Key facts
- A California federal judge denied World Liberty Financial's request to move Justin Sun's lawsuit into private arbitration.
- Sun's individual claims against WLFI will proceed in open court.
- Claims from Sun's holding companies, Blue Anthem and Black Anthem, were not fully sent to arbitration.
- The lawsuit concerns allegations that WLFI embedded hidden controls in its smart contract to freeze or burn token holdings.
- Sun invested $45 million in WLFI and received approximately 4 billion tokens.
A California federal judge has rejected World Liberty Financial's (WLFI) attempt to move Justin Sun's lawsuit into private arbitration, ruling that Sun's individual claims will proceed in open court. U.S. District Judge James Donato's decision means public scrutiny will be applied to allegations that WLFI secretly embedded backdoor controls in its smart contract.
While the court ordered parties to negotiate which company-related claims might proceed privately, Sun's personal allegations will remain public. Sun, the creator of the Tron network, hailed the decision as a win for transparency. The lawsuit centers on Sun's assertion that WLFI's smart contract contained hidden functions allowing the team to freeze, restrict, or burn token holdings, which he claims were used against him after their relationship soured.
Sun invested $45 million in WLFI, acquiring approximately 4 billion tokens. WLFI has denied all allegations, with co-founder Zach Witkoff calling Sun's claims "entirely meritless." The company has also filed a counterclaim in Florida accusing Sun of defamation and improper transfers. The recent ruling does not address the merits of the case but ensures evidence and arguments will be accessible to the public.