A California federal judge ruled that Justin Sun’s individual claims against World Liberty Financial will remain in open court, rejecting the project’s request to force the dispute into private arbitration. The ruling, announced by Sun on Thursday, keeps a growing legal battle public. The case began with a token-freezing dispute in April and has expanded to question whether World Liberty and its USD1 stablecoin hold enough capital to cover potential damages. Sun seeks hundreds of millions of dollars, alleging his WLFI tokens were frozen and his governance rights removed. The judge ordered both parties to meet and confer over remaining company-related claims.
Justin Sun said Thursday that a California federal judge ruled his individual claims against World Liberty Financial will stay in open court, rejecting the Trump-linked project’s push to force the dispute into private arbitration.
The ruling keeps alive one of crypto’s most contentious legal fights, which has grown from a token-freezing dispute into a broader case questioning whether World Liberty and its USD1 stablecoin can actually cover what they owe.
Sun made the comments in a post on X after his counsel appeared in federal court in San Francisco. “Today, my counsel appeared in California federal court to oppose World Liberty Financial’s efforts to force our dispute into secret arbitration proceedings and seal documents from public view,” Sun wrote. “The Court agreed with us.”
The judge rejected World Liberty’s position that all company-related claims should be arbitrated, ordering the parties to meet and confer over which claims stay in court. Sun’s lawsuit dates to April, alleging World Liberty froze his WLFI tokens, removed his governance rights, and threatened to burn the tokens. He seeks hundreds of millions of dollars in damages.
The dispute escalated after the former Grenada diplomat questioned the project’s control over its token contracts. Blockchain researcher banteg had identified a blacklist function added to a later version of the WLFI contract, along with a “batch reallocation” feature.
In his X post, Sun wrote that World Liberty built the same freeze-and-burn capability into its USD1 stablecoin and warned holders the company has already shown a willingness to use those functions. He also pointed to World Liberty depositing roughly 5 billion WLFI tokens, about half its treasury, as collateral on Dolomite, a lending platform co-founded by its own chief technology officer, to borrow at least $75 million in stablecoins.
Sun added that USD1’s reported $4 billion market cap is user collateral, not money that could be used to pay a court judgment. He stated he has seen no sign that World Liberty holds enough capital to cover a claim worth hundreds of millions of dollars.
The legal fight followed a governance dispute over more than 62 billion WLFI tokens. Sun objected in April to a proposal that would place different groups of locked tokens under new vesting terms, as well as the alleged existence of a separate control structure involving an anonymous guardian address and a 3-of-5 multisignature group.
He argued that holders who rejected the proposal could face indefinite restrictions, calling the arrangement “a dictatorship wearing the mask of a
