Who cancels lunch with Warren Buffett? A Chinese tycoon did, but why?

Everybody knew where Justin Sun, a brash Chinese millionaire and cryptocurrency celebrity, was going to be this week. He had paid a record $4.6 million to have a charity lunch with Warren Buffett, the investing guru, in San Francisco, and he was counting down the days on social media.

Then Sun, citing ill health, postponed the lunch three days before it was to happen, sending the Chinese media and internet into overdrive. One outlet reported that he would be held in China once he returned while the authorities investigated his financial dealings. Another asserted that he had never left China in the first place.

Sun denied it all on social media, posting photos and a video of himself with San Francisco landmarks in the background. But the reports, while sounding as though they had been ripped from the pages of an overwrought thriller, were not without precedent.

As the Chinese authorities take an increasingly heavy-handed approach to policing the business and financial worlds, executives have been known to disappear for months and even years.

The chairman of a conglomerate that bought the Waldorf Astoria hotel in New York was taken away, emerging a year later at a televised court hearing where he pleaded guilty to financial fraud. One of China’s wealthiest financiers was wheeled out of the Four Seasons Hotel in Hong Kong two years ago and is now widely believed to be on the mainland. An oil tycoon has not been seen since early last year, and his company is being taken apart by officials.

The gone-in-the-night style of policing has sometimes turned China’s business community upside down. Speculation that the billionaire chairman of one of China’s biggest private conglomerates, Fosun Group, had been detained finally led him to do a video stream to assure investors that he was fine.

The incidents are part of China’s broader scrutiny of fault lines in the country’s economy and a crackdown on risky and speculative investing activities. In recent years, the authorities have sought to end murky financial practices like peer-to-peer lending and have tried to make examples of some high-profile executives as a warning to others.

The effort has extended to cryptocurrencies like Bitcoin and its many variants. Beijing once embraced the virtual currencies as potential engines of growth, but the government has since grown concerned that the difficulty in tracking them could lead China’s wealthy residents to shift money out of the country.

Earlier this year, China included cryptocurrencies on a list of industries it would consider banning. Some cryptocurrency investors and entrepreneurs have faced growing questions from the authorities, with the local police sometimes freezing their bank accounts, said Leonhard Weese, the president of the Bitcoin Association of Hong Kong, who talks to industry leaders on the mainland.

That had led to rumors that some people in the cryptocurrency sector faced exit bans, said two industry executives who spoke on the condition of anonymity because they feared retribution from the authorities. Beijing uses such bans as a way of blocking executives from leaving China and as leverage during investigations.

A fear that Sun might be under investigation shook his company, Tron, this week. The value of its cryptocurrency, also called Tron, tumbled nearly 20 percent after he postponed the lunch.

The intense coverage of Sun began almost immediately after he postponed the lunch with  Buffett on Monday. Tron said he had kidney stones.

On Tuesday in China, Caixin, a reputable Chinese business magazine, reported that Sun was being kept in China under an exit ban while being investigated for potential illegal business activities and money laundering.

Within hours, Sun was using Twitter and Chinese social media to dispute the report. He said on his Chinese social media account that rumors about illegal fund-raising were inaccurate and that the report was “completely untrue.”

“I am safe,” he added.

He then broadcast a live stream video of himself from an office in San Francisco, pointing out the Bay Bridge behind him.

He also posted a selfie holding a sheet of paper with a sequence of numbers known as a blockchain hash. Because such hashes are recorded on electronic ledgers with time stamps, the photo was roughly the equivalent of a picture taken with that day’s newspaper.

In another post on his Chinese social media account overnight,  Sun wrote a long apology to regulators and the media, thanking them for their insight and criticism and expressing regret over how he had marketed Tron.  Sun added that he would cooperate with regulators without offering any details. “I will put the interests of the country, sector and the public above anything else,” he wrote. “I will abandon my own self-interests, actively reform, abide the law to operate and contribute more positive energy for the development of blockchain industry.”

Sun and Tron did not respond to a request for comment. The Chinese authorities did not respond to a faxed request for comment.

On Wednesday, Chinese media outlets questioned the images and  Sun’s whereabouts. Caixin posted an article with a detailed explanation of how Sun could have gone abroad even while being subject to a travel ban.

“If the exit ban and investigation progress are not well synchronised, there are loopholes,” the article said.

Another business publication, the 21st Century Business Herald, reported that the Chinese authorities were befuddled as to how  Sun could have traveled to the United States while under official scrutiny.

“Is it just postponing the Buffet Lunch?” the article said. “How he left China has become a mystery.”

Global Times, a nationalist tabloid owned by the Chinese Communist Party, accused  Sun of using the lunch with  Buffett to raise his own profile.

At least one of  Sun’s dozens of companies has come under official scrutiny in recent weeks. Last month, China’s State Administration of Industry and Commerce put the company, Guangzhou Pei Wo Information and Technology, on a blacklist for operating illegally. Calls to the company were not answered.

Sun made his money in late 2017 at the height of China’s digital currency mania, raising $70 million through his digital-currency platform. Around the same time, China’s central bank banned initial coin offerings, the main vehicle for digital currencies like Tron to raise money and be exchanged.

Much of the media scrutiny on  Sun stems simply from his high profile, said  Weese of the Hong Kong bitcoin association.

“Justin Sun’s main crime is probably to have so openly flaunted his wealth,”  Weese said, adding that he may have appeared to be legitimising the cryptocurrency industry and his own riches by publicizing the lunch with  Buffett.

“The authorities don’t like this kind of personality cult and this money being thrown around,” he added. “Spending $4.6 million on lunch, that seems to feed this personality cult.”

© 2019 The New York Times News Service