Sun Yuchen sues WLF document: Four "outrageous" details emerge

Author: Aleks Gilbert

Original translation: Chopper, Foresight News

Crypto billionaire Sun Yuchen hopes to maintain a good relationship with Donald Trump but has taken a tough stance 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 are not expressed with lengthy, dull legal jargon. Instead, the complaint emphasizes that World Liberty Financial is facing “bankruptcy and potential insolvency,” with operations struggling.

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

Some details have been reported previously. Claims such as World Liberty being on the verge of collapse are purely speculative. Even so, this lawsuit will provide critics of the company with plenty of ammunition, including dissatisfied investors and opportunistic opposition lawmakers.

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

CEO Zach Witkoff said the lawsuit is “Sun Yuchen’s desperate attempt to divert attention from his own misconduct.”

Herro did not directly respond to the lawsuit. He reposted Rudyard Kipling’s inspirational poem and Witkoff’s statement, captioning: “Building is never easy; it is often filled with success and failure, like a huge maze you need to navigate through.”

Below are the four most noteworthy allegations and details from the 52-page lawsuit.

Herro’s Past

Mainstream media reports have previously summarized Herro’s tainted history, including criminal records, inflammatory remarks, suspicious business operations, and participation in a DeFi protocol in 2024 that nearly lost all crypto assets due to a hack.

The complaint includes all of the above and adds several new details.

It states: “Herro’s misconduct in business is extremely egregious. Around 2010, deceived clients and partners set up a website called ChaseHeroScam.com.”

This website was inaccessible as of Thursday; DL News could not verify whether the website contained content related to Sun Yuchen mentioned in the lawsuit.

The complaint claims Herro has been issued four tax liens by courts, and a property he owns in Florida has a tax deed issued against it.

It also notes that Herro has “publicly boasted” about visiting Little Saint James Island, a private island owned by the disreputable financier Jeffrey Epstein. However, the complaint does not provide evidence of this claim, and DL News cannot verify whether Herro has made such statements.

“Secret” Upgrade

Since the project’s inception, the governance token WLFI of World Liberty Financial has had very limited rights for holders.

According to company documents, token holders are not authorized to participate in the company’s operations but can vote on upgrades to the underlying technology.

Sun Yuchen alleges that World Liberty executives broke their promises and unilaterally completed two technical upgrades last year without any governance votes or disclosures to WLFI holders.

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

“Although this upgrade can be checked on the public blockchain, World Liberty Financial concealed it deep in the code without informing token holders of its existence or potential impact,” the complaint states, “the company secretly added a ‘blacklist’ permission that can be enabled at will.”

World Liberty Financial claims the freeze function is only used to protect user rights.

Witkoff stated in a declaration: “Sun Yuchen has engaged in violations, and World Liberty Financial had no choice but to take action to protect itself and its users. The company will continue to take all necessary measures to safeguard the community ecosystem.”

TRUMP Meme Coin

World Liberty Financial’s accusations against Sun Yuchen’s alleged misconduct have been vague. However, Sun Yuchen states that company executives privately provided detailed explanations.

Reasons include: executives believing that Sun Yuchen’s sale of tokens caused WLFI’s price to drop by 40%, violating the “token purchase agreement,” and other misconduct.

But the lawsuit points out that another trigger for the conflict was the TRUMP Meme Coin.

“One reason for freezing WLFI tokens is dissatisfaction with Sun Yuchen’s purchase of $100 million worth of TRUMP tokens (issued by another project endorsed by Trump),” the lawsuit states. Part of the following sentence is redacted, but it notes that something (most likely the purchase of TRUMP tokens) “was approved in advance by members of the Trump family, who are also partners in both projects.”

The lawsuit does not explain why World Liberty Financial would oppose Sun Yuchen’s purchase of TRUMP coins.

Money Transmission Business Violations

Last year, two crypto developers were sentenced to prison for operating unlicensed money transmission businesses, and another was convicted on the same charge but has not yet been sentenced.

Sun Yuchen accuses that World Liberty Financial also violated these regulations.

The complaint argues that by granting itself the authority to transfer tokens on behalf of others, World Liberty Financial has become a money transmission entity.

“World Liberty’s highly centralized control over WLFI tokens not only contradicts DeFi principles but also indicates that it is conducting money transmission business without registration or licensing, violating multiple federal and state criminal laws.”