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Justin Sun has asked a federal court to sanction Trump-backed World Liberty Financial, alleging the company waited months to reveal UAE citizenship in its ownership chain, a disclosure that could strip the court of jurisdiction over his $45 million token lawsuit.
The Tron founder says World Liberty first listed only Florida, then disclosed 22 members across four jurisdictions after a judge signaled some of his claims would stay in open court.
The development has introduced another dimension to the increasingly public dispute between Sun and World Liberty Financial, which began after the crypto entrepreneur accused the company of misleading him into investing and subsequently freezing his WLFI tokens.
Sun announced on X that his legal team had filed a motion seeking sanctions against World Liberty Financial and its lawyers over the timing and accuracy of the company’s ownership disclosure.
The Tron founder said he was among the venture’s earliest and largest investors. In November 2024, he agreed to purchase $30 million worth of WLFI tokens through a Token Purchase Agreement, subsequently increasing his investment to $45 million.
In April 2026, Sun filed a lawsuit alleging that World Liberty Financial induced his investment through fraudulent representations before unlawfully freezing his tokens.
His agreement with the company, he explained, allowed him to pursue his claims in either California federal or state court. He initially selected the federal court.
However, federal jurisdiction generally requires the parties involved in certain civil disputes to be citizens of different states or countries. Under the applicable rules, a company’s citizenship is determined by the citizenship of its owners or members. Consequently, a foreign owner can affect whether a company is considered foreign for jurisdictional purposes.
Sun argued that his case could proceed in federal court as long as World Liberty Financial and all its owners were American.
According to his account, the company’s initial disclosure identified only World Liberty itself and listed Florida as its sole citizenship. Its lawyers also reportedly certified that they were unaware of any other owners requiring disclosure.
The subsequent amendment, however, changed the picture considerably.
The dispute intensified after World Liberty Financial amended its ownership disclosure to identify 22 members in its ownership chain.
Sun said the revised filing listed citizenship in Florida, Delaware, Puerto Rico and the UAE. The company has since argued that the federal court lacks jurisdiction because its UAE connection means foreign parties are present on both sides of the lawsuit.
The timing of the amendment is central to Sun’s allegations.
Before the revised disclosure, World Liberty Financial had sought to compel arbitration, an action that would have moved the dispute away from public court proceedings and into a private arbitration process.
Sun opposed the request, saying his legal team spent months and hundreds of thousands of dollars contesting the company’s position.
At an August hearing, the judge indicated that the arguments did not justify sending all of Sun’s claims to arbitration. Instead, the court determined that some claims should remain in open court while others should proceed through arbitration. It subsequently instructed both parties to negotiate an agreement outlining which claims would follow each route.
Less than a week after that hearing, World Liberty Financial submitted its amended ownership disclosure.
Sun believes the sequence raises questions about whether the company knew about its UAE ownership links before the original filing and whether the information was deliberately withheld.
He also questioned the explanation offered by the company’s lawyers, who reportedly said they only discovered the UAE citizenship issue after submitting the initial disclosure.
In his statement, Sun argued that if the lawyers’ explanation was accurate, either they failed to conduct adequate due diligence or the company did not provide them with accurate information.
He added that World Liberty Financial declined to explain how the discrepancy occurred when his legal team sought clarification.
Beyond the jurisdictional dispute, Sun has highlighted what he considers a contradiction between the company’s court filings and its public positioning.
World Liberty Financial’s gold paper presents the venture as an American-focused decentralized finance project. The document states that the company is not organised offshore and describes it as an American corporation committed to bringing decentralized finance back to the United States.
It also promotes a US-based decentralized platform built around what it calls American ideals of liberty, privacy and freedom to transact.
One section of the document describes the company as “an American, tax-paying, corporation that aims to bring DeFi to its rightful home America.”
Sun contrasted these statements with the company’s reliance on its UAE ownership links to challenge the federal court’s authority over the lawsuit.
“World Liberty was proudly American when it was selling tokens. It discovered its UAE roots only when it needed a way out of an American federal courtroom,” Sun wrote on X.
The allegation places the company’s corporate identity and ownership transparency at the centre of the dispute. However, Sun’s claims about the timing and circumstances of the disclosure remain allegations, and the filing of his sanctions motion does not establish that World Liberty Financial or its lawyers deliberately misled the court.
The company’s position on federal jurisdiction is also distinct from the underlying allegations concerning Sun’s frozen tokens and investment agreement.
World Liberty Financial has previously pushed back against Sun’s claims, alleging that he shorted WLFI and contributed to downward pressure on the token’s price. That counter-allegation has added to the public confrontation between the two sides.
Sun said his immediate objective is to hold World Liberty Financial and its legal representatives accountable for what he considers an improper ownership disclosure.
The sanctions motion seeks to make the company and its lawyers bear the costs associated with the alleged procedural misconduct rather than leaving Sun responsible for expenses incurred during the dispute.
He also maintained that the issue extends beyond his personal investment, arguing that token holders should be able to rely on accurate information from projects seeking their capital.
“Token holders deserve to know whether the projects they invest in are telling the truth, both to the public and to courts,” Sun wrote.
The Tron founder further indicated that the current federal court proceedings would not end his attempt to pursue the underlying claims.
According to his announcement, he intends to refile the lawsuit in California state court once the sanctions motion has been resolved.
That decision would allow him to continue pursuing his allegations against World Liberty Financial even if the federal court ultimately determines that it lacks jurisdiction over the case.
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