Justin Sun seeks sanctions over World Liberty's late UAE disclosure

What happened

Justin Sun, the founder of Tron, has asked a federal court to impose sanctions on World Liberty Financial and its legal team, alleging that the Trump family-backed crypto company withheld information about its citizenship in the United Arab Emirates for months. Sun announced the motion in a November 3 post on X. Crypto.news and Coinpedia both reported that the request adds a new procedural front to the dispute over his WLFI tokens.

According to the reports, World Liberty's first court disclosure identified only the company itself and listed Florida as its sole citizenship. After an August 20 hearing that left some of Sun's claims in federal court and sent others to arbitration, the company filed a supplemental disclosure on August 26. That filing identified 22 entities in its ownership chain and listed Florida, Delaware, Puerto Rico and the UAE as jurisdictions of citizenship.

Sun contends that his lawyers spent months and hundreds of thousands of dollars fighting World Liberty's request to compel arbitration before the company then challenged the federal court's jurisdiction. He said the timing of the amended disclosure raises questions about whether the case can proceed in California federal court. Sun argued that if the company's lawyers only learned of the UAE citizenship after the original filing, they either failed to conduct proper diligence or were not given a straight answer by their client. He said his team sought an explanation but World Liberty declined to provide one, according to his account.

Sun wants the court to hold World Liberty and its lawyers responsible for the alleged disclosure failures and for the legal costs incurred during the earlier proceedings. He also said he intends to refile his lawsuit in California state court once the sanctions motion is resolved.

Why it matters

The dispute over the UAE disclosure is significant because Sun filed his case under federal diversity jurisdiction, which generally requires parties to be from different jurisdictions. World Liberty has argued that the federal court can no longer hear the case because foreign parties are involved on both sides, according to Crypto.news. The sanctions motion does not resolve the underlying allegations about frozen tokens or Sun's investment; instead, it adds a fight over disclosure conduct and court jurisdiction. Coinpedia noted that the motion leaves the token dispute unresolved.

What the data shows

Key dates and figures in the dispute include Sun's April lawsuit, the August 20 hearing, and the August 26 supplemental disclosure. The original filing listed one entity and Florida as the only citizenship; the amended filing listed 22 entities and four jurisdictions. Sun's investment began at $30 million and rose to $45 million. The sanctions request was announced on November 3.

Background

Sun sued World Liberty in April, alleging that the company fraudulently induced his investment and unlawfully froze his WLFI tokens. He had signed an investment agreement in November 2024, initially committing $30 million before raising his total to $45 million, making him one of the project's earliest major investors. World Liberty rejected the allegations. CEO Zach Witkoff disputed Sun's account of the token restrictions. The relationship further deteriorated over a proposed governance change that would extend restrictions on early investors' holdings. In May, World Liberty filed a defamation lawsuit against Sun in Florida, accusing him of running a campaign to damage the project's reputation and token price. Coinpedia reported that the company described his legal action as a "meritless PR stunt." Sun has pointed to World Liberty's own materials describing the company as American and focused on building decentralized financial services in the United States.

What to watch

The next steps are likely to center on how the federal court handles Sun's sanctions motion and the citizenship dispute. Sun has said he will refile in California state court after the sanctions request is resolved. The reports did not include a response from World Liberty or its lawyers to the sanctions motion. The company's separate defamation case against Sun in Florida and the underlying WLFI token claims also remain in play.

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