Justin Sun seeks sanctions against Trump-backed World Liberty Financial over alleged concealment of UAE ties to avoid federal court jurisdiction.
Regulation & Gov ·
Justin Sun, a major investor in World Liberty Financial, has filed a motion seeking sanctions against the Trump family-backed venture, accusing it of strategically delaying disclosure of UAE ownership ties to undermine federal court jurisdiction. Sun invested $45 million in WLFI tokens after agreeing in November 2024 to purchase $30 million worth, later increasing his stake. The timing of World Liberty's ownership disclosures appears central to his complaint: the company initially listed only itself with Florida citizenship, then amended filings weeks later to reveal 22 ownership members and UAE ties, changes Sun contends were designed to render the federal court unable to hear the case.
The underlying legal mechanics turn on citizenship attribution in corporate disputes. Under federal rules, a company acquires the citizenship of each of its owners, potentially making an entity with any foreign owner ineligible for federal court jurisdiction when a foreign plaintiff sues. Sun argues this reality motivated World Liberty's amended disclosure, which came shortly after a judge indicated at an August hearing that certain claims should remain in open court rather than go to arbitration. World Liberty has countersued, alleging Sun shorted WLFI tokens and drove down the price.
Sun has signaled he will refile in California state court once the sanctions motion concludes. The core dispute remains unresolved: whether World Liberty deliberately concealed UAE connections, and if so, whether sanctions are warranted for what Sun characterizes as a procedural maneuver inconsistent with the company's public marketing as an American, tax-paying corporation.