Sun, WLF trade claims over arbitration hearing as USD1 freeze power looms

The freezing power matters well beyond the two parties. World Liberty's USD1 stablecoin has about $4 billion in circulation across at least eight blockchains, according to DefiLlama, with roughly $1.5 billion on Ethereum alone and about $1.4 billion on BNB Chain. Anyone holding USD1 or using it for settlement is exposed to the same wallet-freeze mechanism now being litigated. A court ruling on when that power can be exercised would set a precedent for the issuer and for the wider stablecoin market.

The legal fight is not confined to California. World Liberty also sued Sun for defamation in Miami-Dade County, Florida, accusing him of "malicious misrepresentation" and demanding a retraction, Cryptopolitan reported. Sun's own complaint uses the phrase "centralized finance in a decentralization costume" to describe World Liberty, according to Reuters.

The timing has drawn extra scrutiny. In March 2026, the SEC closed its 2023 fraud and market-manipulation case against Sun with a $10 million settlement and no admission of wrongdoing. That settlement came after his $75 million investment in World Liberty and $90 million in TRUMP memecoins. House Democrats have since called for a probe into whether those payments amounted to a "pay-to-play" arrangement.

World Liberty is expanding even as the litigation runs. On August 14, the Office of the Comptroller of the Currency granted preliminary conditional approval for World Liberty Trust Company, a proposed national trust bank in Bay Harbor Islands, Florida. Final approval depends on meeting pre-opening requirements and could still be revoked.

WLFI, the project's governance token, is trading around $0.061 as of August 21, up 4.6% on the day but down about 87% from its September peak of $0.46, CoinMarketCap shows. The token's market cap sits at about $1.94 billion. Whatever the court decides, investors have been pricing in the legal uncertainty for most of the year.