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Home/Markets & Investing/CRYPTO IRS RULING · CRYPTO MONEY LAUNDERING ENFORCEMENT

Justin Sun claims World Liberty Financial can unilaterally freeze token holdings

JT

Jude Thorne

crypto IRS ruling · Apr 14, 2026

Justin Sun claims World Liberty Financial can unilaterally freeze token holdings

Source: DojiDoji Data Terminal

Justin Sun's token holdings were frozen in September, leading the crypto entrepreneur to claim that World Liberty Financial implemented a "backdoor blacklisting function" in the blockchain-based contracts for its WLFI token. Sun alleges the tool grants the firm unilateral power to freeze, restrict, and effectively confiscate the property rights of any holder without cause or recourse.

Related Brief9h ago
cryptocurrency

XRP Whale Transfer to Coinbase Signals Potential Sell-Off

A major holder of XRP may be preparing to sell $119 million in tokens. The movement of 89,828,700 XRP to a Coinbase-linked address suggests a potential sell-off or position rebalancing. This occurs because assets moved to a centralized exchange are more liquid and readily tradable than those held in personal wallets. The transfer began from wallet address rMWqYat3nJXSLoyqB5tUsfYp6KLgoMHXTN and passed through an intermediate wallet, rwnYLUsoBQX3ECa1A5bSKLdbPoHKLnqf63J, before reaching the final Coinbase-associated address, rRmgo6NW1W7GHjC5qEpcpQnq8NE74ZS1P. The movement of 89,828,700 XRP worth $119 million to Coinbase may signal that a major holder is preparing to sell.

World Liberty, a venture co-founded by the Trump family, has denied the allegations. The company stated it does not seek to blacklist individuals and that it responds to "malicious or high-risk activity that could harm community members." In a post on X, the company added, "We have the contracts. We have the evidence. We have the truth. See you in court pal."

Related Brief7h ago
financial regulation

Blockchain recordkeeping for U.S. securities collateral tests SEC’s tolerance for hybrid finance

A public blockchain could soon play a role in tracking collateral for U.S. securities—without changing who legally holds them. Ondo Finance has asked the SEC not to take enforcement action over a pilot that would record ownership claims to more than 260 U.S. stocks and ETFs on the Ethereum Mainnet, using tokens to represent investor entitlements. The underlying assets would stay in the traditional system, held through the Depository Trust Company (DTC) by broker-dealer Alpaca Securities LLC. What changes is how collateral for Ondo’s offshore investment products is tracked. The tokens, minted by transfer agent Oasis Pro TA and held in BitGo custodial wallets, would mirror security entitlements—claims to assets in custody—not the securities themselves. Alpaca’s off-chain books would remain the official legal record. The blockchain layer would serve as a parallel system, enabling near real-time tracking, automated minting and burning of tokens with investor flows, and better reconciliation. These tokens wouldn’t trade openly. Instead, they’d operate within a controlled environment, with compliance built into the design: transfers screened against watchlists, and the ability to freeze, seize, burn, or reverse transactions. The core regulatory question is whether a broker-dealer can rely on public, permissionless infrastructure to support recordkeeping duties under the Securities Exchange Act and FINRA rules. Ondo argues it doesn’t need to, because the blockchain isn’t the legal record—just a tool. The SEC’s response will determine whether hybrid models that layer blockchain efficiency onto traditional custody can operate within existing law.

World Liberty's own risk disclosures state the company can block and freeze wallet addresses and associated tokens it determines are linked to illegality or activity that violates its terms. Sun, who spent at least $75 million on WLFI tokens by January 2025, claims he is the "first and single largest victim" of this tool. He cited unspecified blockchain records to argue that a single account with administrative powers has the ability to freeze any holder's assets.

Related Brief5h ago
securities law

DeFi User Interfaces Can Now Trade Crypto Securities Without Broker Registration

DeFi user interfaces, including wallet apps and browser extensions, can now facilitate trades in crypto asset securities without registering as broker-dealers. This relief is available to 'Covered User Interfaces'—software that converts user inputs into executable code for self-custodial wallets without handling custody, routing orders, or offering investment advice. The SEC's Division of Trading and Markets staff statement targets these specific tools. To qualify, providers must charge fixed neutral fees agnostic to products or venues and avoid soliciting specific trades or endorsements such as 'best price'. They must also provide clear disclosures of conflicts and cybersecurity measures and objectively vet connected trading systems for liquidity and security. This non-binding interim measure is effective for five years unless withdrawn.

World Liberty generated more than $460 million in income for the Trump family during the first half of 2025.

Related Brief5h ago
cryptocurrency regulation

Non-Custodial DeFi Protocols Gain Five-Year Shield From SEC Broker-Dealer Rules

Non-custodial DeFi protocols can now operate without registering as broker-dealers — a shift that alters the legal risk calculus for developers and investors alike. The SEC’s Division of Trading and Markets issued formal guidance creating a five-year exemption from broker-dealer registration requirements for certain decentralized finance protocols and non-custodial wallet providers. This applies only to systems that act solely as passive software interfaces, with no role in handling user orders or taking custody of assets. If a protocol touches private keys or influences transaction execution, it falls outside the safe harbor. A qualifying protocol must not control private keys, take custody of user funds, or influence transaction execution in any way. Those that meet the criteria are exempt from registering as broker-dealers under the Securities Exchange Act of 1934. Basic decentralized exchange front-ends, read-only portfolio dashboards, and non-custodial wallet interfaces are likely exempt. DeFi platforms with centralized control, pooled assets, admin keys, or off-chain order matching do not qualify. The guidance provides regulatory clarity for developers building non-custodial infrastructure and reduces legal risk for compliant projects. Venture capital and project founders may accelerate investment in pure DeFi interface layers due to reduced regulatory uncertainty. Users gain clearer insight into which platforms operate without centralized intermediaries and which retain custody-related regulatory exposure. The five-year sunset clause creates a temporary safe harbor, allowing time for broader legislative or regulatory developments. The exemption does not determine whether tokens traded on these platforms are securities, nor does it affect state-level money transmitter laws or Bank Secrecy Act obligations. Non-custodial DeFi protocols now operate under a defined, time-limited regulatory framework that distinguishes their software-only function from traditional financial intermediaries.

crypto IRS rulingcrypto money laundering enforcementcommercial real estate distresspayment for order flow SECSEC ESG enforcementSEC retail investor ruleinsider trading SEC chargeSEC enforcement actionRipple XRP SECSEC crypto enforcement

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