procedural victory in a California federal court regarding his lawsuit against World Liberty Financial. U.S. District Judge James Donato ruled that Sun’s individual claims will proceed in open court, rejecting the company’s attempt to move the entire dispute into private, confidential arbitration.

Sun, an early investor who committed $45 million to the project, alleges that World Liberty Financial utilized smart contract “backdoor” functions to freeze, restrict, or burn his WLFI token holdings. He has further accused the company’s USD1 stablecoin of possessing similar administrative powers that allow operators to move funds from frozen wallets without user consent.

While Sun describes the court ruling as a win for transparency, World Liberty Financial co-founder Zach Witkoff has disputed Sun’s characterization of the hearing, claiming the post is “riddled with falsehoods.” The court has ordered both parties to negotiate which specific corporate claims will remain in public court and which may move to arbitration. The ruling does not resolve the underlying allegations of fraud or misconduct.