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Justin Sun, Warren Buffett’s Chinese Lunch Pal

Another Chinese entrepreneur is about to have lunch with Warren Edward Buffett. His name is Justin Sun, founder of cryptocurrency project TRON and CEO of file-sharing company BitTorrent. Sun’s $4.57 million bid is the highest on record for the charity’s 20-year history.

Since 2000, Buffett’s charity lunch has raised more than $30 million, all of which has been donated to the Glide Foundation to help the homeless in San Francisco.

Before Sun, three Chinese entrepreneurs took Buffett’s lunch at auctions: Duan Yongping, the chairman of BBK in 2006, Zhao Danyang, famous investment manager known as “Godfather of private equity”, and Zhu Ye, the chairman of Zeus Entertainment. Their combined auction price is equivalent to a quarter of Buffett’s total lunch charity.

Sun started the digital token Tronix, better known as TRON two years ago. The cryptocurrency is now the 11th largest by market capitalization and is worth roughly $2.5 billion, according to CoinMarketCap.com.

“I see this as a win for the entire blockchain community,” Sun said. “We in the community know we have a long road ahead of us to educate the mainstream on blockchain’s value and proper use cases.”

However, the Berkshire Hathaway chairman and CEO is not a fan of bitcoin. Buffett has labeled the world’s first and largest digital currency everything from “rat poison squared” to a “delusion” that “attracts charlatans.”

When asked for comment on the lunch, Buffett laughed and told CNBC that he was looking forward to it. As for Justin Sun, he praised him as a “crypto pioneer”.

What Buffett may not know is that his lunch pal was planning to transfer some crypto coins to his cellphone.

“I may ask a small request at the luncheon, which is to install digital  currency wallet on Buffet’s mobile phone. Then I would transfer some TRX to him. It is possible that these small amounts of TRX would be Buffett’s first experience of using encrypted digital currency.”

Sun talked about his plan in an interview with Jiemian.

From campus opinion leader to cryptocurrency entrepreneur

Looking back into Sun’s personal growth, there are two major titles. One is “campus opinion leader”, the other is cryptocurrency founder. Also, two main skills helped him gain wealth and fame: seizing opportunities and being good at marketing.

Sun was born in Xining, Qinghai province. In high school, Sun spent lots of time on surfing internet and reading novels, resulting in his poor academic performance.

Realized that he cannot handle multiple subjects, his sense of powerlessness transformed to the angriness of the examination-oriented education system. As Gentlemen’s Quarterly reported, in the Chinese literature exam, Sun only wrote composition-part. In the English exam, he answered question in Chinese. And when filling in the blanks in the history examination, he filled his headteacher’s name in the negative characters. As for the positive figures, he wrote his own name on it.

Having done many rebellious actions, Sun in fact did not happy with his situation. As an ambitious student, he wanted to be the best in all the areas he participated in. Predicting he himself cannot get a good score in college entrance examination, he decided to go into a shortcut: through the New Concept Composition Contest to get famous universities’s admission.

Launched in 1998, the New Concept Composition Contest was held by Meng Ya Magazine. Since then, most of the students who won the first prize either have been exempted from the college entrance examination and admitted by famous universities directly, or at least earned some extra scores which helped them go to the universities easily.

The event also brought out a group of talented writers who then became the only group of people who can achieve class leap by writing. One of the representative of them is Han Han, a rebellious teenager, gifted writer, race car driver and film director.

Paradoxically, both Han Han and Guo Jingming, another young writer with different writing style have been accused of plagiarism after they achieved success through the New Concept Composition Contest.

Justin Sun was lucky. By studying the prize essay and unremitting efforts, he finally won the first prize of the composition contest and was admitted by Peking University in 2007.

If we say that in high school, what Sun had taken is the shortcut to change his destiny, then after having entered Peking University, Sun took the key of fame. 

Chinese people in 2010 was still in “the golden age of public intellectuals”. At that time, media reporters, writers, as well as the observers who took granted for China’s way of development could speak out their opinions freely.

It is in this year, Justin Sun, an intern at Southern Weekly started to comment on the current affairs of the university with fierce words. In order to make his article more popular, at the end of each article, Sun left a line with the signature: “Sun Yuchen, in the news department of Southern Weekly”.

The “southern press” was highly recognizable in China. A striking example is a story of then-president of US Barack Obama. It is said that during his visit in China in 2009,  Obama only accepted exclusive interviews with two Chinese media press, Caijing and Southern Weekly.

So with the help of the influence of Southern Weekly, Sun, who has become an opinion leader on the campus of Peking University, finally brought his fame outside the campus. In 2010, he and Jiang Fangzhou were featured on the cover of Asia Weekly as “China’s post-90s elites in the age of Internet”.

The turning point came after Justin Sun graduated.

While studying for a master’s degree at the University of Pennsylvania, the “youth leader” was accused of plagiarism by a Princeton graduate. Although the evidence is conclusive, Sun himself firmly denied charges and saying that the two articles were just similar in style, not in content.

Such a response did not make any good for his fame. He was called as plagiarist for days, and his credibility was also crushed. Having realized that he cannot save his damaged reputation as a writer, Sun decided to turn around. He began to focus on business world, left the dream of being an influenced public intellectual undone.

After a rocky start, the newcomer of business world found his luck. In 2013, his personal assets jumped to 10 million yuan due to his purchase of Tesla stock and bitcoins. In his own words, he at that time has achieved financial freedom.

The huge rewards of bitcoin made Sun set his mind to take bet on crypto currency. He returned to China and became the chief representative of Ripple Labs’ Chinese branch in 2013.

Unfortunately, the good times did not last long. With bitcoin turning into bear market for more than two years, other digital cryptocurrency’s coin price including Ripple also dropped badly. Sun had to change his track again. This time, He bought a social networking app for strangers called “Pei Wo App”, namely, “to keep accompany with me”.

In fact, managing Pei Wo App is only an expedient for Sun, what he really cared about is still cryptocurrency. So it it is naturally that in July 2017, when cryptocurrency ICO became a  ” entrepreneurship tuyere”, Sun prepared to make some noises.

“Live in the HELL”

Before we get to Sun’s TRON, we need take a few words about ICO.

ICO, the short name for Initial Coin Offering, is alike IPO (initial public offering). And when a company plans to IPO, their intention is to raise money from the public. So if it goes to ICO, they also fund money from the public, just not through shares, but cryptocurrency. To some degree, ICO can be seen as an “underground stock market”.

The world’s best-known ICO case is Ethereum, whose mission was to solve the problem of the insufficient expansion of bitcoin. In September 2014, it raised 31,531 bitcoins in September 2014, equivalent to $18 million at the time.

With this initial funding, Vitalik Buterin, co-founder of Ethereum, introduced the ERC 20 token standard in 2015 (token, which can reflect value of an entrepreneur team or represent a proof of equity). Since then, Ethereum has become an “open source Android system” that allows people to develop various programs.

Vitalik Buterin, co-founder of Ethereum

From then on, anyone who needs funding to support a certain project can develop a token based on Ethereum. And it can be sold publicly as long as it meets the standards to raise funds for the project. What’s more, the whole process of selling does not need third-party supervision and can be completed automatically. Therefore, it makes easier for the people who are not originally part of the digital currency community to participate in ICO project.

However, compared with the technical success of Ethereum, the story of the developers’ sudden wealth with the ICO is more compelling — especially in China.

The ICO mode entered China in 2016, and then a series of jaw-dropping numbers shocked many Chinese people who dreamed of getting rich overnight.

Qtum’s highest price is 66.66 yuan, an increase of 33 times in its first listing day. Neo has risen from 5 cents to 40 yuan. The most dramatic project of them is Stratis, which increased 1500 times in one year.

You can imagine how excited entrepreneurs and investors will be. Waving white papers and clutching banknotes, they tried to squeeze their way into this path of wealth and freedom.

According to the “China ICO Development Report 2017” released by China Internet Financial Risk Analysis Technology Platform, in the first half of 2017, the financing scale of ICO projects completed in China amounted to 2.616 billion yuan. According to the statistics of Autonomous NEXT, a financial science and technology analysis and research institute, the number of people participating in ICO in China has reached 2 million.

But in a frenzied market, white papers soon became unimportant. Some ICO projects announced their ICO plan directly, without giving any white paper. Bizarre currency as Malego Coins, Leek Coins also entered the house. Swarming investors, however, seem unconcerned about the high risks behind these projects.

In fact, from the perspective of many senior experts in cryptocurrency area at that time, 90% of ICO projects are unreliable. It is true that most tokens soared at the very beginning of their ICO. Nevertheless, under the joint trading of issuers and private equity, these tokens would eventually turn into the plunge, making the investors who rush in become “leeks” harvested by capital.

It is in such an environment that Sun Yuchen entered the stadium.

On August 22, 2017, TRON, a block-based decentralized content protocol, carried out a total of 500 million TRX, TRON’s official token, in binance.com, one of the largest block chain assets trading platform in the world. All shares were immediately snapped within 53 seconds.

But then the seemingly smooth situation changed, and regulators who had been paying close attention to the ICO bubble decided to take action. On September 4th, the Central Bank along with other seven ministries and commissions jointly issued the Announcement on Preventing the Financing Risk of Token Issuance, which defined  domestic ICO as unauthorized illegal public financing activities. The regulators also declared that all kinds of ICO projects should be stopped immediately. As for the existing projects, they need to be cleared up from the capital market within the allotted time.

Since the policy paper had issued, the domestic cryptocurrency market was devastated heavily. The tokens’ value then went way down, some of which were even cut in half.

TRON’s choice was to run away.

According to the report of China.org.cn at the time, after the supervision document issued, Sun sold out the tokens bought from the investors on the trading platform at a high price and then transferred the cash to his personal wallet. It was said that he had already leave China and disappeared from the public.

Having heard those stories, the investors were irritated. They went to TRON’s office, protested against Sun and the company’s senior managers, trying to force Sun show up. Under heavily pressure, TRON announced on 4th September that they would refund all the TRX subscribed by the traders.

Later, when recalling the storm at that time, Justin Sun said that those saying that he had “absconded with money” were utterly rumors:

“It was so funny, a lot of people said we ran away after 4th September when the government issued regulatory filling, but in fact I even didn’t know anything about the document before!”

Though denied being runaway with money, Sun admitted that he was breakdown when the “4th Sep. Document” issued.

“Three senior executives were so scared that they decided to resign immediately. No matter how hard I tried to persuade them, they just didn’t listen and leave the company. On that day, the people who had subscribed TRX were extremely panic. They requested us that their money should be withdrawn at once, they can’t wait even for a second. Those three days …… was really like hell!”

TRON: rising from controversies

The bad luck of TRON did not last long. The company moved overseas in late 2017, then the price of TRX soared from one or two cents to 2 yuan, with a jump of  100~200 times.

Just in this period, there came a series of controversial events.

Several media outlets reported that on 5th Jan 2018, Sun had sold 6 billion TRX and cashed out 300 million dollars, or about 2 billion yuan, which led to a 20% drop in the price of TRX the next day.

Confronting with the doubt of media and the investors, Sun declared that he had never cashed out. However, Liu Ming, then-COO of TRON doesn’t believe him:

“Sun is a man who has strong willingness to perform. He is also very good at acting and performing. In some circumstances, even he himself knows what he said is bullshit, he still can speak it out as trustworthy as no one could ever doubt whether it is a liar. ”

No one knows whether Sun has cashed out. Public information shows that he holds at least 45 percent of the total TRX, a total of 45 billion. Another fact is, Sun claimed that his fortune was up to 10 billion yuan only after 10 months TRON had established.

After “cashing incident” went away, there was a plagiarism storm.

In March 2018, in order to promote TRX, Sun publicly challenged Ethereum on Twitter. He listed seven reasons why TRX is better than Ethereum.

But Vitalik, co-founder of the Ethereum, responded him saying that on top of these seven articles, there should be an eighth: “Ctrl+C and Ctrl+V are more efficient than typing new content on the keyboard”, satirizing that TRON’s white paper was the product of plagiarism.

Just as the scandal of plagiarizing article in his earlier years, this time, Sun also denied Vitalik’s accuse. He argued that in the business world in these days, it does not make any sense to keep talking about PLAGIARISM.

“The code of cryptocurrency is a open source, and even Ethereum once borrowed a lot of information from Bitcoin. Nowadays, the value of idea and the white paper are not as invaluable as before. The point is to make the idea come true, not to argue with the content of a certain piece of white paper!”

Interestingly, this time, the plagiarism scandal has not stopped TRX from rising: in the first quarter of 2018 alone, the price of TRX tokens increased by as much as 90 times, and its global trading volume was second only to Bitcoin and Ethereum. TRX’s highest market value once reached $3.7 billion.

In this regard, some data analysts believe that although Sun Yuchen is just “a coin-seller”, he did bring a new story. What’s more, the role he played is exactly what the industry needs at this stage.

Private blockchain saw its “cold wave” in 2018, with a large number of vertical media and blockchain startups died. According to the report from BlockBeats, in August 2018, nearly 1000 projects were dying in the industry of cryptocurrency, 80% of ICO financing are fraudulent and 10% are zombie projects.

He Yi, CMO of Binance told Huxiu that most of the heads of these unlucky enterprises doesn’t have necessary capability to run a company. As for some other companies still alive, the only reason that they haven’t close down till now, is because they have sufficient funds.

Different from most of the founders and CEOs in the circle of startups in blockchain, Sun happens to have sufficient capital as well as management skills. And in addition to that, this opportunistic entrepreneur is very good at doing marketing hype.

A shrewd marketer

Propaganda is the core of Sun’s entrepreneurship, and the core of propaganda for him is to get endorsement from “big names”.

Sun defined himself as “Jack Ma’s first post-90s disciple”, for he was the only post-90s student in Hupan University, an entrepreneur training camp founded by Jack Ma in 2015.

Speaking of Hupan University, Sun once described a scene in class to the media. One day, he asked Ma, why did you promise not to play games before, but now set up Ali Games?

Ma replied to him that his judgment on the game has changed. He used to think games hurt people, but Shi Yuzhu changed his mind: playing games is an important entertainment project for common people.

For Sun, it becomes a very important lesson: one’s position could be changed at any time with their interests.

Justin Sun defined himself as “Jack Ma’s first post-90s disciple”

In addition to creating shiny identity tags, Sun also good at enhancing his influence through social events.

In 2018, when ofo couldn’t refund the deposit to its users, Sun declared he would repay 10,000 users’ deposit for Dai Wei, founder of ofo and one of the investors of TRON. That means Sun spent 109 million for the users’ of ofo.

Earlier in this year, when Zhao Yu, a courageous man who had been falsely charged by the court needed help, Sun promised that he would give 100,000 yuan to support him.

So basically, in those social events, Sun spent 209 million yuan. High price as he pay, Sun got reputation from the common people. Many netizens even called him as an entrepreneur with conscientious. Now his followers in Weibo has went to 1.1 million. And by the end of March 2019, Sun had more than 1 million Twitter followers, outnumbering Vitalik by 840,000 followers.

It is true that some of the things that he did have some benefits to the people. But in essence, his motive is to enhance his and TRON’s social influence. From this perspective, what he has done are more like marketing hype.

“I have no choice.” Faced with doubts and criticisms from some media, Sun explained.

“As a startup, we are too small to get attention from the big investors. So if we want to get more investment, the boss and the people in the department of public relations have to make more noises. Yeah, I know it looks a little ugly, but we have no choice.”

Now the question is, at this luncheon, can Sun really install TRX in Buffett’s mobile phone?

It doesn’t matter. As the opportunistic entrepreneur having lunch at Buffett’s Smith & Wollensky steakhouse, the only suspense might be this: what the marketing story Sun would tell to the public after lunch.

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