Crypto billionaire Justin Sun recently criticized Trump’s family crypto company World Liberty Financial.
The founder of the Tron blockchain, who invested at least $75 million in WLFI, is now claiming that the company is misleading investors by “implanting backdoor controls over user assets, freezing investor funds without disclosure or due process, and treating the crypto community like a personal ATM.”
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Sun alleges that his account has been frozen since September and hasn’t been able to sell his holdings.
“I have always been an ardent supporter of President Trump and his crypto-friendly policy,” Sun wrote on X. However, “this is the opposite of decentralization. This is a trap door marketed as an open door. I denounce the ongoing token scandals by the bad actors at WLFI.”
World Liberty denied any wrongdoing and threatened to sue Sun. The company even wrote on X, “See you in court, pal.”
Here’s what investors need to know about the dispute.
Know Who’s Behind Such Criticism
Public feuds between powerful figures can create sudden price swings, but they rarely benefit smaller investors. By the time most people hear about the controversy, markets have already reacted.
“When billionaires go public, retail investors usually end up losing out,” said Ali Zane, CEO at Imax Credit Repair Firm. “They usually hear about the developments the next day and have a lot less information available.”
It’s also important to consider motives. Sun is a direct competitor. As the founder of the TRON blockchain, Zane said his criticism may be influenced by rivalry rather than a concern. However, that doesn’t invalidate his points.
Investors need to “know who is behind such criticism to be able to judge whether it comes from legitimate intentions or it’s simply an attempt to get the price down,” according to crypto billionaire.
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Political Branding Doesn’t Equal Real Value
Crypto projects tied to celebrities or political figures usually gain attention quickly, but that doesn’t mean they have lasting value.
“World Liberty Financial attracted many users’ attention because of its political branding. Such projects are very vulnerable in terms of their reputation because there’s no real substance behind them,” Zane said.
Before investing in any cryptocurrency, Zane recommends evaluating the infrastructure behind it, the utility and uniqueness of tokens, and their liquidity and transparency.
“At the moment, nothing about World Liberty looks interesting for retail investors. This project was built on the power of its political brand,” he said.
Regulatory Risks Are Higher
Projects tied to high-profile supporters may face more scrutiny from regulators like the U.S. Securities and Exchange Commission (SEC).
“The regulators pay extra attention to this kind of crypto venture, which is obviously not accounted for by the current market evaluation,” according to Zane.
If you still want to invest in crypto, the billionaire investor recommends established digital currencies like Bitcoin and Ethereum.
“The only safe cryptocurrencies for long-term investment are Bitcoin and Ethereum,” Zane explained. “These are the only two cryptos whose survival prospects are not being questioned by institutional capital. All others are still trying to prove their legitimacy.”
And if you really want to get into WLFI, Zane recommends allocating a maximum of 5% or an amount you’re willing to lose.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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This article originally appeared on GOBankingRates.com: A Crypto Billionaire Is Criticizing Trump’s Crypto Company: 3 Things Investors Need To Know
