Original author: Aleks Gilbert

Original translation: Chopper, Foresight News

Cryptocurrency tycoon Sun Yuchen hopes to maintain a good relationship with Donald Trump, but he has taken a hard line against the president's business partners.

In a lawsuit filed on Tuesday, Sun Yuchen accused World Liberty Financial executives of fraud, theft, and other illegal activities.

These allegations do not use lengthy and dull legal jargon. Instead, the complaint emphasizes that World Liberty Financial is facing "closure and potential bankruptcy," struggling to operate.

Sun Yuchen points all the most damaging content at one person: World Liberty co-founder Chase Herro, who the complaint describes as a habitual scammer and tax evader.

Some of the details have been reported previously. However, claims such as World Liberty's imminent closure are purely speculative. Even so, this lawsuit will still provide plenty of ammunition for the company's critics, including disgruntled investors and opportunistic opposition lawmakers.

On Wednesday, when asked about the lawsuit, a spokesperson for World Liberty Financial pointed out that the company's co-founder had issued a statement on social media.

The company's CEO Zach Witkoff stated that this lawsuit is "a desperate attempt by Sun Yuchen to divert external attention from his own misdeeds."

Herro did not respond directly to the lawsuit. He shared Rudyard Kipling's inspirational poem and Witkoff's statement, adding, "Building is never an easy task; it is often filled with successes and failures, like a huge maze that you need to traverse."

Here are the four most notable allegations and details from the 52-page lawsuit.

Herro's Past

Mainstream media reports have previously outlined Herro's tainted history, including a criminal record, inflammatory remarks, questionable business practices, and his involvement in a certain DeFi protocol in 2024, which nearly lost all its crypto assets due to a hacker attack.

The complaint includes all of the above content while also adding several new details.

The lawsuit states, "Herro's business misconduct is extremely severe; around 2010, deceived clients and partners constructed a website called ChaseHeroScam.com."

The website has been inaccessible since Thursday, and DL News was unable to verify whether the site contained the information mentioned in Sun Yuchen's lawsuit.

The lawsuit claims that Herro has been issued tax liens by the court four times, and one of his properties in Florida was subjected to a tax disposition contract.

The complaint also notes that Herro has "publicly boasted" of visiting Little St. James Island, a private island owned by the disgraced financier Jeffrey Epstein. However, the lawsuit did not provide evidence of this statement, and DL News is also currently unable to verify whether Herro has made such remarks.

"Secret" Upgrades

Since the project's inception, World Liberty Financial's governance token WLFI holders have had very limited powers.

According to company documents, token holders do not have the right to participate in World Liberty Financial's operations but can vote on upgrades to the underlying technology.

Sun Yuchen accuses World Liberty executives of violating their commitments by unilaterally and secretly completing two technology upgrades last year without any governance votes and without disclosing them to WLFI holders.

It is claimed that these upgrades granted World Liberty Financial the authority to freeze and confiscate WLFI tokens, and that this authority has been used against Sun Yuchen. Sun Yuchen described this upgrade as a devastating operation.

"Although the upgrade is queryable on the public blockchain, World Liberty Financial has hidden it deep within the code, failing to inform token holders of the existence and potential impact of this feature," the lawsuit states, "the company secretly added a 'blacklist' feature that could be activated at will."

World Liberty Financial stated that the freezing function is only used to protect user rights.

Witkoff said in a statement, "Sun Yuchen's violations have forced World Liberty Financial to take action to protect itself and user rights. World Liberty Financial will continue to take all necessary measures to protect the community ecosystem."

TRUMP Meme Coin

World Liberty Financial has been vague about the allegations of Sun Yuchen's alleged misconduct. However, Sun Yuchen stated that the company's executives provided detailed explanations privately.

Reasons include: executives believe Sun Yuchen's token dump caused WLFI's price to drop 40%, violating others to purchase tokens, and breaching the "token purchase agreement," among other things.

But the lawsuit points out that another incentive for the conflict between the two parties exists: the TRUMP Meme Coin.

"World Liberty Financial claims that one of the reasons for freezing WLFI tokens is dissatisfaction with Sun Yuchen's purchase of $100 million worth of TRUMP tokens (issued by another Trump-endorsed project)," the lawsuit states. The subsequent part is redacted, but the ending notes that a certain matter (most likely the purchase of TRUMP tokens) "was previously approved by a member of the Trump family, who is also a partner in both projects."

The complaint did not specify why World Liberty Financial would oppose Sun Yuchen's purchase of TRUMP coins.

Illegal Money Transmission Business

Last year, two crypto developers were sentenced to prison for operating an unlicensed money transmission business; another person was convicted of the same charge and is currently awaiting sentencing.

Sun Yuchen accuses World Liberty Financial of also violating this regulation.

The lawsuit asserts that World Liberty Financial has become a money transmission agency by empowering itself to transfer tokens on behalf of others.

"World Liberty's highly centralized control over WLFI tokens not only completely contradicts the DeFi philosophy but also indicates that it operates a money transmission business without registration and licensing, violating multiple federal and state criminal laws in the United States."

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