BEIJING — Justin Sun was supposed to have lunch with Omaha investor Warren Buffett in San Francisco. Instead, the Chinese cryptocurrency entrepreneur canceled the meal, for which he had paid $4.6 million, and was apologizing for his “excessive self-promotion.”
The chain of events underscores both China’s growing economic clout and its authorities’ ability to exert control over supposedly independent businesspeople.
“The bidding stemmed from my admiration for Mr. Buffett and my commitment to philanthropy ... and of course, my self-interest and the exterior motive of advocating for the blockchain industry,” Sun said in a long-form open letter posted July 25 on Weibo, a Chinese social media platform, explaining why he paid millions in an auction to dine with the Oracle of Omaha.
“But my immaturity, hubris, blundering, and neglect of public responsibilities have produced unexpected consequences totally contrary to my original intentions ... and triggered concerns from regulatory authorities,” he wrote.
Every year, Buffett raises money for the Glide Foundation, a San Francisco-based charity that aids the poor and homeless, by offering to have lunch with the highest bidder.
Sun, a 28-year-old who founded the cryptocurrency company Tron, won the auction in June with his record bid. Tron had an estimated market value of $10.2 billion earlier this year.
He planned to take four other cryptocurrency business leaders with him to lunch last week in an effort to persuade Buffett, who once described bitcoin as “rat poison squared,” of the digital assets’ merits.
“Buffett’s understanding of bitcoin is stuck in 2009. Now it’s 2019,” Sun told the Global Times, a nationalist tabloid with close ties to the Communist Party of China, in June, shortly after winning the auction. “My initial objective is to convince Buffett on the Bitcoin and blockchain industry instead of creating hype.”
Sun invited another skeptic to join the lunch. President Trump tweeted earlier this month that he was “not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air.”
Sun retorted that Trump had been misled. “#Bitcoin & #Blockchain happens to be the best chance for US!” he wrote. “I’d love to invite you to have lunch with crypto leaders along with @WarrenBuffett on July 25. I guarantee you after this lunch, nobody will know crypto more than you!”
But July 22, three days before their scheduled meal and barely a week before his 29th birthday, Sun announced he was suffering from kidney stones and would have to postpone the meal. Tron, which then had a market capitalization of $2.8 billion, immediately lost more than 20% of its value.
Buffett had agreed to reschedule, Sun’s Tron Foundation tweeted. Glide confirmed that it had received the money and that it was “already transforming lives.”
Sun’s announcement lit up Chinese social media, sparking speculation that he was variously under arrest or banned from leaving the country or otherwise in deep trouble with Chinese authorities.Adding fuel to the fire, the government-owned 21st Century Business Herald, China’s biggest financial newspaper, reported July 23 that Sun was in trouble for illegal fundraising through Tron. It said the Tron network had been facilitating illegal gambling services, adding that authorities suspected Sun’s earlier blockchain-based social-networking app PeiWo (literally “be my company”) had been involved in the pornography business.
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PeiWo has been taken offline. Weibo and WeChat users say the app was full of pornographic content and advertisements for paid sex services, but that Sun’s company didn’t do anything about it until his plan to dine with Buffett was announced.
Then Caixin, a respected business magazine, reported that China’s fintech regulator had called for a police investigation and that Sun had been barred from leaving China.
Sun and his representatives denied the reports. The entrepreneur took to Weibo to dismiss the Caixin story as a “totally tall tale” and to post photos of himself in San Francisco — showing he had not been banned from leaving China. He later deleted the photos.
In a live stream on Periscope, Sun showed he was working in an apartment with a view of the Bay Bridge, confirming that he was in San Francisco.
“Everything is OK,” he said July 24 local time, showing viewers around the apartment and introducing members of his team. “I’m not feeling quite well, but I think we’re going to postpone but definitely looking forward to it.”
“I feel so much better now! It seems I will be back to work with full speed on this Friday!” Sun tweeted in English on July 24.
But in his open letter in Chinese on Weibo later that day, Sun ate humble pie.
“I will take a hiatus to recover, post less on Weibo, receive no more visitors, and do fewer press interviews so that I can quit the habit of excessive self-promotion,” he wrote. He promised to return to developing blockchain technology and “set a better example for our younger generations!”
Sun started out as a tech golden boy. He graduated with a history degree from China’s prestigious Peking University and completed an M.A. in political economy at the University of Pennsylvania in 2013, according to his LinkedIn page.
In 2014, the World Economic Forum named him a “Global Shaper.” The following year, Forbes included him in its “30 under 30” list, describing PeiWo as “an app aspiring to become China’s Snapchat that matches and connects users by analyzing 10-second voice samples as well interests.”
He brags about being the first millennial graduate of the tech academy started by Jack Ma, founder of e-commerce giant Alibaba. Only leaders of start-ups with revenue of more than $4.5 million a year and at least 30 employees can enter the academy, called Hupan University. They must prove they have paid taxes for more than three years.
In 2017, Sun created the Tron blockchain protocol.
But he has become an increasingly a controversial figure, accused of market manipulation and other financial irregularities.
Sun’s company was listed in June as an “enterprise with abnormal operations,” after industry and commerce officials in Guangdong province tried but failed to contact the registered company address, as displayed on the Chinese company credit record search engine Qichacha.com.
He Tao, the deputy editor of GQ China, who wrote a profile of Sun in 2015, compared him to Elizabeth Holmes and her blood-testing start-up Theranos. Holmes disbanded her company amid allegations that they defrauded investors, patients and doctors; she and her chief operating officer are due to face trial next summer.
”Even if angel investors and Series A financiers noticed something amiss with this entrepreneur, they would choose to back him out of self-interest considerations before they find the next buyer,” He said in a radio show this month. “This is a Chinese version of ‘Bad Blood,’ and Justin Sun knows that too well,” He said, referring to a book documenting the Theranos affair by reporter John Carreyrou.