Justin Sun has threatened legal action against CoinGeek over its coverage of his Tron blockchain’s growing popularity among Islamic terrorist groups.

On Nov. 29, Tron representatives contacted CoinGeek regarding an article published on the site, which detailed a recent Reuters report on terrorist groups shifting blockchain-based financing activities from BTC to Tron.

Tron representatives claimed that the “tone” of the CoinGeek article was “defamatory of Tron and Justin Sun in almost every respect.” For example, Tron representatives disputed CoinGeek’s claims, saying that “Sun has a long history of ignoring court orders and ‘requests’ from law enforcement agencies.”

The article cites a former Mossad agent as saying that Tron is “evading Israeli demands to cut off accounts linked to Hamas.” CoinGeek also cites a recent ruling by an Amsterdam court that imposed financial penalties on the parent company of Sun’s HTX exchange (formerly Huobi) for ignoring a court order forcing the exchange to freeze wallets containing digital assets fraudulently obtained from Dutch citizens.

The CoinGeek article points to a tweet from Sun stating that while Tron is “committed to combating terrorist financing,” the chain’s “top priority” remains “providing instant, affordable, and reliable transactions.” Sun also expressed “huge gratitude to everyone in our industry who has contributed to the widespread adoption of cryptocurrency.”

The CoinGeek article states that “[g]iven the context, Sun’s comments could easily be interpreted as ‘terrorists have rights, too.’” The article acknowledges that this “could be a callous interpretation,” but CoinGeek argued to Tron’s representatives that Sun’s statements about Tron’s priorities appeared to deprioritize taking action to reduce the likelihood that terrorist groups would use Tron to fund their activities.

In subsequent communications, Tron representatives argued that due to Tron’s “public and decentralized” nature, neither Sun nor Tron had the ability to freeze/seize Tron wallets. CoinGeek responded that Tron’s delegated proof-of-stake (DPoS) consensus mechanism relies on a small number of super representatives (SRs) to validate Tron transactions. CoinGeek believes that these SRs have the ability to prevent specific transactions from being included in new blocks on the chain.

As mining pools on other chains have recently demonstrated the ability to block transactions flagged by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) from entering new blocks, CoinGeek asked Tron whether it had held discussions with its SRs — whose ranks include multiple Sun-related entities — about similar efforts by Tron’s SRs. CoinGeek did not receive a response from a Tron representative to this inquiry.

Key points and confrontation

On November 30, CoinGeek received a letter from Tron Network Ltd’s litigation counsel, Harder Stonerock LLP.

The letter accuses CoinGeek of making “false and defamatory statements” in a separate article in response to a letter sent to the U.S. Senate Banking Committee by the watchdog group Campaign for Accountability (CFA). CFA asked the committee to “turn its attention to the possible role played by cryptocurrency entrepreneur Justin Sun, his blockchain TRON, and U.S. stablecoin issuer Circle in the financing of terrorist organizations.”

Harder Stonerock listed an eight-point summary of the CoinGeek article and included quotes that the company considered to be “false and defamatory.” The letter also stated that Harder Stonerock “hereby requests that CoinGeek remove the defamatory statements from the story and issue a full, fair and conspicuous retraction and apology for each statement.”

Of the eight points, three are direct quotes from the CFA letter, while the fourth is CoinGeek’s summary of the CFA’s urging the Commission to target bad actors for using “chain hopping” to obfuscate the trail of illicit assets. This quote mentions neither Sun nor Tron.

Another point cited by Harder Stonerock is a quote from a Wall Street Journal article on November 12. Similar excerpts from the Wall Street Journal article have been cited in reports from other blockchain media, including CoinDesk and social media.

That leaves only the three points in Harder Stonerock’s quote that are purely CoinGeek’s doing: the headline (“Justin Sun, Circle target ‘crypto’ terror financing concerns in letter to US senators”); the lede (“Justin Sun’s Tron blockchain has once again been labeled a preferred funding option for terrorist groups, and USDC issuer Circle has received some rare political criticism for its ties to Tron.”); and the portion of the quote from the article about Sun “having spent much of his life evading multiple institutions.”

CoinGeek insists that neither the title nor the headline contains any defamatory information. In fact, the day before CoinGeek received the letter from Atlantic Council’s Center for Geoeconomics Harder Stonerock tweeted a clip from a recent event in which a panelist claimed that “92% of terror financing occurs on the TRON blockchain, most of which is the stablecoin Tether.”

Also present at the conference on Thursday, Chinese blockchain analyst Bitrace tweeted that Tron “has become a blockchain network that is primarily exploited by black and gray activities.” The Israeli intelligence agency’s actions also detailed Tron’s growing popularity among terrorist organizations, leading to reports from mainstream media such as Forbes.

Other blockchain media outlets — including Cointelegraph, DL News, and others — also reported on the original CFA letter and quoted some of the same paragraphs as CoinGeek. It is unclear whether Sun or Tron sent similar threatening letters to these media outlets for reporting the same public information.

Circle responded to the CFA letter with its own rebuttal, which devotes an entire section to distancing itself from Sun/Tron. Circle claims that it “does not ‘bank’ Justin Sun. Neither Mr. Sun nor any entity he owns or controls, including the TRON Foundation or Huobi Global Station, currently has an account with Circle.” Circle noted that it “terminated all accounts held by Mr. Sun and his affiliates in February 2023,” but did not provide any details as to why Circle took this action.

The Escaped Sun

As for point 8 of Harder Stonerock’s letter, which mentions Sun’s escapes from multiple institutions, The Verge published an in-depth article on Sun/Tron titled “Tron Founder Justin Sun and His Multiple Escapes” in March 2022. Among other details, the article noted that in September 2017, following Tron’s TRX token initial coin offering (ICO), Sun abruptly left China for South Korea (and from South Korea to the United States):

The Chinese government’s ICO ban was the reason that Sun was waiting for a flight at Incheon International Airport a week later. Sources who have heard him tell this story say Justin believed he was a fugitive and was ready to take off at any moment. Sun’s actual escape route from Beijing to Seoul remains shrouded in rumor. But the reason for his escape is simple: He likely knew the ICO ban was coming but went ahead anyway.

The Verge also details the legal risks Sun faces in the United States:

The U.S. Attorney’s Office for the Southern District of New York, which typically handles financial crimes on Wall Street, is seeking evidence of a crime against Sun. The investigation is being led by the Federal Bureau of Investigation (FBI) […] As the dragnet closes in around Sun, the grand jury is exploring a long list of potential charges. According to the subpoenas (one of which was shown to me), they are: wire fraud, conspiracy or intent to commit wire fraud, racketeering, money laundering, spending proceeds of a criminal enterprise, failing to register securities and lying about them, aiding and abetting a crime, and conspiracy to defraud the United States.

Justin Sun left the United States before the pandemic hit and never returned.

Recently, the U.S. Securities and Exchange Commission (SEC) detailed the difficulties it had in locating Sun so that he could receive a subpoena in connection with the SEC's civil lawsuit for offering unregistered securities to the public. Although the complaint was filed in March, it took until mid-July for the SEC to successfully serve Sun with a subpoena. This delay occurred despite the SEC attempting to serve "multiple attempts at known addresses" at Sun's home in Singapore, which he tweeted he was aware of the day he filed the complaint.

You can't face the truth

Harder Stonerock is a heavyweight team that has successfully handled civil lawsuits on behalf of Hulk Hogan, former President Donald Trump, and former First Lady Melania Trump. Therefore, it would be unwise for us to immediately dismiss their litigation threats.

However, CoinGeek believes that the media has a responsibility to report on bad actors, especially in the blockchain space, which has suffered a tsunami of regulatory and criminal crackdowns over the past few years due to the actions of these bad actors. It is these individuals and entities that poison the public’s perception of digital assets and slow the adoption of blockchain technology by businesses.

Sun has long touted his close relationship with Binance founder Changpeng “CZ” Zhao, though Zhao has tried to downplay those ties as professional rather than personal. But CZ’s recent $4.3 billion settlement with the U.S. Department of Justice to make up for Binance’s years of neglecting anti-money laundering and know-your-customer (KYC) responsibilities hints at Sun’s possible fate.

The Verge article details how, after Sun acquired the Poloniex exchange from Circle in 2019, he informed employees that they no longer had to abide by the strict KYC rules that Circle imposed on Poloniex customers:

Sun also began impatiently pushing Poloniex’s KYC rules, which slowed Poloniex’s user adoption in China. The stalemate infuriated Sun, a former employee said. “Fake KYC,” he screamed in a meeting. “Fake”

In order to approve new customers as quickly as possible, Poloniex built an automated KYC system, but according to a former employee, this was allowed. They explained that it essentially rubber-stamped any type of government ID — “it didn’t matter if they submitted a picture of Daffy Duck.”

Prior to his guilty plea last month, CZ made a habit of using his social media platforms to rebuff every new report detailing allegations of criminal activity at Binance. Sun seems equally determined to refute the notion that he and his platform can be treated in the same light. Is Sun currently negotiating his own plea deal with U.S. prosecutors? Only time will tell.