Summary of the hot topics today: the legal case between Justin Sun and World Liberty Financial has seen significant progress in a federal court in California.

The court issued an order to dismiss World Liberty’s motion to move the case to a closed arbitration proceeding and to seal the documents so the public could not see them. The judge ruled that all of Justin Sun’s specific claims must be considered only in open court. This is an important victory, because token holders should be able to see the truth about how the project manages people who trusted them.

Going back, Justin Sun was one of the earliest and largest investors who put in $45 million during a period when token sales were still sluggish, helping drive fundraising to $550 million. However, the lawsuit states that World Liberty secretly embedded a backdoor system in WLFI’s smart contract, giving itself unilateral power to freeze or burn token holders’ tokens without prior notice. It then used this system to freeze Justin Sun’s tokens and threatened criminal prosecution when he tried to exercise his legal rights.

In addition to suing for hundreds of millions of dollars in damages, Justin Sun also obtained a temporary court order prohibiting World Liberty from burning or moving his tokens again.

An additional concern is that Justin Sun warned that the same backdoor system has been used in a stablecoin, USD1. This means users’ assets can be frozen at any time.

It also raised questions about World Liberty’s liquidity and financial risks on multiple fronts:

- The damages sought in the lawsuit are as high as several hundred million dollars, while the market valuation of USD1—over $4 billion—is money set aside as customer collateral and cannot be used to pay damages as determined by the ruling.

- Reports say World Liberty put up to 5 billion WLFI tokens (about 50% of the treasury and 5% of the total supply) as collateral on the Dolomite lending platform, which was co-founded by its own CTO, to borrow out USD stablecoins of at least $75 million. Analysts view this as similar to the repeated borrowing behavior that previously occurred in the FTX case.

- Co-founder Chase Herro previously ran Dough Finance, which had claimed it was hacked, but investors sued it for allegedly moving assets into the company’s own pockets. Many people from that team have since moved on to manage World Liberty.

- Justin Sun also shared lessons from his own past, when ARIA seized collateral TUSD worth more than $500 million, urging investors to study information carefully and be especially cautious.

If you’ve been following or holding assets in this system, it’s recommended that you study the information and assess the risks in detail.