Tron Founder Accused of Several Illegal Operations
An article by The Verge, published on Wednesday (March 9, 2022), written by Christopher Harland-Dunaway, alleged that Sun was possibly involved in a litany of illegal activities. The reporter stated that he received information about the crypto entrepreneur’s operations from several anonymous sources, information which comprised current and former employees of Sun’s cryptocurrency businesses in the United States and China. Harland-Dunaway was also privy to internal TRON documents, which reveal the financial dealings of Sun’s company.
Sun left China following the country’s ban on initial coin offerings (ICOs) in 2017. One of his (anonymous) employees described the entrepreneur as someone who has an absurdly high tolerance for risks.
Meanwhile, the report stated that Sun was guilty of insider trading and market manipulation. According to sources, TRON’s market-making team was directed to buy TRX tokens a day before the company was set to make a positive announcement.
Furthermore, the report stated that even though more than half of the workers lived in Boston, Sun registered Poloniex in Seychelles, a country which does not have stringent crypto rules. Another allegation leveled against Sun was that the crypto entrepreneur not only lowered the know-your-customer (KYC) standard on Poloniex, he reportedly faked the KYC.
An excerpt from the article said
“To approve new customers as quickly as possible, Poloniex built an automated KYC system, but according to a former employee, it was permissive. It virtually rubber-stamped government IDs of any kind, they explained — “ ‘Didn’t matter if they submitted a pic of Daffy Duck.’ ”
Lost But Found Bitcoins on Poloniex
There were also allegations about BTC belonging to Poloniex customers that were reportedly siphoned by Sun. According to the report, the cryptocurrency exchange had an outdated architecture with a strange program that caused digital tokens to be trapped–as if dropped and abandoned in a deep part of a sofa.
Also, users sometimes mistakenly sent Bitcoin to wallets designed to accept only Tether (USDT). These BTC was thought to be lost forever; however, it was actually in a “suspended animation”
In 2021, Sun discovered that the coins could be recovered, and asked engineers to gather the Bitcoin in a project called “Operation Couch Cushions”. At the time, Poloniex personnel estimated the number of cryptos to be 300 BTC. (In reality, about 230 BTC, with a value of $9 million, was recovered from thousands of Tether wallets.)
The recovered Bitcoins were first transferred to an anonymous wallet and later to one of the exchange’s communal wallets where the BTC audit trail was lost in a flurry of withdrawals and deposits by customers. However, there is no evidence that Sun personally received the Bitcoin.
Meanwhile, U.S. authorities are reportedly investigating Sun.
Harland-Dunaway said that he saw a subpoena which lists charges like “wire fraud, conspiracy or intent to commit wire fraud, swindling, money laundering, spending the spoils of a criminal enterprise, failure to register a security and lying about it, aiding and abetting a crime, and conspiracy to defraud the United States.”
Sun Refutes Allegations, Threatens Legal Action
Sun responded to the allegations in the Verge article via a tweet thread, specifically touching on the statements made against Poloniex. Sun said that the article was laden with “false accusations” and “fabricated storytelling.”
According to the crypto entrepreneur, Poloniex employed advanced KYC facilities “in line with industry standards.” Sun also said that the cryptocurrency exchange did not operate in the U.S. nor serve users in the country, adding that Poloniex was not registered in Seychelles.
Sun added he would take up legal action against any entity perpetuating falsehoods.