Justin Sun Accuses WLFI of Secret Token Freeze Backdoor

Justin Sun claims World Liberty Financial secretly froze his WLFI tokens via a hidden backdoor, sparking a major DeFi transparency row.

Justin Sun is accusing World Liberty Financial of secretly embedding a blacklist function in its smart contract. The WLFI token investor says the feature lets the company freeze any holder’s funds without warning. 

Sun claims no one disclosed this to investors before they committed capital. He describes himself as the project’s first and largest victim. 

Besides, his wallet, he says, was blacklisted in early 2025 with no notice or explanation.

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Justin Sun Calls Out WLFI’s Hidden Smart Contract Backdoor

Sun took to X to detail what he calls a serious breach of investor trust. He says he backed WLFI early because it promised decentralized, middleman-free finance. 

Instead, he alleges, the platform quietly built in unilateral control over user funds. That kind of control, he argues, goes against every principle DeFi stands for.

He describes the backdoor as a trap disguised as a feature. 

According to Sun, the function gives WLFI the power to restrict or effectively confiscate tokens. No recourse exists for affected holders, he says. 

He is calling on the team to unlock frozen tokens and restore transparency.

WLFI Governance Votes Lack Fairness, Sun Claims

Sun does not stop at the blacklist allegation. 

He also questions the legitimacy of WLFI’s community governance process. Moreover, he claims key information was withheld from voters during those votes. Participation, he says, was restricted, and outcomes were predetermined.

He insists these votes do not reflect genuine community will. In his view, they only reflect the preferences of those who designed the process. 

Sun also accuses the WLFI team of extracting fees from users without proper authorization. Additionally, he stresses that none of these actions were sanctioned through any fair process.

WLFI Pushes Back on Liquidation Fears Amid Controversy

As earlier reported by LiveBitcoinNews, WLFI is also dealing with separate concerns circulating online. 

The project addressed claims about its lending activity. World Liberty Financial says reports about liquidation risks misrepresent how its borrowing strategy works.

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The team says it supplied WLFI tokens as collateral and borrowed stablecoins against them. Moreover, it calls this a standard DeFi practice and denies any liquidation risk. 

Besides, WLFI also revealed $65 million in WLFI buybacks. The project pointed to major upgrades to its USD1 stablecoin, positioning it for AI-native payments.