Justin Sun has asked a federal judge in San Francisco to sanction World Liberty Financial and its lawyers, alleging that the crypto company waited months into his lawsuit before disclosing that some of its owners are based in the United Arab Emirates. The motion for sanctions was filed on 2 November, and the court docket sets a hearing before Judge James Donato for 10 December.
The claims are Sun’s and have not been tested. World Liberty Financial, the Trump-linked company behind the WLFI token and the USD1 stablecoin, has until 16 November to respond in court. At stake is more than legal fees: the citizenship disclosure decides whether a federal court can hear Sun’s case at all, and Sun now says he will refile it in California state court.
In brief
- Sun alleges World Liberty first listed only Florida citizenship, then, after an August hearing, named 22 persons and entities including two UAE entities.
- He asks for $263,821.20 in fees spent opposing World Liberty’s bid to send the case to arbitration.
- The motion relies on the court’s inherent power and 28 U.S.C. § 1927; World Liberty’s response is due on 16 November.
What the motion alleges about World Liberty Financial
Sun, with two companies named as co-plaintiffs, Blue Anthem Limited and Black Anthem Limited, sued in April over a November 2024 token purchase agreement. According to the motion, World Liberty Financial’s initial disclosure, filed on 2 June, named its parent WLF Holdco LLC and gave Florida as its only citizenship, with counsel stating they were “unaware of any other parties that must be disclosed”. On that basis the case went ahead in federal court, which can hear a dispute between a foreign plaintiff and a US defendant.
On 26 August, the day before a joint filing on arbitration was due, World Liberty filed a supplemental disclosure. It lists 22 persons and entities in its ownership chain, with citizenship in Florida, Delaware, Puerto Rico and the UAE. The UAE entries are two Aryam Investment 1 SPV entities. The motion says World Liberty’s counsel emailed the same day that the firm had only “recently” become aware of the information, and argued that the court now lacks jurisdiction because there are foreign parties on both sides.
The motion says the timing “smacks of gamesmanship”. It notes the change came less than a week after a 20 August hearing at which, it says, the judge told World Liberty: “I’m not hearing any reason that would make these claims subject to” an “arbitration clause.” It argues the initial filing was “the result of (at a minimum) recklessness”. It also says World Liberty refused a deposition and refused to explain counsel’s investigation. The court stayed the case until 22 October for jurisdictional discovery at both sides’ request, the docket shows.
What Sun is asking the court for
The motion asks for sanctions “pursuant to the Court’s inherent sanctions power and 28 U.S.C. § 1927”, the statute on lawyers who multiply proceedings. It argues the conduct also breached Rule 11. Rather than move under Rule 11 itself, it asks the judge to act on the court’s own initiative. The fee request, $263,821.20, covers only opposing the arbitration motion; the plaintiffs, it says, “should not have to pay their lawyers twice” when they refile in state court.
Sun set out his side on X. “Last night, my lawyers moved to sanction World Liberty Financial @worldlibertyfi for failing to disclose, until months into my litigation against the company, that it is a citizen of the UAE,” he posted on 3 November, saying his total investment reached $45m. In a second post he said World Liberty “discovered its UAE roots only when it needed a way out of an American federal courtroom.” The Block reported that World Liberty countersued in May, calling Sun’s case a “meritless PR stunt”.
Why a citizenship filing can decide the forum
The dispute turns on a technical rule with large consequences. For jurisdiction based on the parties being from different places, a limited liability company takes the citizenship of each of its members, and of their members in turn. One foreign member anywhere in the chain makes the company foreign for this purpose. A foreign plaintiff such as Sun can then no longer sue it in federal court on that basis. That is why the court’s local rules require a full ownership disclosure at the start of a case, and why a late correction can unwind months of work.
The motion asks the court to treat the gap between the two filings as a failure of reasonable inquiry. World Liberty’s position, as described by its own counsel’s email in the motion, is that the information came to light only recently. The court has not ruled on which account is right, and the sanctions motion does not decide Sun’s underlying fraud and contract claims, which would move to state court.
For crypto projects, the compliance point is about consistency. A company’s ownership structure appears in marketing, in token sales and in court filings, and each has its own standard of accuracy. World Liberty’s UAE links are already the subject of a separate Circle shareholder suit over Aryam’s stake, which World Liberty calls meritless. A court finding about what the company knew, and when, could matter beyond this case. So could a ruling that the late filing was an honest correction.
What happens next in court
Sun, the founder of TRON, has made his own claims on X before, including on TRON’s post-quantum cryptography. World Liberty was recently in the news for a different reason, as one of the stablecoin issuers that froze funds after the Binance hack.
World Liberty Financial’s opposition is due on 16 November and Sun’s reply on 23 November. Judge Donato will hear the motion at 11:00 on 10 December in Courtroom 11, on the 19th floor of the San Francisco courthouse. The first filing to watch is World Liberty’s account of when, and how, it learned who its own owners were.
Sources
Primary:
- Sun et al. v. World Liberty Financial LLC, No. 3:26-cv-03360 (N.D. Cal.), docket via CourtListener
- ECF No. 70: Plaintiffs’ Notice of Motion and Motion for Sanctions, 2 November 2026
- ECF No. 42: World Liberty Financial’s initial disclosure, 2 June 2026
- ECF No. 66: World Liberty Financial’s supplemental disclosure, 26 August 2026
- Justin Sun (@justinsuntron) on X, 3 November 2026
- Justin Sun (@justinsuntron) on X, second post, 3 November 2026
Press:
- The Block: Justin Sun seeks sanctions against World Liberty over UAE ties
- Crypto Times: Justin Sun seeks sanctions against Trump-backed World Liberty Financial over late UAE disclosure
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