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 The liquidation against lies and speculators has begun. Original source: The Verge Original author: Christopher Harland-Dunaway Compiled by: Hu Tao, chain catcher Original title: THE MANY ESCAPES OF JUSTIN SUN Editor's note: Justin Sun has been trending on Weibo again, this time because of an article published by the American technology media The Verge, which refers to the story of how he used two projects, Tron and BitTorrent, to make huge fortunes in the cryptocurrency market while "smartly" avoiding supervision by China and the United States. In response to the article, Justin Sun claimed on social media that it was "rumor making" and took out his status as "Ambassador of Grenada", expressing that he reserved the right to pursue legal action. Reckless and outspoken, Tron founder Justin Sun has been a controversial figure in the crypto space. Sun is bolder than his reputation suggests, taking a riskier approach to U.S. and Chinese financial regulations — and often trying to circumvent them. Will his rule-breaking and dangerous behavior finally get him punished? Or will he escape again? 01 Leaving Incheon Justin Sun, a budding Chinese cryptocurrency tycoon, walks through the gleaming mezzanine atrium of the departure terminal at South Korea's Incheon International Airport. 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 Sun is not worried about the money he will gain, or what he will lose if the coin fails. In fact, his company Tron launched a token called TRX – which was a huge success, quickly selling out for $70 million. The problem for Justin Sun is that just a few days ago, Chinese regulations banned ICOs entirely. Regulators claim that ICOs are vehicles for financial fraud, pyramid schemes, and other illegal and criminal activities—a credible claim given that 2017 saw the introduction of hundreds of new and highly questionable cryptocurrency tokens. People buy 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 might rise astronomically over time, much like Bitcoin. But in many cases, token founders immediately sell all their holdings for huge sums of money, destroying their value and the investments of every other buyer in the process. These are “exit scams” or “pump and dump” scams, and in short, they defraud cryptocurrency buyers out of billions of dollars. People are being scammed so frequently that the SEC can hardly bring criminal charges fast enough. A week later, China’s ICO ban was the reason Justin Sun was waiting for a flight at Incheon International Airport. Sources who heard him tell the story said Sun believed he was a fugitive, ready to take off at any moment. Sun's true escape route from Beijing to Seoul remains shrouded in rumors. But the reason for his escape is simple: he probably knew the ICO ban was coming and held on to 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, revealed the news to Justin Sun. 「They were together," one former employee told me. Changpeng Zhao allegedly learned of the impending ban from his connections. But at some point after the ICO ban, Changpeng Zhao made it clear that his relationship with Justin Sun was not personal, saying: "We only talked about business and didn't really 'hang out' in any way." But in 2019, Changpeng Zhao and Justin Sun were vacationing together on the shores of Lake Geneva. On social media, they give the impression of being on a business trip. (Changpeng Zhao did not respond to a request for comment. ) At 4pm in Seoul, Sun boarded his flight and the captain waved the Korean Air plane across the tarmac. It swung its sky-blue fuselage onto the runway, its jet engines roared, and Justin Sun took off. He traveled to San Francisco, completing his first of many escapes. Justin Sun learned early on that in the world of cryptocurrency, it's easy to make a lot of money as long as you're ready to quit before it catches up with you.  For this story, 15 sources spoke to me on condition that their names not be used because they feared retaliation from Sun. They are current and former employees of Sun’s various ventures in his cryptocurrency empire, China and the United States. For other reasons, one source has first-hand knowledge of Sun's business. 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 companies. In the course of reporting this story, more than one person felt that talking to me might put their life in danger. Despite repeated requests, Sun never agreed to answer any questions. Law firm Harder LLP, which advises Sun's company on the litigation, responded: "This story is yet another attempt by Mr. Harland-Dunaway to damage Justin Sun's reputation. Poloniex and BitTorrent would not respond to the allegations. I also interviewed 18 current and former BitTorrent and Tron employees who I spoke with during my earlier coverage of Justin Sun for The Verge. Together, these descriptions paint a picture of a man desperately driven to succeed, with seemingly boundless energy and little empathy for his employees, who pursued hype tactics and technologies that were at odds with the U.S.-China trade war. But that story doesn’t delve into the cryptocurrency that underpins Justin Sun’s empire. So I started paying attention to his money. 02 「They have been "making the market"』」 He fled because of the ICO ban. A few months later, the value of Tron’s token, TRX, soared. Sun began to use his newfound wealth. He transferred millions of dollars to his U.S. bank account through a company in Hong Kong called Davidyo Limited, some of which he used to buy a GMC Denali, which he apparently liked 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 acquiring the troubled company, whose software focused on decentralized file sharing. He completed the acquisition for $140 million. The story of Justin Sun's escape is well known at the Tron offices in San Francisco. In his telling, it's a sob story about a businessman fleeing China to fulfill his God-given capitalist ambitions. One former employee said that when Sun emotionally retold the story at Tron, they would often receive a message: "Sun is crying again. 」 But suddenly, Sun seemed intent on putting a Chinese stamp on the company. He decided to consummate the marriage between BitTorrent and TRON through a summit held at Tron’s Beijing headquarters. This is his first time back to China, and the employees have heard about it. After months of hiding from Chinese authorities, Sun apparently now feels safe there. BitTorrent executives, fresh from San Francisco, were transported from the Shangri-La Hotel to a coworking space and ushered into a glass-enclosed conference room. Sun picked up the table and read a typed speech, telling executives that they were "his generals" and that together they would massacre their rivals. Executives split up to hold meetings with different departments at TRON’s China office. BitTorrent CFO Dipak Joshi came back from his meeting looking shocked. 「Dipak seemed to care deeply about what he was learning," said a former employee. When Joshi returned to San Francisco, he confided in another employee what he thought Sun's China office was doing. 「He told me that they ran an insider trading team in China. 」 「The market-making team is led by a technocrat named Baolong Xu. One day, Xu had lunch with a former employee at a nearby restaurant that served traditional Chinese seafood. They were eating a stewed freshwater fish called crucian carp when Xu started explaining that his job was to "make sure the TRX price reaches a certain level that Justin Sun wants." During the explanation, Xu explained that when his team knew that Tron planned to announce the good news to the public, Justin Sun instructed them to buy TRX. Following Tron’s announcement, the token’s value soared and it was sold at huge profits. 「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 “market making” meant, he laughed and said: “You know how the Chinese do it, right? 」He apparently explained that the market-making team’s job is to work with wealthy cryptocurrency consumer “whales” outside of Tron. 「We have ways 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 operations have ventured into what is essentially wholesale market manipulation. (Tron and Bittorrent did not respond to requests for comment. ) When Dipak Joshi, BitTorrent's chief financial officer, returned to San Francisco from the Beijing summit, he spoke with another employee about the possibility of illegal activity in Beijing. The former employee admitted to me, “I’m not a legal expert, but I definitely knew it wasn’t good. 」Joshi and another employee believed they would be safest if they removed as much of themselves from working on TRX as possible and actively ignored discussions about cryptocurrency. 「have no idea. Not involved," the former employee said. I asked them if this was because cryptocurrencies fell into a legal gray area, "Yes. I would say black areas. 」 (Dipak Joshi declined to comment. ) I spoke with three attorneys who are experts at the intersection of financial law and cryptocurrency and former regulators at the Financial Industry Regulatory Authority, covering insider trading laws and cryptocurrencies. Their opinion on whether insider trading laws apply to cryptocurrencies: “A case can be filed.” They also all made it clear that Tron’s Beijing market-making team seemed to be using “material non-public information” to conduct transactions. The U.S. Securities and Exchange Act explicitly prohibits the use of "material non-public information" as an unfair advantage in trading, and the maximum penalty is 20 years in prison. In the United States, Justin Sun is facing serious financial irregularities. But America's slow-moving rule of law has provided Sun with another escape hatch: legal argument. Insider trading prohibitions apply to financial products called securities. 「"Security" 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 vast fortunes while alienating the public from fair market conditions. The multi-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. If a cryptocurrency qualifies as a security: it must be registered with the Securities and Exchange Commission (SEC). Registration means a cryptocurrency company opens its accounting books for inspection and publicly discloses its 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 held numerous settlement talks with cryptocurrency businesses and even charged company executives with selling unregistered securities. Regardless of the conclusion of this legal debate over cryptocurrencies, Justin Sun has set out to ensure Tron’s legal legitimacy. He began contacting lawyers in search of legal advice that could protect his cryptocurrency business. He knew his path to wealth in America was littered with legal pitfalls to avoid. 03 「SEC Since the SEC is the regulator likely to follow Justin Sun, it makes sense when a former employee was heard in a meeting musing, “You know what’s amazing? If we have someone from the SEC join the company. 」Justin Sun has set his sights on David Labhart, a veteran who has worked in the SEC's compliance department for eight years. He may be Tron's Chief Compliance Officer.  When questioned by Justin Sun, Labhart proposed overhauling Tron's compliance process and working directly with BitTorrent's legal counsel to ensure that everything about Tron is legal and compliant. Unsurprisingly, the former regulator thinks like a regulator. 「Sun was very skeptical," said a former employee. Sun countered Labhart: "Sun was trying to convince him that he wanted (Labhart) to specifically prove that TRX was not a security token but a utility token. 」(One securities law expert told me that there is no reason to believe that the “utility token” narrative is valid, and that no judicial opinion has ever described a token as such. ) The former employee described Labhart's confused expression as: "Are you kidding me? I'm from the SEC. 」The conversation reached an impasse. Then, "Sun was asserting his dominance, like, 'I'm the boss, you're going to work under me, and these are my needs. '」Despite his obvious concerns, Labhart signed the contract. After hiring Labhart, Sun seemed emboldened. Within days, he had another ICO. ICOs are not banned in the United States like they are in China. The new token is BitTorrent Token, or BTT. One former employee who was enthusiastic about Sun explained that when he acquired BitTorrent, it had more than 100 million active users. Issuing tokens will be very profitable and "a no-brainer." Labhart was far less understanding, a former employee told me. At the time, the SEC provided little legal guidance on how to conduct an initial coin offering that did not sell securities. According to Labhart, it's vague and very dangerous. A former employee explained that Sun allegedly wanted Labhart to write a legal opinion to protect him in case he was later charged for selling unregistered securities and "to avoid liability." Apparently, Labhart refused. Then Justin Sun announced that the company would distribute BTT to the public for free, a so-called "airdrop." These crypto giveaways are a marketing ploy, which is also dangerous because it looks like marketing for an investment opportunity (a security). 「I think this was the final straw for Labhart. 」He resigned. 「Justin Sun will be in trouble, but he doesn't care," said one former employee. Justin Sun ordered the China office to continue the airdrops. (Labhart declined to comment. ) Sun still faces risks. He was visibly angry after trying to get BitTorrent's general counsel to write a finding to protect his token, TRX, from securities law regulation. 「Finally, they got someone - a lawyer from Hong Kong - to write a finding proving that TRX was a public utility. 」The former employee was baffled by the idea. 「Can we do it? Hongkong? are you sure? It really doesn’t make sense,” they remember saying. The former employee was never informed of the Hong Kong lawyers’ identities and it was unclear whether they were licensed to practice anywhere in the United States. One crypto-finance lawyer I spoke with warned that “corporate executives should never go to a lawyer until they get a ‘yes’. You're not looking for advice - you're looking for someone to say yes. 」Sun could often find them at his company, and as his business decisions became more adventurous, few resisted Labhart's approach. It seems like Justin Sun views lawyers as disposable, like he has the power to leave them behind, tainted by the behavior they inadvertently enabled, while he keeps his eyes on the way out. Justin Sun's crypto empire fundamentally changed when he purchased a cryptocurrency exchange called Poloniex. Cryptocurrency exchanges function like stock exchanges but list tokens. 04 「If not, just fake it! 」 Poloniex is a very popular and risky cryptocurrency trading venue. 「Poloniex used to be an altcoin casino," said a former employee. 「It will list all currencies. 」That is, exchanges list tokens (“altcoins”) with incredibly fragile legality. The trading world is ruthless. 「People would keep pumping and dumping it, it was like the complete Wild West," said one former employee. Previously in 2018, Poloniex was acquired by a crypto finance company called Circle, which sought to purge illegal activity from the exchange and transform it into something close to the Nasdaq stock exchange, but for crypto. They implemented 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 users to provide a government-issued ID. KYC information is typically checked against databases of known criminals banned from the international financial system, but it turns out: Poloniex’s lack of previous customer vetting was what made it so appealing in the first place. Once KYC is performed, trading volume plummets. Sun's new control was revealed during an all-hands event at the company, when he slid out of a sliding side door. 「This is a real gangster," one employee said. Justin Sun plans to take Poloniex back to its early gray zone, and some employees are eager to get back on board the "Poloniex pirate ship." Justin Sun moved Poloniex to the Seychelles. The archipelago has few regulations on cryptocurrency trading. The fact that Poloniex's roughly 50 to 70 employees are headquartered on High Street in downtown Boston doesn't matter. The Boston native is now employed by a company called Augusttech, LLC, which provides "technical and IT services" to Poloniex Seychelles. 「The company structure is like a Russian matryoshka doll, confusing things," said one former employee. It's not just confusing — employees say it's also painful for any customers who want to sue Poloniex. They may have to go to court in the Seychelles. The corporate shakeup is being conducted 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 entourage of attorneys, employees said. But with his own new law firm, Sun is taking bigger risks, according to a former employee. To the former employee, the combination made Fenwick & West "the most horrible attorney I've ever met." (Law firm Fenwick & West did not respond to a request for comment. ) Elsewhere on Poloniex, approval requirements for token listings have been relaxed. Justin Sun also began impatiently rolling back Poloniex’s KYC rules, which were slowing Poloniex’s user adoption in China. One former employee said the standoff infuriated Sun. 「Fake KYC! 」he screamed at a meeting. 「Forgery! 」 In order to approve new customers as quickly as possible, Poloniex set up an automated KYC system, but according to a former employee, this was not allowed. They explain that it essentially rubber-stamps any kind of government ID—"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 said: “I think over time he started to see all the possibilities of using Poloniex more or less as his personal bank. 」But there's just one problem: all money on the exchange belongs 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 sums of money to get trapped in the digital cracks of old exchanges, like buried deep in the couch. Employees referred to the missing traces of cryptocurrency as "dust," and eventually, engineers discovered a gold mine. For years, customers have accidentally deposited Bitcoin into wallets designed only to accept a popular cryptocurrency called Tether. Bitcoins are kept out of wallets, undelivered, in a sort of suspended animation. There is no way for the user to restore it and it seems to have been forgotten for years. By 2021, these Bitcoin fragments will be worth a lot together. When Justin Sun learned about them, he ordered engineers to collect it. Almost every day, engineers find a new pocket for change. "You could turn over a rock and find a million dollars," said one former employee. 」When others in the company learned about the operation at an all-hands meeting, many objected. They argued that the money did not belong to the company. When engineers completed their search, their rough estimate of the dust they found was about 300 Bitcoins, or about $20 million. Gradually, employees involved in the operation realized that Bitcoin would never become 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 people involved in the project one question: “Where are my 300 Bitcoins? 」 Over the course of four hours and hundreds of transactions, nearly all of the Bitcoin dust was sucked out of thousands of old Tether wallets. All told, it was 230 Bitcoins, worth just over $10 million today. All the dust settles in an anonymous wallet. Within half an hour, the anonymous wallet had transferred almost all of it to a public wallet on Poloniex. Here, traces of the dust disappear as Poloniex users withdraw and deposit Bitcoin in large numbers. Taking a step back and looking at blockchain transactions, former employees said that the simultaneous unfreezing and transfer of large amounts of Bitcoin dust could only be performed through Poloniex's code scripts. One former employee pointed out a clause in Poloniex's terms that allowed them to deduct "dormant fees." To them, it appears that the terms and conditions can be changed, at least providing a policy safeguard to dust off Bitcoin. Although Justin Sun requested Bitcoin, there is no apparent blockchain evidence that he personally received it. Former employees explained that Poloniex public 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 Sun himself or Poloniex taking the money may be moot. Andrew Verstein, a UCLA professor and attorney who specializes in cryptocurrency and financial crime, told me that since Justin Sun is the sole owner of Poloniex, he would be held responsible regardless. 「It is absolutely a crime to use client funds for personal use," Verstein said. None of the former employees interviewed believed that Sun would take personal responsibility for his malfeasance. Most people seem to think he exists beyond the fingertips of American law. The legal ambiguity surrounding cryptocurrencies' initial outburst 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 yet to be tested, such as insider trading laws. Some might even argue that this is not a new scenario and in some cases cryptocurrencies are simply repeating some of the same mistakes and scandals that have shaped financial law in the United States and many other countries. One former Poloniex employee believes that 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 completely believes in his bones that it's legally set up to protect himself. 」 It was during a meeting about a legally risky business decision that Sun hinted at how he would actually protect himself. A former employee was present. 「What's the big deal? 」Justin Sun asked. 「The worst thing that could happen is that I will never come to the United States again. 」 05 「taxes are stupid」 All the while, Justin Sun seems to be finding another way. Former employees told me that 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 string lights twinkling overhead. There, surrounded by waiters, a motley crew of crypto celebrities and business journalists, Tron representatives met with Malta’s then-president Marie-Louise Coleiro Preca. The meeting was perfunctory, but she told Tron’s emissaries, “We welcome Tron’s investment in the Maltese economy. 」 The next day, Tron employees went to the office of Malta’s Minister of Economy and Industry, Silvio Schembri. They sat together in a conference room. The envoy's goal is to arrange a one-on-one meeting between Sun and the country's former prime minister, Joseph Muscat, who has been accused of corruption. In a preliminary meeting with Schembri, the finance minister said Sun "needs to invest first". Justin Sun’s secret investment. At the time, Malta was notorious for essentially selling citizenship to wealthy people 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 program was widely criticized for being susceptible to corruption, including by 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 also did not respond to a request for comment. ) Sun began renting a lilac apartment in Malta on a narrow street in the resort town of Sliema, with white decorative security bars on the windows. Malta's business registration records also show that 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 has done any meaningful business. According to them, Sun made business investments that may have stimulated the Maltese economy. Meanwhile, Sun wired thousands of dollars to lawyers who were assisting him in applying for citizenship. According to a prominent Maltese immigration lawyer, "individual investors" "must contribute at least €650,000" to Malta in order to obtain citizenship. It's unclear how Sun contributed. Justin Sun received his residence card in Malta and dissolved his Maltese company Tron Limited in 2020. In some respects, Sun's Maltese citizenship is not exceptional, as he has other destinations to which he could escape. He claimed in a court statement that he was also a citizen of the Caribbean island of St. Kitts and Nevis. Another former employee told me that Sun casually boasted about buying passports from the small West African country of Guinea-Bissau. But there is another, more important secret to Sun’s relationship with Malta. According to multiple Tron employees, Justin Sun made two additional "investments" of €50,000 in Malta. He has applied for citizenship for his father and mother. Sun's desire to bring his parents with him suggests Malta could be his final destination if he finds himself in a crossroads with U.S. or Chinese regulators. Other countries to which he claims on-paper allegiance 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 seek citizenship for Guinea-Bissau, he urged an employee to start opening a bank account there if it was feasible. In the United States alone, he controls at least 13. When he opened a checking account at First Republic Bank, he was coy about his occupation, describing himself as a technology services provider and telling a former employee never to disclose his cryptocurrency work to bankers. He also told them that banks frequently froze his money and that he needed to spread his wealth across multiple accounts. The employee believed 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 tricky proposition. Sun's many bank accounts may just be signposts for moving funds. As one former employee with knowledge of Sun's banking operations speculated, "If he had to cash out all his cryptocurrencies, he would have to do it outside of the United States 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 also a financial one. Maltese citizens can bank in most of Europe. Sun allegedly urged an employee to submit an application to open eight bank accounts there. One potential explanation for Sun's bloated bank account comes from a former close associate of Sun's, who told me he was looking for ways to pay as little tax as possible. As one former employee succinctly put it, “He thought taxes were stupid. 」As a close associate of Justin Sun explained, “Every billionaire, all they think about is: tax evasion, tax optimization. 」 06 「The FBI is here! 」 Just before Christmas, a former employee received a call from the front desk of their apartment building. 「The FBI is coming," they said. The former employee was shocked: “Wait, you mean FBI, FBI? 」 The former employee wasn't home, but about 10 minutes later the FBI called. The agent on the other end arranged to meet them at a restaurant serving desserts in New York's Koreatown. The former employee had a friend accompany them to the meeting, just in case it was a prank by a dangerous person. The former employee walked into the restaurant, bought a pastry and sat down. A man wearing a dark jacket and jeans walked in and held his wallet up to the employees at the front of the restaurant, letting it open to reveal their identity. They waved him over and he sat down at the former employee's desk. 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, IRS agents told the former employee they were investigating Sun but didn't really know what they were looking for. FBI agents finally arrived and asked about various employees in the United States and China, as well as rumors about beautiful models flying Sun around the world, and whether he had any private business. The former employee was under the impression that the agent was interested in potential tax evasion. The former employee said they even called Sun an "IRS criminal." Agents handed over a letter asking the former employee to forward information relevant to the investigation to them, listed a court date and said: "It sounds like you really want to help us. 」To which the former employee said, “Oh, yeah, because I wanted to screw him. 」The agents were amused and said they had heard it before. Other employees who worked for Sun have received grand jury subpoenas. The U.S. Attorney's Office for the Southern District of New York, which typically handles financial crimes on Wall Street, is seeking criminal evidence against Sun. The investigation is led by the FBI. Sun has hired a top white-collar defense lawyer 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 has been tasked with guiding employees through the grand jury subpoena process. A source close to the investigation predicted they would try to fend off the subpoenas. But this may be in vain. As sources noted, any number of Sun's employees may already be working with the government. They said: "They have been keeping this secret for a long time. 」 As the investigation into Sun draws to a close, a grand jury is exploring a long list of potential charges. According to the subpoena (one of which was shown to me), they are: wire fraud, conspiracy or intent to commit wire fraud, defrauding, money laundering, spending the proceeds of a criminal enterprise, failing to register securities and lying, aiding and abetting a crime, and conspiring to defraud the United States. (The U.S. Securities and Exchange Commission, which prosecutes securities fraud, declined to comment. The IRS can 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. ) Sun left the United States before the pandemic hit and never returned. 07 「No one can catch him」 Cryptocurrency is filled with colorful personalities and idealistic people who want to push the possibilities of finance. 「I think there are a lot of people who really believe in the power and promise of crypto. In many ways, this is really a generous, giving community," explained a former employee who worked closely with Sun. 「I think that makes you too gullible. I think scammers anywhere can find their targets easily. Unfortunately, the crypto community is littered with things that can be easily exploited. 」 These “low-hanging fruit” 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 led to an atmosphere of omnipotence that festered. Some Poloniex employees weren’t sure whether Justin Sun’s Bitcoin dust heist was illegal. When people around him can't tell right from wrong, it's easy for Justin Sun to get away with it easily and without any consequences. Sun's fate is unclear. Over the past two years, he has spent millions on art and NFT auctions, on one hand a $500,000 digital image of a rock and on the other a $78.4 million sculpture by Alberto Giacometti. He also revealed that he won a Blue Origin auction for $28 million and received a seat on one of the spacecraft. Sun also announced that he is now Grenada’s ambassador to the World Trade Organization, where he said he will advocate for favorable cryptocurrency policies. With his new title in place, one of his senior staffers sent out instructions to staff on Slack on how to properly address Sun as "Your Excellency." Former employees speculated that the ambassadorship was an attempt to secure diplomatic immunity. But by far, he’s most notable for using his public office to promote Tron. If the U.S. does indict Sun, it has an extradition treaty in force with every country I’m told he holds citizenship in, except China and Guinea-Bissau — if his claim to a former employee that he purchased his citizenship is true. Over the past year, the international community has shown that it is tired of various small states acting as legal trapdoors for tax avoidance and financial crime. It's hard to imagine Sun being able to stay one step ahead forever, although it may still be possible. When I spoke to one of the employees who told me about operating the couch cushions, I challenged them and asked why Sun might risk something so brazen. The staff guessed without hesitation. 「If he broke so many laws at such a fast pace, no one would be able to catch him. 」 So far, no one can. So far it's working. (This article has been partially abridged. The article cover and accompanying images are from The Verge) Geek asked Will Justin Sun escape custody again?        |
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