The Leeds chairman Gerald Krasner said: "The club are not in discussion with Mr Sainsbury. Yet again there was no proof of funds provided.
"We can only assume Mr Sainsbury is simply intent on damaging a deal with another consortium we are in advanced discussions with."
Sainsbury's initial takeover bid fell through earlier this month because he failed to meet a series of deadlines.
Krasner insisted negotiations with a local consortium of Leeds fans was a more a likely takeover alternative.
The Leeds chairman said: "The negotiations with the local consortium of United fans are progressing well.
"The board hope it will come to fruition in the next seven to 10 days, at which time a further statement will be made."
Sainsbury was understood to have ditched his original backers, Nova Financial Partners, and attracted European investment in order to fund the deal.
Sainsbury said: "The proof of funding will be supplied in a manner I know will totally satisfy the board of LUFC, and this will follow imminently."
Leeds were forced to sell their Elland Road ground on a sale-and-lease-back agreement to raise funds after Sainsbury's original offer fell through
