Justin Sun Postpones $4.6m Lunch and Long Island Blockchain Turns Sour

Over the past week, Justin Sun postponed his much-publicised lunch with Warren Buffet due to “kidney stones” prompting a range of theories on his personal circumstances, opportunistic beverage company Long Island Iced Tea were the subject of an FBI investigation following its absurd pivot into blockchain and crypto personality and libertarian John McAfee went on the lam, ending up in police custody in the Dominican Republic.

News 

Sun rumours rise in the East and set in the west

Following the sudden cancellation of his lunch date with Warren Buffett, Chinese media speculated that the entrepreneur was in police custody and unable to travel to the US. Among the reasons cited for the government’s interest were the gratuitously large sum he paid for the Buffett meeting, rumours of money laundering and the fallout of the Wave Field ponzi scheme, all of which have brought scrutiny on the Tron network. The reports proved false with Sun live streaming later that day from San Francisco, where he has reportedly been living since October of last year.

Ripple sales of XRP tokens hit new high of $251.5m in Q2 2019

Many an eyebrow has been raised in the crypto community over Ripple’s business model, which involves selling tokens from their reserves on the open market to fund its operations. The extent of the selling has been revealed in the company’s latest quarterly report, which shows $251.5m XRP were sold this past quarter, and $1.1 billion since Q4 2016. The breakdown of the sales shows 36% were sold to exchanges and 64% to institutional customers. The inflation rate has likely been a factor in the decline of the token’s value, down 10% in 2019.

MetaMask goes mobile

Ethereum wallet MetaMask announced the beta release of its highly anticipated mobile product. The browser-based platform, which allows users to send ETH, ERC-20 and ERC-721 (collectibles) tokens, has been one of the most popular products in the Ethereum ecosystem with around 264,000 monthly active users. This latest move is potentially a major step in increasing the usability of crypto assets, bringing simple token transfer to the mobile consumer.  

The long take 

Is the time up for crypto’s top LARPer?

There’s an unusual verb that’s entered the crypto vernacular – larping. Drawn from the world of online gaming, to larp (an acronym of live action role-play) means to act in a pretentious, and often deceptive, way. In essence, fake it till you make it. Larping in crypto occurs at all levels of the food chain, from failed traders pretending to live lambo lifestyles through to shady crypto ‘entrepreneurs’ pushing vapourware on unsophisticated investors.

Many will argue that there are few who embody the LARP energy more than Justin Sun, founder and CEO of Tron. Since Tron’s ICO nearly two years ago, Sun has made a flood of headlines, often for the wrong reasons. Announcements about announcements (ostensibly to build anticipation and boost price speculation), a reportedly plagiarised whitepaper and, most recently, his inaction over a Tron-affiliated ponzi scheme project that scammed millions from Chinese investors have all done little to enhance his perception among the crypto public.

Now, if recent reports are to be believed, it appears the Chinese Government has Sun on its radar. The extravagance of paying $4.6 million to lunch with billionaire Warren Buffett, Peiwo (another of Sun’s companies) being removed from the Chinese app store for unsuitable content, and protests at Tron’s offices in Beijing over the Wave Field scam have made him a credible target. The purchase and subsequent IEO of torrenting service BitTorrent has no doubt also raised questions among regulators.

This week, Global Coin Research published an article exploring Sun’s background. The piece labels him a “successful entrepreneur actor”, depicting a substance-less PR mastermind with a hunger for fame and riches. It describes his skills in allegedly luring unsophisticated investors with ‘surface-level news and sentiment’. It also details Sun’s alleged track record of plagiarism.

It would be comforting to believe that crypto community is getting wiser to bad actors, but the truth is that Sun’s tactics will continue to work…until they don’t. The real concern is the damage – both financial and to the credibility of the crypto space – that is done in the meantime.

I’ll leave the last words on this to popular Singapore-based fund manager Su Zhu:


Tweets of the week

Messari’s Ryan Selkis questions the ethics of Ripple’s business model:

 

 

Tracy Alloway updates on Bitcoin’s correlation with the price of avocados:

 

 

Moon Overlord is unsurprised by the Tron saga:

 

 

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Trans-Fee Mining Crypto Exchange 'FCoin' Insolvent After Mistakenly Being Too Generous

One of the first cryptocurrency exchanges to adopt the controversial trans-fee mining (TFM) model, which has been called a “disguised ICO” has paused trading and withdrawals over a shortage of crypto worth up to $130 million.

According to a statement published by FCoin’s founder Zhang Jian, a former Huobi CTO, the exchange is now unable to process withdrawals as its reserves are down by between 7,000 to 13,000 bitcoin, worth over $130 million at press time, over an issue that’s “a little too complicated to be explained in a single sentence.”

Zhang’s statement details the cryptocurrency exchange wasn’t hacked, nor is it pulling an exit scam on its users. He detailed that an internal system error gave users more mining rewards than they should have received, noting the error wasn’t detected for a long period of time.

The transaction-fee mining model, which saw FCoin’s trading volume surpass $5 billion per 24 hours numerous times, sees the cryptocurrency exchange incentivize trading via its own token, FT. FCoin reimbursed users for transaction fees paid in BTC or ETH with FTs until 51% of the coin’s supply was distributed, and redistributed 80% of the BTC and ETH it collected to those holding FT tokens.

The controversial model drew criticism and saw Zhang defend it, claiming it was a misunderstood invention. At the time, he said:

If you look back at history, all new things were not recognized at the beginning. Many were believed to be fraud. Jack Ma was recognized as a fraud when he first promoted the internet in China.

Various cryptocurrency exchanges started adopting the TFM model shortly after, with research showing these platforms had unusually thin order books and low traffic taking into account the trading volumes they had.

According to Zhang, the errors in FCoin’s system gave away too many tokens in mining rewards from mid-2018 to mid-2019, when a complete back-end auditing system was implemented. As throughout 2019 the price of FT kept on dropping, Zhang and his team reportedly used their own funds to buy back tokens and drive up demand, a decision he claims was an error.

This, as it gave users a chance to sell their FT tokens and withdraw as much as possible from their accounts, while FCoin bought up tokens that kept on losing value. Zhang’s announcement came shortly after FCoin suspended its platform over a risk-control issue.

Zhang is now reportedly manually processing users’ withdrawal requests sent via email. The founder of the exchange claimed he will “switch tracks” to start again, and noted he hopes he can use the profits made from new ventures to “compensate everyone for their losses.”

Featured image via Unsplash.