Welcome to Dark Markets, a newsletter about technology and financial fraud. I’m David Z. Morris, longtime financial investigative reporter and tech analyst. Today, we have a deep dive into the long history of scamming by Tron “founder” Justin Sun.
This would normally be a weekend post, but I’m about to make a shocking confession: I spent a fun day Saturday playing in a Warhammer tournament. The tabletop wargame, with its roots in 19th century Prussia, is a hobby that enthralled me as a kid. But it’s expensive, complicated, and ultimately really for adults - I would guess everyone in my Brooklyn league is at least thirty.
Finally having the time and money to pursue such a trivial distraction has been an incredible upgrade to my life. If you’ve got hobbies on hold, don’t wait - life is short.
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Chinese crypto impresario Justin Sun has been in the news a lot lately, above all thanks to the $75 million he deployed into the Trump family’s World Liberty Financial project – and the recent surprising seizure of those funds by the Trumps. World Liberty Financial is after all exactly what its critics say – a fake company only intended as a backdoor channel for influence-peddling and scamming.
But WLF is a perfect match for Justin Sun, whose entire career has been built on stealing other people’s ideas and ruthlessly cashing in on them. In just one data point I recently revisited, a former BitTorrent executive who spent substantial time with Sun found him a technological ignoramus and habitual liar. Sun’s long string of deceptions and fluff has been by and large of the extremely bargain-basement variety, from crass plagiarism to buying diplomatic titles to pressuring the spineless new owners of CoinDesk to fire editorial staff who dared publish anything less than glowing coverage of his crass stunts.
But his clownishly dishonest public persona may actually help him hide the serious financial deception at the heart of his fake-crypto empire. This became particularly clear thanks to a recent lawsuit summarized here by the inimitable Molly White. Sun sued Bloomberg to prevent the revelation that the majority of his claimed wealth is in Tron’s native $TRX token, of which he owns 63% of the total supply. This is, as White points out, very similar to the discovery that Sam Bankman-Fried’s FTX and Alameda Research were propped up by holdings of $FTT, a token SBF himself created.
Sun has, also like Sam Bankman-Fried, represented himself as separate from entities he in fact directly controls, creating huge opportunities for self-dealing fraud. This has included his denial that he owned the exchange Poloniex, which he later admitted to; and his current denial that he owns the exchange HTX, formerly Huobi. According to White, Sun registered for the World Liberty token sale using a “hot wallet” belonging to HTX/Huobi. Protos, with Molly White among the best sources of insight on Sun, alleges that HTX has aggressively re-hypothecated its reserves, loaning them to the AAVE protocol.
Apparently lacking the same basic moral compass that lets honest people spot liars, it would be little surprise if Sun himself got grifted by Donald Trump. But that’s not necessarily what happened: Sun pretty obviously made his “investment” in WLFI to stop an SEC prosecution on securities fraud charges. Those charges, crucially, were not just of selling unregistered securities, which has been broadly de-prioritized in crypto prosecutions, but of market manipulation through techniques including wash trading. The SEC alleged both that Sun manipulated the price of $TRX to create an inflated impression of demand for the token in the early stages of the system’s growth, and generated $31 million in fraudulent revenue through market manipulation. As a cherry on top, the SEC claimed Sun used undisclosed paid promotions (to the very credible Jake Paul, Lindsay Lohan, and Soulja Boy) to further manipulating the market for TRX and BTT tokens.
Want an even grander tale of fraud and graft? Pre-order my book, “Stealing the Future: Sam Bankman-Fried, Elite Fraud, and the Cult of Techno-Utopia.” Coming November 11 from Repeater Books.
So maybe World Liberty Financial “freezing” Sun’s $122m was part of the deal all along. Not only do the Trumps now get to keep the real money Sun swapped for his $WLFI tokens, the freezing of Sun’s huge tranche, alongside a $WLFI token burn, has pumped the shitcoin by 8% in just a few days by implicitly reducing supply.
Sun’s ability to (allegedly) influence the most corrupt Presidential administration in the past century is rooted in low-rent chicanery. This has included bald-faced, easily falsifiable lies about the capabilities of “his” blockchain platform, Tron, which in substance is most generously characterized as an unregulated global casino (outranked in that category only by Solana). Sun has also repeatedly used Tron as a personal piggy bank – just as Sam Bankman-Fried used customer deposits – including by meddling with stablecoin reserves.
The cryptocurrency industry’s own attitude towards Sun and Tron is highly cagey. Jeremy Allaire’s Circle decided to stop issuing its USDC stablecoin on Tron in February of 2024, citing risk concerns. Coinbase has refused to list wBTC, a Sun-affiliated Bitcoin wrapper on Ethereum, because of the risk implied by Sun’s involvement. MakerDAO collectively refused to accept wBTC as collateral. It takes quite a strong track record of shadiness to scare other crypto businesses out of working with you: Coinbase in particular will list pretty much any dogshit on-chain, so its distancing really means something.
But Sun’s war chest now amounts to real power. Like many people who rise to such status through shamelessness, Sun’s most powerful defense is simply time. He’s hoping everyone will just forget how he got here.
And so, in defiance of corruption, we remember.
To understand just what a low-rent, chintzy sheister Justin Sun is, we first turn the clock all the way back to 2013 and Sun’s first toehold in the crypto industry – as Ripple’s representative in China. I’ll limit myself here to saying that the early marketing of XRP around the world certainly seems to have influenced how he would later promote Tron after it launched in May of 2018.
An example OGs might remember was Sun’s 2019 declaration that he would give away a Tesla in a Twitter drawing. This was typical of Sun’s modus operandi online: he was constantly hyping the $TRX token price on social media, and regularly gave away small-dollar amounts of Tron and other cryptos to juice his follower count.
The Tesla giveaway became the first truly public evidence of Sun’s bottom-of-the-barrel personal character: it was rigged. Seemingly out of pure negligence, Tron and Sun left evidence of manipulation in the giveaway video. Even more incredibly, the Tron team used an on-chain tool for the giveaway, which left a clear trail of exactly what had happened: Sun ran the giveaway drawing 88 times before, apparently, getting the result he wanted. (An oddly fitting number for a Tesla giveaway.) Sun getting caught red-handed because he didn’t realize blockchain records would be visible exemplifies his heady mix of shamelessness and incompetence. It’s still unclear to me whether a Tesla was ever actually given away.
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