Sun Yuchen's Capital Alchemy: Buying Shells, Ringing the Bell, Raising Funds to Buy Coins

Author: Lu Yuan, Source: Tencent News “Qianwang”

On July 28, a seemingly routine SEC (U.S. Securities and Exchange Commission) filing ignited a deep-water bombshell between Wall Street and the crypto world. Tron Inc. ( code: TRON) officially submitted the S-3 form to apply for a “Mixed-Shelf Offering” of up to $1 billion.

Tron Inc. is a massive “ammunition depot” that allows the company to flexibly sell stocks, bonds, warrants, and other securities on the open market to raise up to $1 billion in cash over a period of time.

And the purpose of this huge amount of money is straightforwardly directed towards a single and bold goal: to purchase more TRX tokens.

The market reacted enthusiastically. After the news was announced, Tron Inc.'s stock price soared by 25%, breaking through $12 per share. Wall Street seems to be going crazy for this story of “using capital market money to strengthen the crypto world ecosystem.”

But the core of this story is far more complex and thrilling than the fluctuations of stock prices. A month ago, Tron transformed into a publicly listed company through a reverse takeover of a small toy factory. A week ago, Tron founder Justin Sun made a high-profile appearance at the Nasdaq stock exchange to ring the opening bell, officially announcing Tron’s entry into the US capital market. However, a look at the documents submitted by the company to the U.S. Securities and Exchange Commission reveals that behind the glamorous facade lies a world filled with capital operation ‘alchemy’, the infiltration of the crypto world into traditional finance, corporate strategic design, and the undeniable regulatory paradox.

Justin Sun’s “Glamorous Appearance” at the “Crossroads of the World”

Times Square, a place known as the “Crossroads of the World.” Here, giant LED billboards hang like a digital waterfall in mid-air, illuminating the night as brightly as day. Faces from around the globe converge into a constant flow of humanity, their gazes drawn to the dazzling spectacle woven from commerce, finance, and pop culture. This is the most ostentatious stage of global capitalism, a crossroads of ambition and desire, where every inch of air is filled with the buzzing sound of money and information flowing at high speed.

The Nasdaq Stock Exchange stands right in the center of Times Square, where some of the largest companies in the world by market capitalization, such as Apple, NVIDIA, Meta, and Microsoft, are listed and traded.

A week ago, a new code composed of four letters, “TRON,” suddenly lit up on the giant curved screen of this exchange. For the hurried tourists in the square, it was just another symbol flashing on the screen. But behind this code lies not a tech company buried in a garage or a Silicon Valley lab, but a controversial, globally connected cryptocurrency ecosystem worth hundreds of billions of dollars—TRON—and its founder, Justin Sun, who never plays by the rules. An unprecedented capital magic trick in Wall Street has quietly unfolded in the blind spot of the spotlight.

On July 24, Sun Yuchen attended the Nasdaq listing bell-ringing ceremony in a tailcoat and a black bow tie. In his speech at the event, he stated that founding a Nasdaq-listed company was a dream he had 15 years ago, and today it has finally come true. He expressed that being able to be on the same exchange as great companies like Apple and Nvidia is a significant achievement, and that the company still needs to work hard to reach the same level as these great companies.

Despite the enthusiastic scene of ringing the bell that was almost indistinguishable from any other listing ceremony, Sun Yuchen’s listing of TRON did not go through the traditional roadshow process, but instead, in a nearly “stealth” manner, successfully embedded a corner of his crypto empire into the world’s most influential capital market. The tool he used is an ancient technique regarded as a “shortcut” or even a “side door” in the capital market—Reverse Merger, commonly known as “shell listing.”

However, this is not a simple shell acquisition. The U.S. Securities and Exchange Commission (SEC) disclosed information in public documents, revealing that the “Tron” sailing into NASDAQ is not the cryptocurrency TRX itself, but a publicly listed company named Tron Inc. Its predecessor was a toy manufacturer called SRM Entertainment, and now its balance sheet is stuffed with over a hundred million dollars worth of TRX tokens, with its business model completely shifting from designing theme park figurines to managing and operating a massive “cryptocurrency vault.”

Finding the “Shell” - A Strange Journey from Toys to Tokens

It all started with a company called SRM Entertainment ( original code: SRM). According to its 10-K annual report submitted to the SEC, it is a typical small-cap public company in the United States, primarily engaged in the design, manufacturing, and distribution of plush toys and branded souvenirs for theme parks, chain restaurants, and entertainment brands. In the 2024 fiscal year, the company’s revenue is only a few million dollars, and in the vast Nasdaq market, it is hardly noticed, making it a perfect “shell resource” - clean, simple business, low market value.

The real plot unfolds in an 8-K filing in June 2025. This document is a “significant event announcement” from the listed company, and what SRM disclosed is a transaction that could change its fate.

The documents show that SRM has signed a Securities Purchase Agreement with a British Virgin Islands company named “True Wise Limited.” True Wise Limited has agreed to make a strategic investment of up to $100 million in SRM. Who is this obscure and mysterious offshore company? The SEC documents provide the answer: its sole shareholder is Weike Sun.

(SEC documents show that Weike Sun invested $100 million equivalent in TRX, the native token of TRON.)

The name Sun Weike may be unfamiliar, but Tencent News’ “Qianwang” has learned that his true identity is——the father of Sun Yuchen, the founder of TRON.

What is most striking about this transaction is its method of payment. True Wise Limited did not inject cold hard cash in US dollars, but rather equivalent TRX native tokens on the TRON blockchain. This is akin to a modern-day “turning stone into gold”: using a string of code circulating on the blockchain as the consideration for acquiring control of a Nasdaq-listed company. This is an extremely rare and bold innovation in the history of Wall Street.

According to the agreement, SRM issued 100,000 Series B convertible preferred shares to True Wise Limited, which can be converted into 200 million common shares at any time. In addition, the agreement bundled a large number of warrants, allowing True Wise Limited to continue increasing its stake at an agreed price in the future. Once these warrants are fully exercised, the total transaction price will exceed $200 million, and the equity of the original shareholders will be severely diluted, while the Sun family will firmly lock in absolute control over this publicly traded company.

This first move reveals the seasoned nature of capital operations. Firstly, through Sun Yuchen’s father rather than himself or the TRON Foundation, a legal firewall has been established to attempt to evade the SEC’s direct scrutiny of Sun Yuchen.

Secondly, by paying with TRX instead of cash, it not only avoids the market selling pressure that large-scale cashing out of TRX may cause, but also successfully “capitalizes” TRX, allowing it to have measurable equity value on traditional financial ledgers.

Finally, the complex “preferred stock + warrants” structure is a combination of strategies that ensures the maximum control and future increment space with the minimum initial cost.

Changing Dynasties - When the “TRON System” Takes Over the Boardroom

At the moment the equity transfer was completed, the “soul” of SRM Entertainment had already changed hands. The subsequent 8-K document detailed this “palace coup.”

The board of directors has undergone a complete reshuffle. Sun Weike has been appointed as the chairman of the board, becoming the nominal highest leader of the company. At the same time, several executives closely related to the TRON ecosystem have been appointed as directors and have quickly occupied key committee positions such as audit, compensation, and nomination. This means that all key decisions of the company, from financial audits to executive appointments, are now in the hands of the “TRON system.”

And Sun Yuchen himself appears in the document with a clever identity - strategic advisor.

(Sun Yuchen serves as an advisor)

(Completion of core personnel replacement )

This position seems to be superficial, but it actually carries profound implications. It means that Sun Yuchen does not have to bear the daily legal responsibilities and cumbersome compliance obligations of a publicly listed company’s executives, yet can rightfully guide the company’s core strategy. And what is the new strategy of this company? The answer may only be one: how to manage and operate the huge TRX wealth on its balance sheet.

Subsequently, the company announced a series of drastic reforms.

The company name change: SRM Entertainment, Inc. has officially changed its name to Tron Inc.

Code Change: The NASDAQ stock code changes from “SRM” to “TRON.”

(Completion of stock code renaming)

When the code “TRON” lights up on Wall Street trading screens, the true nature of this reverse merger is revealed - a “Tron Vault” officially emerges, dressed in the guise of a listed company. It announces to the world: you can buy shares of a company deeply tied to Tron’s future, not through a cryptocurrency exchange, but on NASDAQ.

This can be described as a textbook-level transfer of brand value. Sun Yuchen is well aware that the “TRON” brand has tens of millions of users and influence in the global crypto community. By renaming and altering the code, he has almost costlessly “infused” this intangible asset into this listed company, instantly transforming it from an obscure toy factory into a highly regarded blockchain concept stock.

Tron Inc.'s business model is an imitation and “upgrade” of MicroStrategy. MicroStrategy has become an “agent tool” for traditional investors to indirectly invest in Bitcoin by buying and holding a large amount of Bitcoin, thus making its stock price highly correlated with Bitcoin’s market trends. Tron Inc. not only holds TRX but can also depict a more attractive blueprint in its 10-Q quarterly report: through staking, it invests the held TRX into the DeFi protocols of the Tron network (such as JustLend), thereby generating continuous and considerable passive income. This is akin to a company that not only hoards gold but also enables the gold to “give birth” on its own, making its story undeniably attractive to the capital markets.

Risks That Cannot Be Ignored

However, behind the glamorous narrative of capital lies the “risk factors” that no investor can ignore. This part is the key for investors to see through the essence of this gamble.

First is the extreme volatility of crypto assets, as the vast majority of the value of TRON’s listed entities is tied to the price of the TRX token. This means that any drastic fluctuation in the price of TRX will directly lead to a rollercoaster-like fluctuation in the value of the company’s assets and stock price. Today’s market value of tens of billions may vanish after a single black swan event.

Secondly, there is the looming sword of regulatory oversight. The U.S. SEC has filed a lawsuit against Sun Yuchen, the TRON Foundation, and related entities in 2023, accusing them of unregistered issuance and sale of securities (i.e., TRX tokens), fraud, and market manipulation. Although the lawsuit is currently on hold, there are reports that the SEC may reach a settlement with Sun Yuchen, but this does not mean that the risks are completely eliminated. This creates a significant legal paradox: a publicly listed U.S. company whose core asset is a token previously deemed an “illegal security” by the highest securities regulatory body in the U.S. This is akin to building a skyscraper on a regulatory minefield. Any unfavorable developments in the lawsuit could have a devastating impact on Tron Inc.

There is also a high dependence on a single ecosystem, and the fate of Tron Inc. is closely tied to the Tron blockchain network itself. Whether the network suffers from technical attacks, significant vulnerabilities in ecosystem applications, or loses in public chain competition, it will directly erode the foundation of Tron Inc. Its moat is entirely built on the continuous prosperity of the Tron ecosystem.

Finally, there is the risk of key individuals. As the soul of TRON and the strategic advisor of the new company, Justin Sun’s personal reputation, health status, and ongoing legal disputes all constitute significant uncertainties for the company.

The various risks mentioned above reveal the essence of the Tron Inc. model: it is a company that “translates” and transfers the inherent risks of the crypto world to public market investors through compliant channels of the capital market. It opens a window for traditional investors to observe and participate in the crypto world, but outside this window, there are not only beautiful landscapes but also potential storms.

The cleverness of this operation lies in its use of the lag in regulation and the gray areas of existing rules. The scrutiny of reverse mergers is far less strict than that of IPOs, allowing this transaction to be completed quickly. Once it becomes a public company, the company only needs to fulfill its obligation of “full disclosure,” listing the risks one by one, thus formally meeting compliance requirements. Whether investors can truly understand and bear these risks is a personal choice.

The “New Species” of Wall Street and the “New Gamble” for Investors

Sun Yuchen’s recent “shell borrowing” action is far from a simple financial investment. It is a well-considered strategic advance, a landmark penetration of the crypto force into the barriers of traditional finance. It has created an unprecedented “new species”: a hybrid rooted in the decentralized world but drawing nutrients from the top-tier market of centralized finance.

For the Tron ecosystem, this listing is of great significance. It provides a regulated, global investment entry point, greatly enhancing the brand reputation of TRX and the liquidity of its assets. Imagine, in the future, Wall Street analysts discussing “staking yield” from Tron Inc. in their reports, and the code “TRON” potentially appearing in pension fund portfolios—this is the “legitimacy” that Justin Sun has always dreamed of.

For investors, Tron Inc. offers a highly tempting yet extremely dangerous gamble. It simplifies the complex process of investing in the crypto world, eliminating the need to manage private keys and worries about exchanges being hacked—just click buy on a familiar brokerage app. However, beneath this convenient veneer lies all the severe risks from the crypto-native world mentioned earlier. This requires investors to possess a cognitive framework far beyond traditional stock analysis to understand blockchain, DeFi, and the ruthless economics of tokens.

For regulators, the emergence of Tron Inc. undoubtedly poses a tricky dilemma. When an asset that has been sued as an “illegal security” transforms into the core reserve of a Nasdaq-listed company, where are the boundaries of regulation? Should such transactions be blocked, or should regulation and risk warnings be strengthened within the existing framework?

Looking at the two moves of “backdoor listing” and “billion-dollar fundraising” together, Sun Yuchen’s team demonstrates a set of interlocking and progressively developing capital alchemy. The $1 billion shelf offering attempts to create a strong positive cycle for market financing, first leveraging the status of a Nasdaq-listed company to raise dollars from the public market, then acquiring core assets, using the raised dollars to purchase more TRX tokens in the crypto market, thereby increasing asset value. Increasing TRX holdings not only strengthens the company’s balance sheet but may also provide market support for the TRX price, thus boosting the company’s stock price. Finally, a new round of financing is conducted based on a higher stock price, paving the way for the next round of financing at a higher valuation.

Sun Yuchen and his “TRON” have successfully landed on Wall Street. It is like a “Trojan Horse,” appearing as a compliant public company, yet filled with the logic, culture, and risks of the crypto world. Whether you see it as innovation or speculation, integration or invasion, this “new species” is now truly standing before us.