When the WLFI project party froze 500 million dollars in assets, Sun Yuchen's rights protection battle was not just about 'asking for money' from the very beginning—it was more like a public game of tearing apart the 'pseudo-decentralization' veil of the crypto circle. From building public opinion to legal prosecution, and then to regulatory reporting, the three steps progressed layer by layer, yet the outcome remained full of variables.
Step 1: Build public opinion momentum, using 'resonance' to break through the heat
Starting from September 3, Sun Yuchen, in the guise of a 'guardian of crypto freedom', threw out 8 posts on X, cursing from 'centralized tyranny' to 'the bottom line of asset safety'. One of his statements, 'Today they can freeze my 500 million, tomorrow they can freeze any big account', directly hit the most sensitive pain point of 'asset safety' in the crypto circle. Within half an hour, 3.2 million followers drove over 100,000 shares, and #SunYuchenFrozen# surged to the trending list, turning a single asset dispute into an industry-wide topic.
The division in the comments section highlights the controversy:
- Supporters: "Regardless of Sun Yuchen's past, the project party freezing assets at will with the 'admin key' is crossing the red line of DeFi 'non-discrimination'." (A certain DeFi community blogger)
- Critics: "The controversy over TRX's 'cutting leeks' back then is still unresolved, now pretending to be a 'victim' seems too deliberate." (A seasoned retail investor)
- Neutral parties: "WLFI itself has issues with excessive token issuance and ambiguous locking rules, this dispute seems more like a 'bilateral game'." (Crypto industry observer)
He also actively "dragged down" key figures—tagging Aave's founder, core developers of the Tron project, and even Alt5 Sigma's official WeChat account connected to the Trump family. Aave's founder's remark, "Decentralization is not just a slogan," further heightened the interest. Insiders stated: "This move is ruthless enough to blow up small issues, forcing WLFI to respond directly, otherwise it will leave the impression of being 'guilty'."
WLFI's official response appears even more passive: issuing three statements that "the freeze was to prevent market manipulation," but on-chain data revealed that "after the freeze, they quietly transferred out 20 million tokens (about $3.7 million)," immediately earning the label of "the thief calling to catch the thief."
Step two: Legal prosecution, using "contracts" to fight to the end
After three days of escalation in public opinion, Sun Yuchen threw out the "big bomb"—suing the WLFI project party in Delaware court for $550 million (including the value of frozen assets + so-called "strategic investment losses"), with the lawsuit core targeting two points:
1. WLFI's white paper clearly states "non-discriminatory freezing clauses," and now freezing large holders' assets separately is suspected of breach of contract;
2. The freezing behavior caused them to miss the "key investment window," even claiming "mental damages compensation."
Crypto legal practitioners analyzed: "The winning probability of this lawsuit hinges on two points—first, whether the court recognizes the legality of WLFI's 'admin key,' and second, whether Sun Yuchen can prove the 'direct causal relationship between freezing and losses.' However, the positive aspect is that Delaware courts have responded positively to crypto disputes in recent years; a similar USDC freezing case was scheduled in just three months last year, so the process won't drag on for too long."
Community reactions are similarly polarized: some dug up the old account of "when USDD de-pegged in 2023, Sun Yuchen did not mention 'default'"; while others acknowledged that "using legal rights protection is better than lying flat, at least it can set rules against the project party's 'arbitrary freezing'." WLFI's actions are even more intriguing: the official has not responded directly, but on-chain information indicates they are urgently hiring "crypto legal advisors familiar with contract loopholes," offering salaries over 30% above the industry average, with insiders leaking that "they want to take advantage of legal loopholes to delay until Sun Yuchen gives up."
Step three: Regulatory reporting, using "compliance" to hit the soft spot
The most ruthless step is hidden at the end. On September 5th, Sun Yuchen's team, in conjunction with 10 cryptocurrency projects, simultaneously reported to the FTC (Federal Trade Commission) and SEC (Securities and Exchange Commission): on one hand, accusing WLFI of "abusing market dominance to manipulate prices"; on the other hand, biting down on the "Trump family connection"—claiming that Alt5 Sigma (a publicly listed company connected to the Trump family) is suspected of "using funds to pump WLFI before dumping it, indicating political interest transfer."
This move precisely targets regulatory pain points: Previously, the FTC just fined Circle $28 million for "lack of transparency in stablecoin reserves," and the SEC is closely monitoring RWA (Real World Asset tokenization) compliance issues, while WLFI's "Trump endorsement" has been highly controversial. Currently, the FTC has confirmed "receipt of the report," and internal SEC news indicates "they have retrieved WLFI's locked asset records and Alt5 Sigma's transaction flow, focusing on abnormal token movements."
WLFI officials finally panicked: issued a statement claiming "the report is groundless," but avoided discussing the "Trump family connection"; sources close to the project revealed, "We are looking for intermediaries to negotiate a settlement, fearing that regulatory intervention will make the problem worse."
Can rights protection succeed? Three key signals determine the outcome
Now the industry is in an uproar over "winning or losing," but three signals may clarify the direction:
1. Legal level: The lawyer bluntly stated, "The winning rate is about 50%." The court will likely determine that "the governance boundaries of the admin key need to be clarified," and could rule for "partial unfreezing of assets," but it will be difficult to claim the full $550 million—after all, WLFI's price has already dropped by 60%, making "direct losses" hard to quantify.
2. Market level: Market makers feedback that "on the day Sun Yuchen initiated the lawsuit announcement, WLFI rose by 15%, but the next day it fell back," indicating that retail investors are on the sidelines, and large investors are hesitant to enter the market. "The core issue hasn't been resolved— as long as the 'admin key' is still there, even if it's unfrozen, no one dares to hold WLFI long-term."
3. Attitude of related parties: An anonymous Trump team advisor revealed, "This situation has made us very passive"—if WLFI, held by Alt5 Sigma, is investigated for "interest transfer," it may affect the image in the 2026 election, "We are pressuring WLFI for public governance reform, otherwise we won't rule out a sell-off to stop losses."
In the end: Winning or losing is not important; the logic of the industry has been rewritten
In fact, Sun Yuchen's rights protection effort is not about winning or losing—it's more like a mirror reflecting the core contradictions in the crypto space: on one hand shouting for "decentralization," while retaining the centralized authority of the "admin key"; on one hand seeking "political endorsement" to gain popularity, while fearing regulatory compliance checks.
If Sun Yuchen wins, future DeFi projects will be more cautious about "arbitrarily freezing assets"; if he loses, the logic of "centralized project parties holding power" may become more rampant. But regardless, this game has already drawn a line in the crypto industry: "Decentralization" cannot just be a slogan; the rules for asset security need to be redefined.
