SUN BLOCKED
WALLET, $100M in $WLFI, LOCKED
Creative Studio: Sum of Parts for Zero Knowledge
Concept Animation, Photo Illustration: Shirley Yu
"F***k around, find out."
Justin Sun just lost control of over $110m worth of $WLFI, the Trump family's DeFi token/influence funnel. This appears to have been an intentional seizure by the World Liberty Financial team. Given Sun's original investment kicked off World Liberty's token sale success and publicity run, this is definitely friendly fire.
THE SEIZURE
Things have been increasingly grim and serious recently, but crypto used to be so fun to write about because it was populated by clownish bloviators playing really obvious grifty games and, not infrequently, getting Wile E. Coyote-style comeuppances.
This week reminded us that even as the numbers get bigger, the stupidity stays the same.
In a truly decentralized system like Ethereum, this seizure isn't possible - uncensorability is the core innovation. But many tokens now have controls for freezing, seizing, whitelisting. The Trump family essentially rug-pulled Justin Sun, selling him a crypto token they quietly held the keys to - then splitting with the dough. They've blacklisted 271 wallets total.
The fascinating part: because $WLFI was printed from thin air, they don't need to cash out. They already have Sun's assets. They can leave frozen tokens locked indefinitely, propping up the market.
THE IRONY
World Liberty Financial was purportedly founded as a response to "debanking" - which, if you believe that, I've got a Brooklyn BridgeCoin to sell you.
The proximate cause appears to have been on-chain signals that Sun was preparing to sell through his exchange HTX - potentially taking profits at the expense of other participants. Thanks to on-chain transparency, you can see the blacklist designation and the sad stash of immobilized millions.
Sun was the second-largest buyer at $75m total. Trump's SEC dropped an investigation of Sun after his first $30m "investment."
THE COLLISION
What's interesting here is the collision of opportunist types in crypto. WLF is basically a brand in search of a business model. Sun is not, uh, known for his business ethics.
Justin was likely using customer assets to cash out, intending to backfill from locked tokens later - the exact "customer assets are my assets" behavior that nuked FTX. He went face first into the Trump family's desire for prices up and branding good.
This validates the tradfi critiques: crypto doesn't understand why we have insider trading rules and forced disclosure. They're going to learn the hard way. As Justin and WLF both appear to have done here.
THE GRIFTER'S RESUME
Justin Sun is the living embodiment of sincere self-delusion as the real secret weapon of effective grifters. Despite a truly shameful track record, Sun has never shown the slightest self-awareness. His intersection with Donald Trump was practically fated in the stars.
Tron began as a copy of Ethereum source code (minus security updates). The whitepaper was substantially plagiarized. Sun regularly exaggerated ties to Jack Ma. Paid $5 million to have lunch with Buffett and milked it for content. Bought perfectly functional Bittorrent and issued BTT, which Bittorrent's former CTO characterized as "almost certainly fraudulent." Even rigged a Tesla drawing in 2019 - on video.
Sun is basically an Elon Musk type (derogatory): constantly and desperately clawing for the cool and respectability given to actual crypto founders, but falling short because it wasn't him who actually created anything.
THE QUESTION
It's entertaining to watch him lose $100m because he couldn't read a smart contract if you clubbed him over the head with it. The loss won't hurt him financially.
The real question: does this freeze signal the Trump family turning against Sun? They now control the SEC. If they decided to destroy him, they'd have plenty of raw material.
More likely they don't know or care who Sun is - Trump isn't exactly known for loyalty to his backers.
But given Sun's track record, it couldn't have happened to a nicer guy.
