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Original title: "THE MANY ESCAPES OF JUSTIN SUN》
Compilation of the original text: Hu Tao, Chain Catcher
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(This article has some deletions)
Reckless and outspoken, Tron founder Justin Sun has been a controversial figure in the crypto space.
Bolder than his reputation is, Justin Sun has taken a riskier approach to U.S. and Chinese financial regulation — and often sought to circumvent them.
Will his rule-breaking and dangerous behavior finally get him punished? Or will he escape again?
Justin Sun, a budding Chinese cryptocurrency tycoon, walks through the shiny atrium of the departure terminal at Incheon International Airport in South Korea. It was September 2017, the early peak of the crypto boom, and Justin Sun had every reason to be nervous after his first ICO. An ICO, or initial coin offering, is similar to an initial public offering of new shares. But Justin Sun isn’t worried about the money he’ll get, or what he’ll lose if the token fails. In fact, his company, Tron, launched a token called TRX — which was a huge success, selling out quickly for $70 million. The problem for Justin Sun is that just a few days ago, the Chinese government completely banned ICOs.
The country claims that ICOs are vehicles for financial fraud, pyramid schemes, and other illegal and criminal activities—a credible claim given the introduction of hundreds of new and highly dubious cryptocurrency tokens in 2017. People buy into ICOs for a variety of reasons: sometimes because the token’s underlying blockchain technology is promising, or sometimes because they speculate that the cryptocurrency’s value may rise astronomically over time , just like Bitcoin.
But in many cases, token founders sold all their token holdings at once for huge sums, destroying their value and the investments of all other buyers in the process. These are “exit scams” or “pumps and dumps,” and in short, they defraud cryptocurrency buyers of billions of dollars. People get scammed so often that the SEC can hardly bring criminal charges fast enough. A week later, the Chinese government’s ICO ban was the reason Justin Sun was waiting for his flight at Incheon International Airport. Sources who heard him tell the story said Justin Sun thought he was a fugitive ready to take off.
Previously, Chris Harland-Dunaway reported on Justin Sun's acquisition of BitTorrent and how the crypto mogul turned it into his own self-promotional machine, seeThe article。
Justin Sun's true escape route from Beijing to Seoul is still shrouded in rumors. But the reason for his escape is simple: he probably knew the ICO ban was coming and stuck with it anyway. Justin Sun pushed TRX to complete its token sale a day before the ban was announced. Changpeng Zhao, founder and CEO of Binance, one of the world’s busiest cryptocurrency exchanges, broke the news to Justin Sun.
"They were together," a former employee told me.
Changpeng Zhao allegedly learned of the impending government ban from his own connections. But sometime after the ICO ban, Changpeng Zhao made it clear that his relationship with Justin Sun was not personal, saying, "We only talk about business, not really 'hanging out' in any way." But as recently as 2019, Changpeng Zhao Vacationing on the shores of Lake Geneva with Justin Sun. On social media, they come across as business trips.
(Changpeng Zhao did not respond to a request for comment.)
Justin Sun boarded his flight at 4 p.m. in Seoul, and the captain waved the Korean Air plane across the tarmac. It turned its sky-blue fuselage onto the runway, jet engines roared, and Justin Sun lifted off. He headed to San Francisco, completing the first of his many escapes.Justin Sun learned early on that in the world of cryptocurrencies, it's easy to make big bucks as long as you're ready to exit before it catches up with you.
For this story, I spoke to 15 sources who spoke with me on the condition that their names not be revealed because they fear retribution from Justin Sun. They are current and former employees of Justin Sun at various ventures in his cryptocurrency empire, China and the United States. A source has first-hand knowledge of Justin Sun's business for other reasons. This story also relies on hundreds of pages of internal Tron documents that were leaked to me. They revealed the financial dealings of Justin Sun and his company. In the course of reporting this story, more than one person felt that talking to me might put their lives in danger.
Despite repeated requests, Justin Sun never agreed to answer any questions. Law firm Harder LLP, which advised Justin Sun on the lawsuit, responded: “This story is yet another attempt by Mr. Harland-Dunaway to damage Justin Sun’s reputation. Poloniex and BitTorrent will not respond to these allegations.
I also interviewed 18 current and former employees of BitTorrent and Tron who I talked to earlier when I covered Justin Sun for The Verge.Together, these descriptions paint a desperate picture of a man with seemingly limitless energy and little empathy for his employees, they pursue hype tactics and technologies that run counter to the US-China trade war. But that story doesn't delve too deeply into the cryptocurrency underpinning Justin Sun's empire.
So I started paying attention to his money.
He fled because of the ICO ban. A few months later, the value of Tron's token, TRX, skyrocketed. Sun set to use his newfound wealth. He transferred millions of dollars into his U.S. bank account through a Hong Kong-based company called Davidyo Limited, some of which he used to buy a GMC Denali, which he apparently loved after seeing it on "House of Cards." A few months later, Justin Sun showed up at BitTorrent's downtown headquarters in San Francisco, talking business in his Gucci sneakers. He proposed buying the struggling company, whose software focuses on decentralized file sharing. He closed the acquisition for $140 million.
The story of Justin Sun's escape is well known at Tron's offices in San Francisco. In his telling, it's a sobbing tale of a businessman fleeing China to fulfill his God-given capitalist ambitions. One former employee said that when Justin Sun emotionally retold the story on Tron, they often received a message: "Justin Sun is crying again."
But suddenly, Justin Sun seemed intent on putting a Chinese stamp on the company. He decided to perfect the marriage between BitTorrent and TRON with a summit held at TRON's Beijing headquarters. This is his first return to China, and the employees have heard about it. After months of hiding from Chinese authorities, Justin Sun apparently feels safe there now.
Fresh from San Francisco, BitTorrent's C-Suite executives were transported from the Shangri-La Hotel in Beijing to a co-working space and led to a glass-enclosed conference room. Justin Sun picked up the desk and read a typed speech, telling the executives that they were "his generals" and that together they would slaughter their competitors.
Executives split up to hold meetings with different departments at TRON’s Beijing office. Dipak Joshi, BitTorrent's chief financial officer, looked shocked as he returned from his meeting. "Dipak seemed to really care about what he was learning," said a former employee. When Joshi returned to San Francisco, he confided to another employee what he thought Sun's China office was doing. "He told me they run an insider trading team in Beijing.”
The “market making team” is led by a technocrat named Baolong Xu. One day, Xu and a former employee had lunch at a nearby restaurant serving traditional Chinese seafood. They were eating a stewed freshwater fish called crucian carp when Xu started explaining that his job was to “ensure TRX prices reach a certain level that Justin Sun wants.” During the explanation, Xu explained that when his team knew that Tron planned to announce good news to the public, Justin Sun instructed them to buy TRX. After Tron’s announcement, the value of the token skyrocketed and it was sold at a huge profit. "I was a little scared," the former employee told me. "He has been doing so-called market making and insider trading."
When another former employee asked Sun's top deputy in Beijing what he meant by "market making," he laughed and said, "You know how the Chinese do it, right?" He apparently explained that doingThe City team's job is to work with wealthy cryptocurrency consumer "whales" outside of Tron.“We have a way to increase the price of TRX,” he said. "You know those people who have a lot of money but not a lot of brains? You can influence them to do anything you want them to do." The team's business has ventured into what is essentially wholesale market manipulation.
(Tron and Bittorrent did not respond to requests for comment.)
When BitTorrent's chief financial officer, Dipak Joshi, returned to San Francisco from a summit in Beijing, he spoke with another employee about the possibility of possible illegal activity in Beijing. The ex-employee confided to me, “I’m not a legal expert, but I sure know it’s not good.” Joshi and another employee thought that if they could take as much of themselves out of work on TRX as possible and actively Ignore discussions about cryptocurrencies, they will be safest. "No idea. Not involved," the former employee said. I asked them if it was because cryptocurrencies fell into a legal gray area, "Yes. I would say black area."
(Dipak Joshi declined to comment.)
I spoke with three lawyers who are experts at the intersection of financial law and cryptocurrencies and former FINRA regulators about insider trading law and cryptocurrencies. Their take on whether insider trading laws apply to cryptocurrencies: "A case can be made." They also all made it clear that TRON’s Beijing-based market-making team appears to be using “material non-public information” to trade. U.S. securities exchange laws explicitly prohibit trading on "material nonpublic information" for unfair advantage, with a maximum penalty of 20 years in prison.
In the United States, Justin Sun is facing serious financial irregularities. But unlike Chinese authorities, who have a record of apparently arbitrarily detaining businessmen, the US’s slow-moving judicial rule of law offers Sun another escape hatch: legal debate.
The insider trading prohibition applies to financial products known as securities. "Securities" is an old-fashioned investment term from the 1930s - such as stocks or bonds. Governments regulate securities because they can easily be exploited by well-connected networks to make huge fortunes while keeping the public away from fair market conditions. The billion-dollar question is whether most cryptocurrencies are securities. It depends on the specific situation. But if a crypto token qualifies as a security, insider trading laws apply.
Justin Sun faces a second major danger. For a cryptocurrency to qualify as a security: it must be registered with the Securities and Exchange Commission (SEC). Registration means that cryptocurrency companies open their accounting books for inspection and publicly disclose their performance. Selling "unregistered" securities is a crime punishable by up to five years in prison in the United States. Despite this, a large number of blockchain companies have rushed cryptocurrencies into ICOs without registering with the SEC. So far, the SEC has quietly engaged in numerous settlement talks with cryptocurrency businesses, even accusing company executives of selling unregistered securities.
Regardless of the conclusion of this legal debate over cryptocurrencies, Justin Sun has set out to ensure Tron’s legitimacy. He started approaching lawyers to find legal advice that could protect his cryptocurrency business. He knew that his road to riches in America was full of legal pitfalls to avoid.
Since the SEC is the regulatory body that is likely to follow Justin Sun, it makes sense that when a former employee heard him musing in a meeting, "You know what's amazing? If we had someone from the SEC join company.” Justin Sun set his sights on David Labhart, a veteran who has worked in the SEC compliance department for eight years. He might be Tron's Chief Compliance Officer.
When asked by Justin Sun, Labhart proposed to overhaul Tron's compliance process and work directly with BitTorrent's legal counsel to ensure that everything on Tron is legal and compliant. Unsurprisingly, the former regulator thinks like a regulator. “Justin Sun was very skeptical about it,” said one former employee, who countered to Labhart: “Justin Sun tried to convince him,He wants (Labhart) to prove specifically that TRX is not a security token, but a utility token.(A securities law expert told me that there is no reason to believe that the term "utility token" is valid, and that no judicial opinion would describe tokens as such.)
The former employee described Labhart's confused look as: "Are you kidding me? I'm from the SEC." The conversation bogged down. Then, "Justin Sun asserted his dominance and was like, 'I'm the boss, you're going to work under me, these are my needs.'" Despite his obvious concerns, Labhart signed the contract.
After hiring Labhart, Sun Yuchen seems to have confidence. Within days, he conducted another ICO. ICOs are not banned in the US like they are in China. The new token is BitTorrent Token, or BTT. A former employee who is passionate about Justin Sun explained that when he bought BitTorrent, it had more than 100 million active users. Issuing tokens would be very profitable, "a no-brainer". Labhart understood much less, a former employee told me. At the time, the SEC provided little legal guidance on how to conduct an ICO without selling securities. According to Labhart, it's vague and very dangerous.
Justin Sun allegedly wanted Labhart to write a legal opinion to protect him in case he was later charged and "avoid liability" for selling unregistered securities, a former employee explained. Apparently, Labhart declined. Justin Sun then announced that the company would give out BTT to the public for free, a so-called “airdrop.” These crypto giveaways are a marketing tactic, which is also dangerous because it looks like marketing for an investment opportunity (a security). "I think that was the last straw for Labhart." He resigned.
"Justin Sun will be in trouble, but he doesn't care," opined one former employee. Justin Sun ordered the Chinese office to continue the airdrop.
Labhart declined to comment.
Justin Sun is still at risk. After trying to get BitTorrent’s general counsel to write a finding to protect his token TRX from securities law regulation, he was visibly angry. “In the end, they got someone — a lawyer from Hong Kong — to write a finding that showed TRX was a utility.” The former employee was baffled by the idea. "Can we do it? Hong Kong? Are you sure? It really doesn't make sense," they remember saying. The former employee was never informed of the identity of the Hong Kong lawyer, nor was it clear whether they were licensed to practice anywhere in the United States.
One crypto finance lawyer I spoke with warned, “Corporate executives should never go to a lawyer until they get a ‘yes.’ You’re not looking for advice—you’re looking for a yes.” Justin Sun often Being able to find them in his company, and as his business decisions became more risky, few resisted Labhart's approach. It seems like Justin Sun thinks lawyers are disposable, like he has the ability to leave them behind and be tainted by the actions they inadvertently facilitate while he keeps his eyes on the way out.
When Justin Sun purchased a cryptocurrency exchange called Poloniex, his crypto empire underwent a fundamental change. A cryptocurrency exchange functions like a stock exchange, but lists coins.
Poloniex is a very popular and very risky place to trade cryptocurrencies. “Poloniex used to be an altcoin casino,” said a former employee. “It lists all coins.” That is, the exchange lists coins (“altcoins”) with incredibly tenuous legitimacy. The trading world is ruthless. “People would just keep pumping and dumping it, like it was all the Wild West,” said one former employee.
Previously, in 2018, Poloniex was acquired by a crypto finance firm called Circle, which sought to purge the exchange of illicit activity and turn it into something close to the Nasdaq stock exchange, but for crypto. They enforced new “know your customer” rules, or KYC, which are often set by governments but also written by companies to proactively prevent fraud on their platforms. This usually means asking the user for a government-issued ID. KYC information is usually checked against a database of known criminals banned from the international financial system, but it turns out:Poloniex's lack of previous customer reviews was what made it so appealing in the first place. Once KYC is enforced, trading volumes plummet.
Justin Sun's newfound control was revealed at a company-wide event when he slid out of a sliding side door. "It's a real gangster," one employee said.Justin Sun plans to bring Poloniex back to its earlier gray areas, with some employees eager to get back on the "Poloniex pirate ship."
Justin Sun moved Poloniex to the Seychelles. The archipelago has few regulations on cryptocurrency transactions. The fact that Poloniex's headquarters of roughly 50 to 70 employees is on High Street in downtown Boston doesn't matter. The Bostonian is now employed by a company called Augusttech, LLC, which aims to provide "technical and IT services" to Poloniex Seychelles. “The corporate structure is like a matryoshka doll, obfuscating,” said one former employee. It's not just confusing -- employees say it's also a pain in the ass for any customer looking to sue Poloniex. They may have to go to court in Seychelles.
The corporate shakeup was being carried out by Sun's new favorite lawyer, Fenwick & West, a blue-chip firm that also represents Silicon Valley giants such as Amazon, Google and Hewlett-Packard. Fenwick & West is now part of his personal legal entourage, employees said. But with his new law firm, Justin Sun is taking bigger risks, according to a former employee. For the former employee, the combination made Fenwick & West "the scariest lawyer I've ever met."
(The law firm Fenwick & West did not respond to a request for comment.)
Elsewhere on Poloniex, approvals for token listing requirements have been relaxed. Justin Sun also began impatiently pushing back Poloniex’s KYC rules, which are slowing down Poloniex’s user adoption in China. The impasse angered Sun, a former employee said. "Fake KYC!" he screamed at a meeting. "Fake!"
To approve new clients as quickly as possible, Poloniex built an automated KYC system, but according to a former employee, this was allowed. They explain that it rubber-stamps virtually any type of government ID card—“it doesn’t matter if they submit a picture of Daffy Duck.”
Justin Sun also seems to have found a completely different way to use Poloniex. As one former employee put it: "I think over time he started to see all the possibilities of using Poloniex more or less as his personal bank." But there was only one problem: all the money on the exchange belong to the user.
It started with a project officially called "Operation Couch Cushions". Poloniex's digital architecture was old and oddly programmed, so it became common for small coins to get stuck in the digital cracks of the old exchange, like buried in the depths of a couch. Employees referred to the lost traces of cryptocurrency as “dust,” and eventually, engineers found a gold mine. For years, customers have accidentally deposited bitcoin into wallets designed only to accept the popular cryptocurrency called Tether. Bitcoins are held out of wallets in a suspended animation, undelivered. Users can't restore it and it seems to have been forgotten for years.
Combined, these Bitcoin shards are worth a fortune in 2021. When Justin Sun learned of them, he ordered engineers to collect it. Almost every day, engineers find a new pocket of change. "You can turn a rock and find a million dollars," said one former employee. After the rest of the company learned of the operation at an all-hands meeting, many objected. They argued that the money did not belong to the company.
When the engineers finished their search, their rough estimate of the dust they found was around 300 bitcoins, or roughly $20 million.
Gradually, the employees involved in the operation realized that Bitcoin would never be an "alternative income" for Poloniex. According to current and former employees, they knew Sun would personally use Bitcoin. According to a former employee, Justin Sun kept asking those involved in the project a question: "Where are my 300 bitcoins?"
Over the course of four hours, and in hundreds of transactions, nearly all the bitcoin dust was sucked from thousands of old Tether wallets. All told, it's 230 bitcoins, worth a little over $10 million today.
All the dust settles in an anonymous wallet. Within half an hour, the unnamed wallet transferred almost all of it to a public wallet on Poloniex. Here, the trail of dust disappears as Poloniex users withdraw and deposit bitcoin in large numbers.
Taking a step back and looking at blockchain transactions, former employees said the simultaneous unfreezing and transfer of large amounts of bitcoin dust could only be performed by Poloniex code scripts.
One former employee pointed to a clause in Poloniex's terms that allowed them to deduct "dormant fees." To them, the terms and conditions seem open to change, at least providing a policy guarantee to clear the Bitcoin dust.
Although Justin Sun requested bitcoin, there is no apparent blockchain evidence that he received it personally. The former employee explained that the Poloniex utility wallets had so much user funds flowing through them 24/7 that they accidentally obscured any trace of the funds. But in the end, the legal distinction between Justin Sun himself or Poloniex receiving the money may be moot. Andrew Verstein, a UCLA professor and attorney specializing in cryptocurrencies and financial crimes, told me that since Justin Sun is the sole owner of Poloniex, he would be held responsible anyway. "It is definitely a crime to use client funds for personal use,” Verstein said.
In interviews, none of the former employees believed that Justin Sun would take personal responsibility for his malfeasance. Most seem to think that his existence lies beyond the fingertips of American law.
The legal ambiguity surrounding the initial outbreak of cryptocurrencies is one of the reasons why Sun appears to be legally invulnerable. It appears that long-standing securities regulations should apply to crypto in obvious ways, but some have not been tested, such as insider trading laws. Some might even argue that this isn’t a new scenario, and that cryptocurrencies are, in some cases, just repeating some of the same mistakes and scandals that have been enacted for the financial laws of the United States and many other countries.
A former Poloniex employee thinks Justin Sun has found a way to live in the shadow of the law:“Justin Sun's tolerance for risk is ridiculously high. And I don't know if it's because he knows more than I do, like he just totally believes his guts are legally set up to protect himself. "
It was during a meeting about a business decision with legal risks that Justin Sun hinted at how he would actually protect himself. A former employee was present. "What's the big deal?" Justin Sun asked. "The worst possible thing is that I will never come to America again."
All along, Justin Sun seems to be blazing a new trail.
Former employees told me that Justin Sun was focused on an island nation. In 2018, Justin Sun sent a Tron employee to a blockchain conference in Malta, where they attended a VIP party inside the presidential palace. Caviar and champagne are served next to a huge swimming pool with twinkling string lights overhead. There, surrounded by waiters, a motley crew of crypto celebrities, and business journalists, Tron representatives met Malta’s then-president Marie-Louise Coleiro Preca. The meeting was perfunctory, but she told Tron emissaries, “We welcome Tron’s investment in the Maltese economy.”
The next day, Tron employees went to the office of Silvio Schembri, the Minister of Economy and Industry of Malta. They are sitting together in a conference room. The envoy's goal was to arrange a one-on-one meeting between Justin Sun and Joseph Muscat, the country's former prime minister accused of corruption. In an initial meeting with Schembri, the finance minister said Justin Sun "needs to invest first."
Justin Sun invests in secret. At the time, Malta was notorious for basically selling citizenship to wealthy individuals from around the world for around $1 million, as long as they settled on the island. The passport sales process is officially called the "Individual Investor Program".
The scheme was widely criticized for being vulnerable to corruption, including legendary Maltese journalist Daphne Caruana Galizia, who was later assassinated for her reporting.
(The Maltese government did not respond to a request for comment. Silvio Schembri did not respond to a request for comment.)
Justin Sun started by renting a lavender apartment in Malta, on a narrow street in the resort town of Sliema, with white decorative burglar bars on the windows. Malta's business registration records also show that Justin Sun set up a company called Tron Limited using his Chinese name. But sources involved in the company's founding could not say whether it had done any meaningful business. According to them, Justin Sun made business investments, which may have stimulated the Maltese economy.
Meanwhile, Justin Sun wired thousands of dollars to lawyers who assisted him with his citizenship application. According to a prominent Maltese immigration lawyer, "individual investors" "must contribute at least €650,000 to Malta" in order to obtain citizenship. It is unclear how Justin Sun contributed. Justin Sun received his residence card in Malta and dissolved his Maltese company Tron Limited in 2020.
In some respects, Justin Sun's Maltese citizenship is no exception, as he has other destinations to escape to. He claimed in court statements that he was also a citizen of the Caribbean island of St. Kitts and Nevis. Another ex-employee told me that Justin Sun bragged casually about his intention to buy passports from the tiny West African nation of Guinea-Bissau. But there is another, more important secret about Justin Sun's relationship with Malta. According to multiple Tron employees, Justin Sun made two additional €50,000 “investments” in Malta. He has applied for citizenship for his father and mother.
Justin Sun hopes to take his parents with him, suggesting Malta could be his final destination if he gets caught at the crossroads of US or Chinese regulators. Other countries to which he claims paper allegiances appear to serve more ephemeral interests. After all, if you don't live in a place, you don't owe it anything.
Justin Sun is something of a connoisseur of bank accounts.When Justin Sun said he would pursue citizenship for Guinea-Bissau, he urged an employee to start opening bank accounts there if feasible. In the United States alone, he controls at least 13. When he opened a checking account at First Republic, he was vague about his occupation, calling himself a technology service provider and telling a former employee never to reveal his cryptocurrency work to a banker. He also told them that the bank routinely froze his money and that he needed to spread his wealth across multiple accounts. The employee believed that Justin Sun's bank account strategy was designed to avoid falling into the trap of anti-money laundering laws. For a cryptocurrency tycoon like Justin Sun, cashing out large amounts of cryptocurrency can be a thorny issue.
Justin Sun's many bank accounts may just be signposts for moving money. As one former employee with knowledge of Sun’s banking speculated, “if he had to cash out all his cryptocurrencies, he would have to do it outside of the U.S. and China,” where they would be heavily scrutinized or banned outright.
According to another former employee, Malta was not only a physical escape route, but a monetary one as well. Maltese citizens can use banking in most parts of Europe. Justin Sun allegedly urged an employee to submit an application to open eight bank accounts there. One potential explanation for Justin Sun's excessive number of bank accounts comes from a former close associate of Justin Sun's, who told me he was looking for ways to pay as little tax as possible. As one former employee put it succinctly, "He thinks taxes are stupid." As one close associate of Justin Sun explained, "Every billionaire, all they think is: tax evasion, tax optimization."
Multiple former employees told me that Justin Sun could never return to China. Justin Sun dodged the ICO ban, and amid the trade war, he ignored attempts by Chinese authorities to contact him and ask him to drop a high-profile lunch with Warren Buffett (who also invited President Trump). China has since paid for the detention of six senior Tron employees.
His exact relationship with Chinese authorities has been difficult to speculate, but he was recently appointed to an academic position at the Central Party School of the Communist Party of China to promote the development of blockchain. On the surface, Justin Sun seems to have shifted his strategic focus to China, possibly out of self-preservation.
Just before Christmas, a former employee received a call from the front desk of their apartment building. "The FBI is coming," they said. Ex-employee startled: "Wait, you mean the FBI, FBI?"
The former employee wasn't home, but the FBI called about 10 minutes later. The broker on the other end arranged to meet them at a restaurant that served dessert in Koreatown, New York. The ex-employee had a friend accompany them to the meeting, just in case it was a dangerous prank. The former employee walked into the restaurant, bought a pastry, and sat down.
A man in a dark jacket and jeans walked in and held his wallet up to the employees at the front of the restaurant, allowing it to open and reveal their identities. They waved him over, and he sat down at the ex-employee's table. He claimed to be an agent of the IRS. He said FBI agents also came, but they were still looking for a parking spot.
As they waited, the IRS agent told the former employee that they were investigating Sun but didn't really know what to look for. The FBI agents finally arrived and asked about the situation of various employees in the United States and Beijing, as well as the rumors that the beautiful model flew around the world with Sun Yuchen, and whether he had done business in private. The ex-employee had the impression that the agent was interested in potential tax evasion. They even called Justin Sun an "IRS criminal," the former employee said. Agents handed over a letter asking the ex-employee to forward them information related to the investigation, listing a court date, and saying, "It sounds like you really want to help us." To which the ex-employee said: " Oh yeah, because I want to fuck him up." The agents were amused, saying they'd heard that before.
Other employees working for Justin Sun have received grand jury subpoenas. The U.S. Attorney's Office for the Southern District of New York, which typically deals with financial crimes on Wall Street, is looking for criminal evidence against Sun.
The investigation was led by the FBI. Justin Sun has hired a top white-collar defense attorney named Telemachus Kasulis who has prosecuted fraud for the U.S. Attorney’s Office. (Kasulis did not respond to a request for comment.)
Meanwhile, a former SEC attorney is tasked with guiding employees through the grand jury subpoena process. A source close to the investigation predicted they would try to fend off the subpoena. But it may be futile. As the sources noted, any number of Justin Sun's employees may already be working with the government. "They have been tight-lipped about this for a long time," they said.
As the investigation into Justin Sun draws to a close, a grand jury is exploring a long list of potential charges. According to the subpoenas (one of which was shown to me), they are: wire fraud, conspiracy or intent to commit wire fraud, defrauding, money laundering, spending the spoils of a criminal enterprise, unregistering securities and lying, aiding and abetting a crime, and conspiracy to defraud the United States.
(The SEC, which prosecutes securities fraud, declined to comment. The IRS could neither confirm nor deny the existence of an investigation, but welcomes tips about financial crimes. The FBI and the U.S. Attorney’s Office for the Southern District of New York did not respond to requests for comment.) )
Justin Sun left the US before the pandemic hit and never returned.
Cryptocurrencies are full of colorful personalities and idealistic people who want to push the boundaries of financial possibility. “I think there are a lot of people who really believe in the power and promise of crypto. It’s really been a generous, giving community in many ways,” explained a former employee who worked closely with Justin Sun. “I think that makes you too credulous. I think a con artist anywhere can easily spot a target. Unfortunately, the crypto community is full of things that are easy to attack...”
These “easy targets” aren’t just everyday investors — many are people who work in cryptocurrencies. As one former employee described it, "delusional optimism" combined with a lack of legal guidance from regulators contributed to an atmosphere of omnipotence that festered. Some Poloniex employees aren't sure if Justin Sun's bitcoin dust heist is illegal. When those around Justin Sun can't tell right from wrong, it's easy for him to get away with it easily and without consequences.
Justin Sun's fate is unclear. Over the past two years, he's spent millions on art and NFT auctions, with a $500,000 digital image of a rock on one hand and an Alberto Giacometti painting on the other. $78.4 million sculpture. He also revealed that he won a Blue Origin auction for a seat on one of the ships used in space for $28 million.
Justin Sun also announced that he is now Grenada’s ambassador to the World Trade Organization, where he says he will advocate for favorable cryptocurrency policies. Thanks to the new title, one of his senior employees sent out instructions to the staff on Slack on how to properly refer to Justin Sun as "Your Excellency." Former employees speculated that the ambassadorship was an attempt to gain diplomatic immunity. But by far he has been most notable for using his public office to promote Tron. After Russian troops invaded Ukraine, Justin Sun met with Russia’s WTO representative and tweeted: “We discussed how to implement humanitarian use cases of blockchains like Bitcoin/TRON for Russian civilians who do not have access to financial payment systems .” The tweet was later deleted.
(A spokesman for the WTO said they were not aware of the incident and therefore had no comment. They also said the WTO had no power to bar any delegate from the meeting, and they had no further comment.)
If the U.S. does prosecute Justin Sun, it has extradition treaties in effect with every country I know he has citizenship, except China and Guinea-Bissau -- if he makes a claim to a former employee that he bought citizenship If the statement is true.
Over the past year, the international community has shown that they are tired of various small states acting as legal trapdoors for tax avoidance and financial crime. It's hard to imagine Justin Sun forever being one step ahead, though it might still be possible.
When I spoke to an employee who told me about manipulating the sofa cushions, I questioned them and asked why Justin Sun might risk such a brazen thing. The staff guessed without hesitation.
"If he breaks so many laws at such a fast pace, there's no way anyone can catch him."
So far, no one can. So far it has worked.
Note: After the report was published, Justin Sun tweeted that the article was blatantly defamatory and that legal measures would be taken.
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