- WLFI froze Justin Sun’s wallet after a $9M transfer to HTX confirmed by Arkham data.
- Sun stated that the fund transfer was not sale, but routine deposit tests with small amounts.
- The freeze affected 540M unlocked and 2.4B locked WLFI tied to Sun’s holdings.
In an unexpected move, Justin Sun’s World Liberty Financial (WLFI) token address was blacklisted on Thursday following a whopping transfer of over 50 million WLFI tokens worth $9 million to crypto exchange HTX. The fund transfer was confirmed based on data from Arkham Intelligence and Nansen.
The address, holding an estimated $107 million in unlocked WLFI, was flagged shortly after the transaction, triggering speculation that the project was restricting token sales and influencing market activity during its first week of trading. Notably, WLFI had lost between 20% to 42% of its value since September.
Sun Responds to Blacklisting Allegations
In response, Sun stated in his X post that the address only performed a few “routine exchange deposit tests”, which involved small amounts of WLFI before creating address dispersion. He further explained that the activity did not include buying or selling and that it would not have any impact on the market.
Sun reiterated that he had no immediate plans to liquidate tokens. “We have no plans to sell our unlocked tokens anytime soon. The long-term vision here is too powerful, and I’m fully aligned with the mission,” according to statements on X.
Despite these assurances, World Liberty Financial activated its blacklist function on the associated smart contract. Reports from Arkham and Nansen indicate that the freeze extends beyond unlocked holdings, immobilizing around 540 million unlocked WLFI and an additional 2.4 billion locked tokens connected to Sun. Moreover, with this step, concerns have been raised over the governance of the project.
Market Impact and Portfolio Data
The blacklisting action coincided with sharp volatility across WLFI markets. WLFI’s token price dropped as much as 42% within days of the move, amplifying investor concerns over centralization and administrative intervention. As the portfolio data provided by Arkham Intelligence indicates, Justin Sun has diversified holdings that are worth $2.25 billion, which represent a 1.93% daily drop.
His portfolio includes 2.93 billion TRX worth $679.17 million, 199,454 stETH valued at $470.83 million, 4,094 BTC worth $455.45 million, and 57,323 AETH/WETH at $246.86 million. Additional assets include $109.5 million in AETH/USDT, $99.6 million in WLFI, $71.4 million in BTT, and $45.46 million in JST. Arkham’s token balance history shows a peak in 2021, followed by market corrections, with more than 600 inflow, swap, and outflow transactions shaping Sun’s multi-chain footprint.
Related: Justin Sun Sues Bloomberg Over Financial Information in Billionaires List
Governance and Decentralization Questions
World Liberty Financial positions itself as a DeFi project that is run on governance tokens, although the one-sided application of a blacklist mechanism highlights the inconsistencies of its framework. It is reported that WLFI is formally governed by Snapshot voting, in which token-holder participation is limited to 5% per wallet.
However, decision-making authority is still centralized in the hands of the insiders and multisig controllers who possess emergency powers such as wallet blacklisting. Analysts observe that this occurrence has turned into one of the main examples where token-holder rights are curtailed through centralized oversight.
The most critical question for investors is: Can DeFi projects be considered credible when central authorities have the power to freeze the wallets of key stakeholders? As the WLFI answer shows, there are some risks to the centralized governance systems in token ecosystems. Moreover, it is vital to maintain transparency in governance systems to safeguard investor trust and the validity of decentralized finance.
