The WLFI launch this week was troubled by confusion and controversy, as retail investors, once again, bear the brunt of what many allege to be insider manipulation. WLFI froze Tron founder Justin Sun’s wallets after unusual transactions raised concerns of insider selling.

Sun is pressing the project to unfreeze his allocated tokens.

World Liberty Financial Drama Continues

On launch day, the community allocation, initially expected to be 5%, only saw 4% of tokens actually go live, as not everyone utilized the designated lockbox. WeRate co-founder Quinten Francois explained that liquidity and marketing, initially reported as 1.6%, actually accounted for 2.8% of the supply. This brought the circulating supply effectively to 6.8%.

Meanwhile, other allocations, such as the 10% ecosystem fund and 7.8% reserved for Alt5 Sigma, weren’t truly circulating. In fact, Francois said that they were simply unlocked but not subject to vesting schedules, which created an illusion of available supply that complicated price dynamics.

Adding to the complexity, Justin Sun held 3% of WLFI’s total supply. Only 20% of his stake was technically unlocked at launch. He publicly promised not to sell, saying that he supported World Liberty Financial’s long-term goal.

The token debuted at $0.20, with a $1 billion market cap, while trading volumes spiked into the billions, generating intense hype. Despite this, WLFI’s price steadily declined, and the on-chain price action appeared suspiciously mechanical rather than driven by genuine community selling.

Francois suggested a likely scenario behind the volatility. Exchanges may have offloaded part of the 2.8% liquidity allocation, while Sun allegedly leveraged his connections with HTX, offering users 20% APY to deposit WLFI. This setup would allow him to quietly sell his personal holdings while making it seem as if tokens were being staked by users, and even backfill user withdrawals with his own stack if necessary.

Reports indicate Sun moved early $9 million worth of WLFI tokens through HTX and Binance from his addresses, activity tracked by Nansen, Bubblemaps, and Arkham Intelligence.

Ultimately, WLFI froze Sun’s wallet using the guardianSetBlacklistStatus function, following these suspicious transfers. The freeze fueled speculation that Sun used user deposits to liquidate his holdings, turning retail investors into exit liquidity.

Sun’s Public Appeal

A community member praised WLFI’s governance vote that froze Sun’s address, saying it at least temporarily blocks him from repeating prior patterns of alleged pumping and dumping tokens on retail investors.

Meanwhile, Sun has publicly appealed to the World Liberty Financial team to restore access. He described the freezing of his tokens as “unreasonable” and stressed that, like other early investors, he “deserves the same rights.”

In a bid to calm nerves and regain investor confidence, Sun also went into damage control mode and tweeted that he sees US-listed crypto stocks as “an undervalued opportunity.” He further pledged to personally buy another $10 million of WLFI.