Justin Sun vs. SEC, Do Kwon arrested, 180M player game taps Polygon: Asia Express

Our weekly roundup of news from East Asia curates the industry’s most important developments.

Chinese crypto billionaire sued by SEC

On Mar. 22, the U.S. Securities and Exchange Commission, or SEC, announced charges against Chinese blockchain personality and billionaire Sun Yuchen — better known as Justin Sun — and three of his wholly-owned companies Tron Foundation Limited, BitTorrent Foundation Ltd., and Rainberry Inc. (formerly known as BitTorrent).

The complaint alleges that Sun and his companies “fraudulently” manipulated the secondary market for Tron (TRX) tokens through “extensive wash trading”, citing more than 600,000 such trades, and paying celebrities to promote TRX and BitTorrent (BTT) tokens with zero disclosure.

Multiple prominent American celebrities, such as Lindsay Lohan and Jake Paul, were named as defendants in their alleged roles in promoting TRX and BTT without proper disclosure. Some have since settled with the SEC. In addition, the SEC alleges that bounty programs and airdrops used to promote TRX and BTT were unregistered investments. Gary Gensler, chairman of the SEC, commented:

“As alleged, Sun and his companies not only targeted U.S. investors in their unregistered offers and sales, generating millions in illegal proceeds at the expense of investors, but they also coordinated wash trading on an unregistered trading platform to create the misleading appearance of active trading in TRX.” 

Justin Sun is an active figure in the crypto industry who rose to prominence via the $70 million initial coin offering (ICO) of Tron in 2017. The ICO was reportedly conducted one day prior to the Chinese government’s announcement of a blanket ban on all ICOs within the country. Sun, who allegedly left Beijing shortly after and moved to San Francisco, used his newfound wealth from the successful Tron ICO to acquire the peer-to-peer downloading platform BitTorrent.

Sunreportedlylaid low while in the U.S. and presented himself as an honest businessman fleeing from the spectres of communism. U.S. authorities have heard this sort of rhetoric before however and on Mar. 15, the U.S. Department of Justice announced that it had arrested Chinese billionaire Guo Wengui over his role in an alleged $1 billion stock and crypto fraud scheme. Just days before his arrest, Guoshilled to his viewersthe importance of his crypto exchange, blockchain technology, and tokens he had created in the fight against communism.

The interest from U.S. authorities may have been behind Sun’s decision to move out of the U.S. in 2020 into the sunny Caribbean island of Grenada. He has since become the country’s ambassador to the World Trade Organization. Aside from foreign relations duties and the bestowment of the fancy title “His Excellency,” the role grants Sun a diplomatic passport that theoretically provides immunity against prosecution.

Despite the controversies, Sun appears to be doing quite well in his new home. Last November, Sun reportedly acquired 100% of co-founders’ stakes in cryptocurrency exchange Huobi Global even though he publicly claims he is just a humble “advisor” in Huobi’s everyday affairs.

In January, Asia Express reported that many Huobi employees’ benefits were allegedly axed via direct orders from Sun. In other areas, cryptocurrency exchange Binance has also significantly limited its utilization of Tron Tether (TRC-20 USDT) after regulatory backlash on its own stablecoin Binance USD.

Do Kwon’s bad bet at Casino Royale

If Do Kwon has anything in common with James Bond in the 2006 hit filmCasino Royale, it is that both found (or is currently finding) their stay in the beautiful seaside nation of Montenegro to be deeply unpleasant. On Mar. 23, Filip Adzic, Minister of the Interior of Montenegro, announced that a South Korean national suspected of being the wanted fugitive Terraform Labs co-founder Do Kwon had been arrested at Podgorica Airport over falsified documents.

Shortly after the announcement, South Korean authorities confirmed that the detained individual is, in fact, Do Kwon based on a positive match of name, birth date, nationality, and photographic evidence. Police say they are awaiting a fingerprint check from Montenegrin authorities to definitively identify the arrested individual. 

Do Kwon is currently wanted by Interpol, as well as South Korean, Singaporean, and U.S. authorities, for his role in the collapse of the $40 billion Terra Luna ecosystem in May 2022. Last October, South Korean prosecutors revoked Kwon’s passport, who was reportedly hiding in Serbia at the time.

Serbia shares borders with Montenegro, a Balkan country that became independent in 2006 and, as a result, has signed few extradition agreements with other nations. However, an extradition agreement merely facilitates the process and is not a requirement for extradition to take place. Interestingly, South Korea does not have an embassy in Montenegro, and vice versa.

Kwon had not been seen since late 2022 until news of his reported arrest. If anything, the blockchain executive has proven to be somewhat of a lackluster gambler. Aside from what appears to be a failed attempt to evade arrest and attempts to double down on the Terra Luna (LUNC) ecosystem, Kwon recently, and finally, lost a $11 million bet that the price of LUNC will be above $90 per token by mid-March 2023. LUNC’s price is $0.0001259 at the time of publication.

Maplestory moves into GameFi

On a happier note, South Korean gaming giant Nexon announced on Mar. 22 that it had selected Ethereum layer-two scaling solution Polygon (MATIC) to power the blockchain ecosystem for multiplayer 2-D fantasy role-playing game Maplestory.

According to Nexon, a Polygon supernet, created by Polygon Labs, will be deployed within Maplestory to allow players to earn and collect in-game items as nonfungible tokens. Ryan Wyatt, president of Polygon Labs said:

“Nexon selecting Polygon Supernets to power its worldwide hit MapleStory Universe sends a strong message to the entire gaming industry about the future of blockchain gaming.”

Last January, Wyatt announced his resignation as head of gaming at Youtube and joined Polygon Studios as its new CEO.

Created in 2003, MapleStory has immense popularity in the Asia-Pacific region and has surpassed 180 million registered players. In-game items are currently purchased using Nexon’s currency NX. The company reported $2.6 billion in revenue in 2022 and has developed over 50 games since inception.