Sun Yuchen wins key court victory in $45 million lawsuit against Trump's World Liberty Financial

Cryptocurrency tycoon Sun Yuchen achieves major legal victory in lawsuit against Trump family crypto project

Cryptocurrency billionaire Sun Yuchen has achieved major victory in a legal dispute with World Free Finance (WLFI), a cryptocurrency project backed by the Trump family. A federal judge in California has rejected the company's request to transfer the dispute to private secret arbitration.

This ruling means that Sun Yuchen's personal claim against WLFI will be heard in open court, exposing this increasingly open and fierce legal battle completely to the public eye rather than hidden behind sealed documents.

Specific content of the ruling

On August 20, Sun Yuchen's legal team appeared in the U.S. District Court for the Northern District of California to oppose the mandatory arbitration motion filed by World Liberty Finance. The legal approach was intended to transfer the entire dispute to a private process, away from public court records and public scrutiny. The judge in charge of the case, James Donato, upheld Sun Yuchen's personal claims, ruling that the claims would be heard in open court.

The judge also rejected World Free Finance's broader argument that all company-related claims should automatically enter arbitration proceedings. Instead, the two parties were asked to meet and determine which additional claims should remain in court and which should be resolved through arbitration-meaning the case has not yet been fully resolved, but the most personal and high-profile parts of Sun Yuchen's lawsuit will remain public.

Sun Yuchen celebrated the results on the X platform:

"This was a major victory, and the judge ruled that all of my personal claims will remain in open court. This is an important victory." He added why he believed World Free Finance was so keen on secrecy: "I believe that if World Free Finance was acting legitimately, they would not be so keen to hide what they were doing. I will not stop until the community has the transparency it deserves."

The cause of this dispute

Sun Yuchen was one of the earliest and largest investors in free finance in the world. He initially invested $30 million in November 2024 to help keep the emerging platform operating, and subsequently invested a total of at least $45 million in the project in exchange for WLFI governance tokens. The investment played an important role in turning the platform's otherwise difficult token sales into a $550 million financing. The platform was launched as a decentralized financial project related to the U.S. president and his family, whose family members include sons Eric Trump, Donald Trump Jr. and Barron Trump.

According to a lawsuit filed by Sun Yuchen in April 2026, World Liberty Financial secretly built a hidden "backdoor" feature in WLFI smart contracts-a code that gave the project team centralized, unilateral power to freeze, restrict or even destroy the assets of any token holder without warning or due process. Sun Yuchen claimed that World Freedom Finance later used this back door against him personally, freezing his WLFI token wallet worth hundreds of millions of dollars and depriving him of his governance voting rights.

Sun Yuchen's complaint further claims that after freezing his assets, World Free Finance pressured him to invest hundreds of millions of dollars in the project's USD1 stablecoin. When he refused and tried to claim his legal rights, his tokens were frozen as retaliation. He claimed that control mechanisms similar to freezing and destruction also existed in the USD1 stablecoin itself, raising broader concerns among anyone holding the asset. Sun Yuchen's litigation claims amount to hundreds of millions of dollars.

Sun Yuchen said that shortly after filing the lawsuit, he obtained a court order that explicitly prohibited World Liberty Finance from burning, destroying, redistributing or otherwise permanently disposing of any of his tokens. He believes this protection is necessary because world free finance both threatens to destroy his assets and has built the technical capabilities to actually carry out the operation.

World Freedom Financial's counterclaim

World Freedom Financial did not simply deny the allegations-the company turned to the offensive and filed its own lawsuit against Sun Yuchen in a Florida court in May 2026, accusing him of defamation. According to the complaint, World Free Financial claimed that Sun Yuchen launched a "scorched earth pressure campaign" against the company after his tokens were frozen, and then publicly "smeared" the project on Platform X, including calling it a "world tyranny" and calling its officials "bad actors." World Free Financial claimed that Sun Yuchen's public statements were false and caused reputation and business damage to the company. The company has requested a jury trial and sought an undisclosed amount of compensation.

World Free Financial insists that it has not acted in any wrongdoing and believes that its ability to freeze tokens is publicly disclosed and included in a formal agreement with Sun Yuchen. The company also accused Sun of improperly transferring WLFI tokens to Binance-related accounts and engaging in short selling activities before and after the token issuance-allegations Sun described as baseless and politically motivated.

Question of whether World Free Finance is able to pay compensation

In addition to the accusation of freezing assets, Sun Yuchen also raised a sharp financial question: If he wins, World Free Finance really has enough capital to pay the judgment compensation. He pointed out that the market value of USD1 of approximately US$4 billion represents collateral deposited by users in stablecoins, rather than company-owned funds that World Free Finance can freely use.

Sun Yuchen also emphasized that World Free Finance reportedly mortgaged approximately 5 billion WLFI tokens on Dolomite. Dolomite is a cryptocurrency lending platform co-founded by the chief technology officer of World Liberty Financial. Sun Yuchen likened the structure to the complex, self-traded lending arrangements that led to the collapse of FTX in 2022.

What happens next

The ruling did not essentially determine who was right and who was wrong, but only determined where the fight would take place. With Sun Yuchen's personal claim confirmed to remain in open court, future documents, evidence and testimony in this part of the case will be subject to public scrutiny rather than sealed in private arbitration. At the same time, the two parties still need to resolve the issue of whether the remaining company-related claims will be heard through court or arbitration, which means that further rulings are yet to come. Currently, one of the most closely watched legal battles in the cryptocurrency space-the showdown between an industry giant and a project directly linked to the family of the then-U.S. president-will continue to be fought under the full public eye.