Tron founder Justin Sun has asked the U.S. District Court for the Northern District of California to sanction World Liberty Financial and its lawyers, alleging that the Trump-linked crypto company failed to disclose United Arab Emirates ownership ties until months into their dispute over frozen WLFI tokens.

The November 2 motion seeks $263,821.20 in legal fees that Sun incurred opposing World Liberty's effort to move his claims into private arbitration. A hearing is scheduled for December 10 before U.S. District Judge James Donato. Sanctions are a mechanism federal judges can use, including fee awards, when a party or its lawyers misrepresent information to the court or fall short of disclosure obligations.

Sun and two affiliated companies sued World Liberty in April, alleging fraud and unlawful restrictions on tokens purchased through a $45 million investment that began in November 2024. The sanctions request concerns the company's court disclosures rather than whether the token freeze itself was lawful.

Ownership Disclosure Revised Mid-Dispute

World Liberty's initial June 2 filing, which named WLF Holdco LLC as its parent, listed Florida as its only citizenship, and its lawyers certified that they were unaware of other parties requiring disclosure.

An August 26 supplement identified 22 people and entities whose citizenship was attributed to World Liberty, adding Delaware, Puerto Rico and the United Arab Emirates. The list included two Aryam Investment entities identified as UAE citizens.

The foreign ownership had already drawn political scrutiny. In February, Senators Jack Reed and Andy Kim questioned a reported 49% UAE-linked stake acquired shortly before Trump's January 2025 inauguration as they sought ownership disclosures from the company.

For jurisdictional purposes, a limited liability company generally takes the citizenship of its members. Because Sun and his co-plaintiffs are foreign parties, World Liberty argues that its UAE citizenship prevents the case from proceeding under federal diversity jurisdiction, which generally requires parties based in different states or countries.

The revised disclosure came six days after an August 20 arbitration hearing at which Donato questioned whether some claims belonged in arbitration. Sun alleges the timing suggests an attempt to avoid litigating those claims publicly.

“World Liberty was proudly American when it was selling tokens,” Sun wrote on November 3, accusing the company of invoking its UAE ties only after encountering resistance in federal court. The statement appeared in posts on X (post, post).

Fee Request and Parallel Litigation

Sun's lawyers argue that accurate disclosures at the outset would have avoided months of unnecessary litigation. Their requested reimbursement covers the work opposing arbitration, including preparation for and attendance at the August hearing, rather than all costs of the lawsuit.

World Liberty's lawyers maintained that they had only recently learned of the additional citizenship information. Sun disputes that explanation, arguing that counsel either failed to investigate adequately or received incomplete answers from the company.

World Liberty has separately defended its token restrictions, maintaining that its freezing authority was disclosed in contractual terms. In May, it sued Sun for defamation in Florida, alleging prohibited transfers, short selling and false public statements. Sun denies those allegations.

Sun says he will refile his claims in California state court after the sanctions motion is resolved.

The December 10 hearing will decide only the fee request, but the dispute has several live fronts to track: the arbitration questions Donato raised at the August hearing, Sun's planned refiling in California state court, and the defamation case in Florida, which keeps both parties in litigation independently of the sanctions outcome.

The sanctions request has not established misconduct by World Liberty or its lawyers, and the disclosure dispute does not determine whether the company lawfully froze his tokens.

Source: Crypto Adventure