A California federal judge has ruled that Justin Sun's legal claims against World Liberty Financial (WLFI) can proceed in open court, rejecting the company's attempt to force the dispute into private arbitration. The procedural decision, issued by Judge James Donato, allows Sun's allegations to remain public, though it does not address the merits of the case.

Sun, the founder of Tron, announced the ruling on social media, stating that his counsel appeared in court to oppose WLFI's efforts to push the dispute into secret arbitration and seal documents. "We argued forcefully that this case belongs in open court," Sun wrote, adding that token holders deserve transparency about how projects treat their investors.

The dispute stems from Sun's claim that he invested $45 million in WLFI, a crypto project associated with the Trump family. Sun alleges that the project's smart contracts give it the ability to freeze, restrict, or burn tokens, and that these controls were used against his wallet. He has also raised concerns about USD1, WLFI's stablecoin, describing features that could allow the project to freeze or destroy assets at any time as "backdoor functions."

Sun further questioned whether WLFI has sufficient funds to cover potential liabilities, arguing that the assets backing USD1's reported $4 billion market capitalization belong to users rather than the company. He said he has seen no evidence that WLFI holds additional capital to meet possible claims and urged investors to exercise caution.

WLFI has denied all allegations. Co-founder Zach Witkoff called Sun's claims "entirely meritless" and said the company has filed a counterclaim in Florida accusing Sun of defamation and improper transfers. The project continues to expand its operations, recently appointing a new chief business officer for USD1 and pursuing an artificial intelligence partnership.

Separately, crypto investigator Hunter Biden has made additional allegations against WLFI, claiming that the project seized Sun's $75 million investment and borrowed against its own token. Biden compared the structure to the "circular leverage" that contributed to the collapse of FTX. He also highlighted WLFI's reported preliminary approval from the Office of the Comptroller of the Currency to become a national trust bank, as well as a 49% stake held by an Abu Dhabi-linked entity and a $100 million investment from a UAE-based fund. These claims remain unproven allegations.

The ruling marks a significant procedural step in the ongoing legal battle, allowing Sun's case to move forward in public view. Neither party has commented further on the judge's decision beyond the statements already made.