Justin Sun Calls WLFI Proposal a Governance Scam

The plan introduces fixed timelines but requires holders to opt in, while those who refuse remain indefinitely locked. Justin Sun criticized the proposal as coercive, and also raised concerns about centralized control over smart contracts, including the ability to override votes and blacklist holders. The proposal triggered wider community criticism, with some investors considering legal action and questioning the project’s governance and financial practices.

WLFI Faces Investor Backlash

A controversy is unfolding around World Liberty Financial, the crypto project linked to US President Donald Trump. Investors are pushing back against a new governance proposal that could extend token lock-up periods. 

Overall, the proposal  aims to restructure how WLFI tokens are distributed, but it attracted intense criticism from major stakeholders and the crypto community.

At the center of the backlash is Justin Sun, founder of Tron and the project’s largest individual investor. Sun publicly condemned the proposal by calling it deceptive and coercive. His criticism stems from an ongoing dispute with the project after his WLFI tokens were frozen. This effectively excluded him from participating in governance decisions. 

He described the proposal as a “logical trap,” and argued that it punishes dissenting voters by keeping their tokens locked indefinitely if they choose not to accept the new terms.

The proposal itself shifts from indefinite lock-ups to structured vesting schedules. Founders, team members, advisors, and partners will face a two-year lock-up followed by a three-year gradual release of tokens, while early supporters would undergo a two-year cliff before a two-year vesting period. 

However, acceptance of these new terms is optional, and those who refuse would be subject to indefinite lock-ups. It is this condition that has fueled accusations of coercion.

WLFI’s price action over the past week (Source: CoinCodex)

Other concerns emerged about the project’s governance structure. Sun alleged that control over WLFI smart contracts resides with an anonymous multisignature wallet, which he claims has the authority to override voting outcomes. He also pointed to the existence of a single account capable of blacklisting token holders, and raised serious questions about the decentralization and transparency of the platform. 

According to Sun, these factors render the project’s governance process ineffective and merely symbolic.

The criticism resonated across the crypto community, with some investors considering legal action. Many users are frustrated about what they see as an unfair choice between prolonged lock-ups and uncertain future value. 

Scrutiny has also been directed at the project’s financial activities, including the use of billions of WLFI tokens as collateral to secure large stablecoin loans.