World Liberty Financial (WLFI) is defending its decision to freeze hundreds of wallets, including Tron found Justin Sun’s, saying the move was meant to protect users from phishing-related compromises, not to stifle normal trading.
“WLFI only intervenes to protect users, never to silence normal activity,” the project wrote on X.
We’ve heard community concerns about recent wallet blacklists. Transparency first: WLFI only intervenes to protect users, never to silence normal activity. 🦅
— WLFI (@worldlibertyfi) September 5, 2025
WLFI said earlier this week that 272 wallets were blacklisted, with approximately 215 of those linked to a phishing attack and 150 compromised through support channels.
Justin Sun’s WLFI address was frozen on Friday, following several small “dispersion test” transfers between his own wallets after claiming unlocked tokens at launch, none of which were sales.
The outbound transfers from Sun-tagged wallets made it appear that the big-name WLFI investor was selling his tokens, but onchain data paints a different picture.
In a post on X, Nansen founder Alex Svanevik pointed out that Sun’s transfers didn’t match the timeline of WLFI’s token decline.
Nansen data shows Justin Sun transferred 50 million WLFI worth about $9.2 million on Sept. 4 at 09:18 UTC — three to five hours after the token’s steepest drop — meaning the transfer followed the crash rather than caused it.
Onchain data from Nansen shows a $12 million WLFI transfer from HTX to Binance by a third-party market maker.
The tokens were borrowed using HTX’s own capital as part of a routine rebalance, but the move came after WLFI’s sharpest declines and was too small to have moved the market, considering WLFI has a daily trading volume of over $700 million.
Once deposited on Binance, it is impossible to determine whether the tokens were sold or simply held.
Market participants instead point to broad shorting and dumping of WLFI through market makers and trading desks across several exchanges as the real driver of the crash.
Onchain records back this view: a transfer from BitGo to Flowdesk flagged by Nansen, coincided with the start of WLFI’s slide and has become a key datapoint in explaining the sell-off.
Meanwhile, WLFI’s decision to freeze funds linked to the crash set off nervous chatter among whales, market makers, and other trading desks that their tokens could be frozen by literal fiat.
“If they can do it to Sun, who’s next?” is how a person familiar with conversations among large market participants paraphrased it when speaking to CoinDesk.
WLFI is currently trading for $0.18, according to CoinGecko. It’s down 40% since listing.