Sun’s personal WLFI claims stay in federal court

Cryptocurrency entrepreneur Justin Sun’s individual claims against World Liberty Financial are set to remain before a California federal court after a hearing over the crypto venture’s attempt to shift substantial parts of the dispute into private arbitration.

US District Judge James Donato heard arguments on August 20 in the Northern District of California over World Liberty Financial’s motion to compel arbitration and stay portions of the lawsuit. Sun characterised the hearing as a significant procedural victory, saying his personal claims would continue in open court.

The outcome is narrower than some initial accounts of the hearing suggested. World Liberty Financial’s June motion principally sought to compel Blue Anthem Limited and Black Anthem Limited, two companies controlled by Sun, to arbitrate their claims. It also sought a stay of any surviving claims brought personally by Sun. The company did not simply seek to send every claim made by Sun himself to arbitration.

World Liberty Financial co-founder Zach Witkoff disputed Sun’s interpretation of the proceedings, saying the court had not issued the sweeping ruling described by Sun and that several claims involving his companies were destined for arbitration. No written order resolving the motion was publicly available immediately after the hearing, leaving the precise division between court and arbitration to be formalised.

The dispute nevertheless leaves Sun’s personal allegations positioned to remain part of a public federal proceeding. The parties are also expected to address which claims involving Blue Anthem and Black Anthem should be heard by an arbitrator and which, if any, can remain before Donato.

Sun, founder of the TRON blockchain network, filed the lawsuit on April 21 alongside Blue Anthem and Black Anthem. His complaint accuses World Liberty Financial of breach of contract, fraud, conversion and other wrongdoing linked to his investment in the WLFI cryptocurrency project.

Sun paid $45 million for three billion WLFI tokens through purchases made in November 2024 and January 2025. His complaint says he subsequently received another one billion tokens connected with an advisory arrangement, an aspect of the relationship that World Liberty Financial has contested.

The litigation escalated after restrictions were imposed on tokens associated with Sun. His complaint alleges that World Liberty Financial added controls to the WLFI smart contract capable of blacklisting cryptocurrency wallets and freezing tokens without adequate disclosure to investors.

About 600 million WLFI tokens held by Sun became available for trading when early-investor restrictions were partially lifted on September 1, 2025. The wallet containing those tokens was subsequently blacklisted. Sun argues that World Liberty Financial improperly deprived him of control over valuable digital property.

World Liberty Financial rejects the allegations and has maintained that its actions were justified by contractual obligations and concerns surrounding token activity. The merits of those competing claims were not decided at the August 20 hearing.

The arbitration argument stems from several agreements involving Sun’s companies. World Liberty Financial contends that contractual provisions require disputes covered by those agreements to be handled through arbitration rather than federal litigation.

Sun’s lawyers have countered that an earlier token purchase agreement contains provisions directing disputes to courts in California. They have also argued that World Liberty Financial undermined its arbitration position by initiating separate litigation against Sun.

That parallel case was filed in Miami-Dade County, Florida, in May. World Liberty Financial accused Sun of making defamatory statements to his millions of social-media followers concerning the token restrictions and the company’s conduct. Sun has rejected the allegations.

The California proceedings therefore involve both substantive cryptocurrency questions and a contractual battle over where those questions should be decided. Arbitration would place affected claims into a comparatively private dispute-resolution process, while claims remaining before the federal court would proceed through a public docket.