Sun Yuchen alleges that the WLFI document contains four outrageous details

Article by: Aleks Gilbert

Translated by: Chopper, Foresight News

Cryptocurrency billionaire Sun Yuchen hopes to maintain a good relationship with Donald Trump but has taken a tough stance against the president’s business partners.

In a lawsuit filed on Tuesday, Sun Yuchen accuses World Liberty Financial executives of fraud, theft, and other illegal activities.

These allegations are not presented with lengthy, dull legal jargon. Instead, the complaint emphasizes that World Liberty Financial is facing “bankruptcy and potential insolvency,” with operations struggling to survive.

Sun Yuchen points all the most damaging content at one person: co-founder of World Liberty, Chase Herro, describing him as a habitual scammer and tax evader.

Some details have been reported previously. Claims such as World Liberty being on the brink of collapse are purely speculative. Nevertheless, this lawsuit will provide critics of the company with plenty of ammunition, including dissatisfied investors and opposition lawmakers waiting for the right moment.

On Wednesday, when asked about the lawsuit, a spokesperson for World Liberty Financial stated that the company’s co-founder had issued a statement on social media.

CEO Zach Witkoff said the lawsuit is “Sun Yuchen’s desperate attempt to divert attention from his own misconduct.”

Herro did not directly respond to the lawsuit. He reposted Rudyard Kipling’s inspirational poem and Witkoff’s statement, captioning: “Building has never been easy; it’s often filled with success and failure, like a huge maze you need to navigate through.”

Below are the four most noteworthy allegations and details from the 52-page lawsuit.

Herro’s Past

Mainstream media coverage has previously documented Herro’s tarnished history, including a criminal record, inflammatory remarks, suspicious business operations, and participation in a DeFi protocol in 2024 that nearly lost all crypto assets due to a hack.

The complaint includes all of the above and adds several new details.

It states: “Herro’s misconduct in business is extremely egregious. Around 2010, deceived clients and partners built a website called ChaseHeroScam.com.”

That website was inaccessible as of Thursday; DL News could not verify whether it contained the content mentioned in Sun Yuchen’s lawsuit.

The complaint claims Herro has been issued four tax liens by courts, and a property he owns in Florida has been subjected to a tax deed sale.

It also notes that Herro has “publicly boasted” about visiting Little Saint James Island, a private island owned by the disgraced financier Jeffrey Epstein. However, no evidence of such statements has been provided in the lawsuit, and DL News cannot verify whether Herro has made such claims.

“Secret” Upgrade

Since the project’s inception, the governance token WLFI of World Liberty Financial has had very limited rights.

According to company documents, token holders are not authorized to participate in the company’s operations but can vote on underlying technology upgrades.

Sun Yuchen alleges that World Liberty executives violated their promises by secretly completing two technical upgrades last year, without any governance votes or disclosures to WLFI holders.

It is claimed that these upgrades granted World Liberty Financial the authority to freeze and seize WLFI tokens, and that this authority has been used against Sun Yuchen. He describes this upgrade as a destructive operation.

“Although this upgrade can be checked on the public blockchain, World Liberty Financial concealed it deep within the code, without informing token holders of its existence or potential impact,” the complaint states. “The company secretly added ‘blacklist’ permissions that can be enabled at will.”

World Liberty Financial claims that the freeze function is only used to protect user rights.

Witkoff stated in a declaration: “Sun Yuchen’s misconduct has forced World Liberty Financial to take action to protect its and its users’ rights. The company will continue to take all necessary measures to safeguard the community ecosystem.”

TRUMP Meme Coin

World Liberty Financial’s accusations against Sun Yuchen’s alleged misconduct have been vague. However, Sun Yuchen says that company executives provided detailed explanations in private.

Reasons include: executives believing that Sun Yuchen’s sale of tokens caused WLFI’s price to drop by 40%, illegal token purchases on his behalf, and violations of the “Token Purchase Agreement.”

But the lawsuit points out that another trigger for the conflict was the TRUMP Meme Coin.

“World Liberty Financial claims that one reason for freezing WLFI tokens was dissatisfaction with Sun Yuchen’s purchase of $100 million worth of TRUMP tokens (issued by another project endorsed by Trump),” the lawsuit states. Part of the following content is redacted, but it notes that something (most likely the purchase of TRUMP tokens) “was approved in advance by members of the Trump family, who are also partners in both projects.”

The lawsuit does not explain why World Liberty Financial would oppose Sun Yuchen’s purchase of TRUMP coins.

Money Transfer Regulation Violations

Last year, two crypto developers were imprisoned for operating unlicensed money transfer businesses, and another was convicted on the same charge but has not yet been sentenced.

Sun Yuchen alleges that World Liberty Financial also violated these regulations.

The complaint argues that by granting itself the authority to transfer tokens on behalf of others, World Liberty Financial became a money transfer business.

“World Liberty’s highly centralized control over WLFI tokens not only contradicts DeFi principles but also indicates that it is conducting money transfer activities without registration or licensing, violating multiple federal and state criminal laws in the United States.”