Justin Sun Criticizes WLFI Over Controversial Loan

Justin Sun criticizes World Liberty Financial's controversial $75M DeFi loan, calling it "illegitimate" and unacceptable. Details of the loan and Sun’s cri

Project Backing Withdrawal

Justin Sun, founder of Tron and an early supporter of President Trump's crypto-friendly policies, has publicly criticized World Liberty Financial (WLFI), a company linked to former U.S. President Donald Trump. This comes after WLFI’s controversial $75 million DeFi loan that tied up user liquidity on the Dolomite platform.

Criticism of WLFI Operations

In a tweet, Sun denounced WLFI's actions as "illegitimate," stating every action taken by the WLFI team to extract fees from users and treat the crypto community as a personal ATM is unacceptable. Sun, an early investor in WLFI, had earlier supported the platform due to its vision of creating a decentralized finance (DeFi) platform.

DeFi Loan Details

On April 9th, World Liberty Financial deposited approximately 5 billion WLFI tokens as collateral on Dolomite’s DeFi lending platform and borrowed about $75 million worth of stablecoins. This significant deposit still dominates the protocol, accounting for over half of Dolomite's total liquidity pool of around $794 million.

Operational Issues and Criticism

The WLFI loan led to a temporary 100% utilization rate in Dolomite’s USD1 pool, locking out ordinary stablecoin depositors. As of Sunday, the utilization had eased to roughly 82%, with about $158 million borrowed against $193 million supplied.

Freeze of Sun's Wallet

In September 2025, WLFI froze Justin Sun's wallet, locking in approximately 595 million tokens worth around $107 million at the time. This move was part of a broader intervention against 272 wallets linked to phishing attacks and compromised support channels. WLFI claimed it only intervened to protect users rather than silence legitimate activity.

Governance Process Allegations

Sun further alleged that the votes used to justify the wallet freezes were not conducted fairly or transparently, key information was withheld from voters, and outcomes were predetermined. These allegations target WLFI's operators rather than former President Trump himself, who Sun has maintained support for due to his crypto-friendly policies.

Financial Impact on WLFI

Zak Folkman, co-founder of WLFI, did not immediately respond to a request for comment. CoinDesk data shows that WLFI’s token is trading at $0.079, down 18% over the past week.

Conclusion

The conflict between Sun and WLFI highlights ongoing challenges in DeFi projects and the importance of fair governance mechanisms. As the crypto community continues to evolve, these disputes underscore the need for transparency and accountability among project operators.

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