Chinese crypto entrepreneur Justin Sun is facing a series of allegations after announcing his decision to postpone a lunch date with Warren Buffet for which Sun bid $4.7 million.
Local media reported that Sun was barred from foreign travel due to allegations including illegal fundraising, money laundering, and gambling. China’s internet finance regulators have called for the public security department to launch an investigation.
Why it matters: The Chinese entrepreneur’s activities have been in the media spotlight after he won a charity auction with a record $4.57 million bid for lunch with Buffet last month.
- Sun founded cryptocurrency TRON, which is now the world’s 10th largest. Sun previously said he hopes to educate and change Buffett’s mind on cryptocurrency. Buffett, a skeptic of cryptocurrency, compared Bitcoin to “rat poison.”
Details: Sun posted on Weibo on Tuesday that he was recovering in the hospital after falling ill from kidney stones, and that the lunch, set for this Thursday, was postponed. Shortly after, allegations against Sun began circulating on Chinese media.
- A report from 21st Century Business Herald (in Chinese) accused Sun of engaging in illegal fundraising through his cryptocurrency platform TRON and alleged that the TRON network operated illegal gambling services.
- Peiwo, a Chinese social network app which Sun owns, recently dissolved according to China’s national company registration website. State-run news outlet Xinhua said that it spread pornographic content and offered escort services. Sun responded in a Weibo post saying that the company is cooperating with regulators.
- Chinese media Caixin also published a story cited anonymous sources saying Sun was put on a border control list because of the allegations and China’s internet financial risks regulator has called for the public security department to launch an investigation.
- Sun’s whereabouts when the allegations surfaced are unknown. However, on Tuesday he live-streamed on Periscope showing the San Francisco Bay Bridge in the background. Sun did not address whether he was restricted from leaving China but he assured the viewers that he was “feeling better.”
Context: Chinese regulators are tightening scrutiny of illegal mining and fraudulent activities related to cryptocurrency. Earlier this month, Sun and his company TRON was caught in the middle of controversy related to a Ponzi scheme.
- Chinese regulators have recently been cracking down on illegal mining activities and scams.
- Victims of a $30 million Chinese Ponzi scheme say Sun’s silence about the scam—which used TRON’s name to attract its members—allowed it to spread more widely.
- Sun moved TRON’s operation to Singapore when regulators banned cryptocurrency trading and fundraising in 2017.