- Citing independent researchers, Tron founder Justin Sun claimed World Liberty can unilaterally move USD1 from frozen addresses to admin-controlled wallets.
Tron (TRX) founder Justin Sun’s lawsuit against World Liberty Financial (WLFI) just gained a slight leverage. The court recently sided with his motion to keep the case public rather than allowing the dispute to proceed into a private arbitration.
The latest developments have emboldened Sun to spill more details to the public about his dealings with the Trump family-backed decentralized finance (DeFi) platform. He revealed that, beyond betraying the basic principles of blockchain and DeFi, WLFI has rigged the smart contract of its native stablecoin, USD1.
USD1 Rigged by World Liberty
Citing the findings of independent researchers, particularly Chinese crypto commentator Ni Sen, who goes by the alias Phyrex, Sun claimed that World Liberty’s administrative permissions over USD1 are not limited to freezing, unfreezing, pausing, minting, and burning. He stated that it has a backdoor that allows it to drain USD1 tokens from a frozen address and reallocate the assets to an admin-controlled wallet.
Sun highlighted that World Liberty didn’t only deceive its token holders by concealing such a vital function. It countered the decentralized and transparent nature of blockchain and cryptocurrencies. He noted that the “Liberty” in its name was ironic, given its strict controls and manipulative tactics against token holders.
“In this industry, ‘your assets’ must actually mean yours—written in code, and now written in precedent,” said Sun.
Hence, the Tron founder told people that his lawsuit with World Liberty is not a mere recovery attempt. Instead, it aims to create jurisprudence that would preserve the purpose of blockchain and crypto.
USD1 is a stablecoin pegged and redeemable 1:1 with the US dollar. It is 100% backed by World Liberty’s reserves, consisting of US government treasuries, US dollar deposits, and other cash equivalents. On-chain data indicates that the asset has a market cap of $3.98 billion.
The Sun Vs. World Liberty Lawsuit
Sun invested $45 million in World Liberty in exchange for 4 billion tokens. The company granted token holders voting rights on protocol upgrades and governance decisions.
However, World Liberty later froze the Tron founder’s tokens. This followed allegations that he breached the terms of his agreement with the company, particularly by attempting to bypass restrictions by moving his holdings to Binance.
The issue led to the billionaire entrepreneur and the DeFi platform going back and forth with their respective lawsuits. The latter countered Sun’s lawsuit with a defamation case, seeking damages, reimbursement of legal fees, and retraction of the Tron founder’s statements against the company.
