A damning investigation has suggested that the crypto empire built by Tron founder Justin Sun could be on the verge of collapse.

According to Protos, the controversial entrepreneur is "desperately flinging money around" as clouds gather over his crypto empire, with a lawsuit brought by the U.S. Securities and Exchange Commission winding its way through the legal system.

Protos has been monitoring a slew of addresses that are linked to the 33-year-old—and often labeled as belonging to him on block explorers such as Etherscan.

It found many of Sun's wallets contain a large portion of tokens from his own projects, setting off considerable alarm bells as a result.

One address on Tron contains a staggering $784 million in assets, and "likely only represent a portion of Sun's activities" on this network. The portfolio includes:

  • $196.8 million of TRX, Tron's native token
  • $226.3 million of USDD, a so-called "algorithmic stablecoin" launched by Sun
  • $60 million of TrueUSD, another stablecoin that Sun is affiliated with
  • $49 million of BitTorrent, a token that was launched after Sun acquired the file-sharing protocol in 2018
  • $43.1 million of JUST, a stablecoin created to support a DeFi project that Sun envisioned
  • $20 million of SUN, an eponymous token that facilitates stablecoin swaps and yield farming on Tron

The list goes on, and on, and on.

Another wallet based on Ethereum contains a portfolio of 201 tokens that are collectively worth about $350 million at the time of writing, including:

  • $4.3 million of Ether
  • $53.9 million of wrapped liquid staked Ether 2.0. Elsewhere, huge sums of staked ETH have been drained from other wallets in recent months, meaning they now lie dormant.

But by far the biggest holding in this address is $205.3 million of pufETH—the native token of a little-known Ethereum staking platform. This altcoin is 2,570th in CoinMarketCap's rankings with a self-reported market cap of $524 million. If correct, this would mean Justin Sun owns about 40% of the coins in circulation.

The account has also $50.5 million of stUSDT or 'staked USDT', which is another project of Justin Sun that basically represents his USDT stablecoin borrowings against the tokens that he issues.

Protos argues in its piece, "many other projects linked with Sun also have strange connections or massive problems."

So... why does all of this matter? Well, as Tether is now entering into a strategic alliance with TON blockchain, Justin Sun may lose his main source of income.

Tron counts Tether as its biggest and only client. A version of USDT is issued on Sun's flagship blockchain, generating about $400 million in annual revenues. Data from Lookonchain suggests TRC-20 USDT recently had 24-hour trading volumes of $53 billion—overtaking Visa.

If Tether TON marriage is successful, this could be financially calamitous for the world's 13th-largest blockchain. Tether's presence on Tron is a crucial driver of revenue for Sun: one that's pretty vital to maintain, but potentially in jeopardy.

And the unusual distribution of his wealth, coupled with some substantial transactions that have taken place in recent weeks and months, is all the more significant given the SEC is chasing after Sun right now.

Back in March 2023, charges were announced against Sun and three of his companies—the Tron, BitTorrent and Rainberry—amid allegations that there was an unregistered sale of cryptoasset securities, secondary markets for TRX were fraudulently manipulated through "extensive wash trading," and celebrities touted his tokens without disclosing they were paid.

Challenging times are ahead for Justin Sun. As ever we continue to Observe.

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