In this article5 sections
Tron founder Justin Sun has asked a federal court in California to sanction World Liberty Financial and its lawyers, alleging the Trump family-backed crypto venture waited months to disclose ownership ties to the United Arab Emirates that could strip the court of jurisdiction over his lawsuit. Sun’s lawyers filed the motion Monday in the U.S. District Court for the Northern District of California, according to Decrypt.
The filing requests $263,821.20 in legal fees and costs, Bitcoin.com News reported. Sun highlighted the motion in a Tuesday post on X.
Also readCircle Shareholder Sues Trump Over $2B UAE Crypto Deals
Key facts
- Sun’s motion was filed Monday in the Northern District of California, and a hearing is scheduled for December 10, per Bitcoin.com News.
- World Liberty’s original June 2 disclosure listed Florida as its only citizenship; an amended filing on August 26 named 22 individuals and entities with citizenship in Florida, Delaware, Puerto Rico and the UAE.
- The amended disclosure came six days after an August 20 hearing at which U.S. District Judge James Donato questioned World Liberty’s argument that Sun’s claims belonged in arbitration.
- Sun agreed in November 2024 to buy $30 million of WLFI tokens and later raised his total investment to $45 million; he sued in April alleging the company misled him and froze his tokens.
- The sanctions request covers work by four lawyers at Cahill Gordon & Reindel and excludes fees billed by other attorneys, according to Bitcoin.com News.
How the jurisdiction argument works
Federal courts can hear disputes between parties from different places, but generally cannot hear a foreign plaintiff’s case against a foreign defendant. As Sun described it, a company inherits the citizenship of each of its owners, so one foreign owner can make the entire company foreign for those purposes.
Sun and two affiliated companies argue that World Liberty should have identified its ownership structure before submitting its first disclosure. The motion says the timing “smacks of gamesmanship,” per Bitcoin.com News, and asks for sanctions under the court’s inherent authority and a federal statute covering attorneys who unreasonably prolong litigation. World Liberty’s attorneys have said they learned of the additional citizenship information only recently.
Also readHTX Agrees to Leave UK in FCA Settlement Over Promotions
Sun’s side also sought documents, a deposition and an account of how the original filing was prepared. According to Bitcoin.com News, the company produced limited records but declined the deposition.
What Sun says the disclosure cost him
Sun contends the late revision wasted months spent fighting World Liberty’s push to move the case into private arbitration. He contrasted the company’s court position with its marketing, citing excerpts from World Liberty’s “gold paper” describing it as “an American, tax-paying, corporation.”
The dispute traces to Sun’s April 21 lawsuit, which alleged World Liberty fraudulently induced him to buy tens of millions of dollars of WLFI tokens and then improperly froze his holdings and restricted his governance rights. Sun said the company used a smart contract function to freeze roughly 2.9 billion WLFI tokens, a figure Bitcoin.com News has previously reported; World Liberty has described its restrictions as security measures. In May, the company filed a separate defamation suit against Sun, who denied the allegations.
Why it matters
The case tests how much a crypto project’s ownership structure and offshore ties can shield it from U.S. courts. If the UAE citizenship holds, Sun’s federal claims would likely move to California state court, a slower and separate track. The dispute is also playing out as World Liberty faces separate scrutiny over its international financial relationships, including litigation tied to a reported $500 million UAE-backed investment and transactions involving its USD1 stablecoin, per Bitcoin.com News.
What to watch
The December 10 hearing on the sanctions motion is the next scheduled step. Sun has said he will refile in California state court once that motion is resolved, writing on X that he will keep pressing for transparency.
This article is not financial advice; cryptocurrency markets are volatile and uncertain.
Sources: Decrypt, Bitcoin.com News
