Justin Sun Asks Court to Sanction Trump-Backed WLFI Over UAE Ties

• Justin Sun wants World Liberty Financial and its lawyers sanctioned over a late ownership disclosure.
• The amended filing added UAE citizenship, which World Liberty now uses to challenge federal jurisdiction.
• Sun plans to refile his frozen-token claims in California state court after the sanctions ruling.
• No court has found that World Liberty deliberately hid its ownership.

On November 3, Tron founder Justin Sun said his lawyers had asked a federal judge in California to sanction World Liberty Financial and its attorneys. His complaint is that the Trump family-backed company revealed it holds citizenship in the United Arab Emirates only months into his lawsuit. World Liberty now relies on that citizenship to argue the court has no power to hear Sun’s case over roughly 4 billion frozen WLFI tokens.

World Liberty’s ownership list went from one Florida entity to 22 members after Sun’s August win

Sun sued on April 21, and World Liberty’s first ownership disclosure, filed on June 2, named only itself, a Florida company. That changed after August 20, when Judge James Donato kept Sun’s individual claims in open court and turned down the company’s push to move the whole dispute into confidential arbitration. Six days later, World Liberty filed a revised disclosure. It listed 22 members in its ownership chain, with citizenship in Florida, Delaware, Puerto Rico and the UAE.

Sun says the timing cost him months of work and hundreds of thousands of dollars fighting arbitration in a court that World Liberty now calls the wrong forum. “World Liberty was proudly American when it was selling tokens,” he wrote on X.

World Liberty’s lawyers say they learned of the UAE link only after their first filing. Sun’s response is that this leaves two options: the lawyers did not check properly, or their client did not give them a straight answer. The court has not decided either way.

One foreign owner anywhere in the chain makes an LLC foreign

Sun’s claims, which include breach of contract and fraud, arise under state law. A federal court can hear a case like that only under diversity jurisdiction, which requires the two sides to be citizens of different states or countries in a combination the law allows. For a limited liability company, courts ignore where it is registered and look through every layer of its members. A single foreign owner makes the whole company foreign.

Sun’s side of the case includes foreign parties. Federal courts cannot hear a diversity case between foreign parties on both sides, so if World Liberty counts as a UAE citizen, Sun’s case falls outside the rule.

Neither side has said publicly which member holds UAE citizenship. The best-known UAE connection is a $500 million commitment from a firm tied to UAE national security adviser Sheikh Tahnoon bin Zayed Al Nahyan, which took a 49% stake days before Trump’s January 2025 inauguration.

Sun paid $45 million for 3 billion WLFI, and the freeze began when trading opened in September 2025

The $45M is the purchase price stated in Sun’s complaint, not the current market value.

After WLFI began trading publicly, World Liberty froze Sun’s wallet. His complaint alleges that the project used smart-contract functions it never properly disclosed to block his transfers. It also says the project shut him out of governance votes and threatened to burn his tokens, which means destroying them permanently on-chain. CEO Zach Witkoff calls the claims entirely meritless and says the freeze powers were disclosed.

World Liberty’s Florida countersuit accuses Sun of shorting WLFI

On May 4, World Liberty sued Sun for defamation in Florida state court. The company says he moved governance tokens to Binance in breach of the token terms, opened short positions that would profit from a falling price, and ran a coordinated media campaign against the project. Sun denies the allegations. That case is separate from the federal one and continues whatever happens in California.

A December 10 hearing decides who pays for the months spent in federal court

Judge Donato has set a hearing on the motion for December 10. The motion, filed on November 2, asks for $263,821.20, the amount Sun says he spent opposing the arbitration request. It relies on the court’s inherent power to punish bad-faith conduct and on 28 U.S.C. § 1927, a federal law that lets judges make lawyers personally cover costs when they unreasonably drag out a case. He also wants targeted discovery, meaning access to internal records, on when World Liberty learned of its UAE citizenship and what checks it ran before its first filing. The judge can grant all of it, part of it, or none of it if he accepts the lawyers’ explanation.

Sun has said he will refile in California state court after that ruling. A dismissal for lack of jurisdiction would not decide whether the freeze was lawful. A state judge would not be bound by the August arbitration decision, so World Liberty could argue for private arbitration all over again.

The 22-member ownership list is now on the public court record. It arrives less than three months after the Office of the Comptroller of the Currency granted World Liberty Trust Company preliminary conditional approval for a national trust bank charter on August 14, despite Senator Elizabeth Warren’s demand that the review be halted. The regulator received public comments about World Liberty’s foreign investors during that process and found they were not principal shareholders of the proposed bank. Sun’s case now puts a far more detailed ownership map in front of a federal judge.