Sun Yuchen's Tron is about to challenge Wall Street's perception of legitimate company assets. If this challenge fails under pressure, its impact could extend far beyond the company itself.
On June 16, toy manufacturer SRM Entertainment announced it would be renamed Tron Inc and adopt a treasury strategy centered around TRX, the native cryptocurrency of the Tron blockchain.
This initiative, widely defined as a reverse merger, has secured $100 million in private investment, which could rise to $210 million if all warrants are exercised. Tron founder Sun Yuchen will serve as an advisor.
Tron's strategy will test TRX as a company reserve asset. While Bitcoin (BTC) has gained some status on public balance sheets, TRX has thinner trading volume, higher concentration of control, and is closely tied to the company itself.
In the first half of 2025, an increasing number of publicly traded companies will incorporate cryptocurrencies into their treasuries. Strategy (formerly MicroStrategy) has promoted an aggressive Bitcoin acquisition strategy, inspiring global companies to follow suit in hopes of reversing sluggish stock prices.
Today, companies are building treasury plans around assets like Ethereum (ETH), Solana (SOL), and Ripple (XRP). However, the allure of this approach is gradually fading, and announcing a cryptocurrency treasury strategy is no longer a guaranteed path to soaring stock prices.
Justin d'Anethan, head of sales at token issuance and distribution platform Liquifi, told Cointelegraph, "Michael Saylor has extensive experience in structured products, public company operations, financial compliance, and processes, along with a mature crypto funding process and clear investor schemes. Many of these emerging tools lack these conditions."
He further added, "While I can't assert that they will necessarily fail, there is objectively a higher potential risk."
Sun Yuchen's plan is fundamentally different from other crypto treasuries. If successful, Tron Inc will become the first U.S. company to use its own blockchain native token as a company reserve asset.
Jamie Elkaleh, marketing director at Bitget Wallet, pointed out to Cointelegraph, "The company is essentially holding its equity-like assets as collateral. This creates a cyclical risk pattern."
He emphasized the dangers of this feedback loop: "If market confidence in Tron Inc wavers, the price of TRX may drop, further dragging down the perceived value of Tron Inc."
Tron and SRM Entertainment did not respond to Cointelegraph's request for comment.
TRX is one of the major cryptocurrencies by market capitalization. As of June 17, its market cap reached $26.2 billion, ranking eighth. However, unlike Bitcoin, TRX lacks significant institutional demand and has noticeably lower trading volume, according to CoinGecko data.
Despite Tron’s related announcements, as of June 17, TRX's 24-hour trading volume was only $1.75 billion—far below Bitcoin's $34.3 billion and trailing behind other treasury coins like XRP and Solana. However, Tron is by no means a "zombie chain"; it has one of the most active ecosystems in the industry.
d'Anethan fairly stated, "Tron has been around for quite some time and plays an important role in stablecoin circulation, so there is indeed substantial activity supporting its underlying value."
TRX was first issued on the Ethereum platform in August 2017 and migrated to its own blockchain in June 2018. It has weathered multiple bear markets and has now developed into the second-largest stablecoin network globally, with the largest circulation of Tether (USDT).
Some of Tron's stablecoin flows have been linked to illegal financial activities, but the network has taken measures to curb such abuses.
Many market observers are surprised by Tron's public listing plans, as reports indicate that Eric Trump, son of former U.S. President Donald Trump, is involved in the new TRX treasury company.
Eric Trump later denied any "public involvement" with Sun Yuchen's new venture. However, he does have ties to the brokerage Dominari Securities, which served as the exclusive placement agent for the deal. In February of this year, Eric Trump and his brother Donald Trump Jr. joined Dominari's advisory board.
Yuriy Brisov, a partner at Digital and Analogue Partners, told Cointelegraph, "It is not unprecedented for politically connected individuals to be involved in tech companies. Such connections can lead to questions about the fairness and independence of tech firms."
Sun Yuchen recently claimed to be the largest holder of Trump meme coins and received an invitation to dinner with the president as a top token holder.
On June 11, Sun Yuchen announced that the first batch of USD1 (a stablecoin issued by the so-called DeFi project World Liberty Financial, linked to the Trump family) had been minted on the Tron network. Sun Yuchen is identified as the largest investor and advisor for the project.
Tron's announcement came after Circle successfully went public through an IPO. Its USDC stablecoin is the seventh-largest cryptocurrency by market cap, ranking just above TRX.
Brisov noted that Circle's approach is more transparent compared to the SRM transaction: "Blockchain companies typically prefer to choose more transparent IPO routes to reassure potential investors, as traditional investors are generally cautious about crypto companies. This is why the path chosen by Circle now appears more robust."
Tron's transaction is described as a reverse merger, a shortcut to entering the stock market that allows private companies to go public by taking over existing listed entities (in this case, SRM).
Brisov pointed out that in the 2000s, many companies from China used this method to list on U.S. exchanges. However, several of these companies later faced allegations of financial misconduct, leading to stricter regulatory scrutiny and delistings.
This connection does not imply that all reverse mergers involve misconduct. After a wave of Chinese companies entered the U.S. market, the Securities and Exchange Commission (SEC) tightened reverse listing rules in 2011.
The SEC and Tron still have unfinished business, as the agency has accused Sun Yuchen and his company of selling unregistered securities through TRX and BitTorrent (BTT).
According to Brisov's analysis, this raises questions about compliance with securities regulations. If TRX is deemed a security, Tron Inc may face additional regulatory obligations.
In February of this year, the market regulator requested a U.S. federal court to pause the lawsuit against Sun Yuchen and his company.
Related: ZachXBT: Iranian crypto exchange Nobitex reportedly hacked for $73 million
Original article: “Will Tron's Wall Street Dream of Using TRX as Collateral Collapse?”
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