Getting scammed for 100 Bitcoin led him to VeChain

VeChain founder and CEO Sunny Lu’s first experience buying Bitcoin is the kind of moment that sticks with you for life, but not in the way most Bitcoin OGs would hope.

“The first encounter with Bitcoin, I got scammed in 2012,” Lu tells Magazine. 

The timing couldn’t have been worse. Lu desperately needed that Bitcoin to solve an urgent crisis in his life.

After switching to US servers when he moved from China, Lu had to rebuild his entire progress in World of Warcraft from scratch. He needed in-game currency fast, but he didn’t have any US dollars to pay for it. That’s when a seller offered him an alternative.

“Somebody said, I take Bitcoin,” he says.

It spiked Lu’s curiosity, and so he googled “Bitcoin,” then headed to Taobao (China’s version of Amazon and eBay) where a seller promised him 100 Bitcoin for roughly $300 USD.

Lu, a hardcore gamer at the time, didn’t hesitate and immediately sent the money. 

Unfortunately, the Bitcoin never arrived. 

The Bitcoin stack would be worth millions today

Even after the recent Bitcoin price plunge, those 100 Bitcoin would be worth $8.7 million at today’s prices. Ouch.

But the experience didn’t sour Lu on the technology. “That opportunity kind of caught my interest to try to analyse whether Bitcoin is really a scam,” says the Shanghai Jiao Tong University engineering graduate.

The expensive but valuable lesson helped push Lu toward building VeChain, the billion-dollar blockchain network he launched just three years later in 2015, alongside Binance founder and former CEO Changpeng “CZ” Zhao. 

The project is designed to solve inefficiencies and lack of transparency in business supply chains and processes. 

Lu says the name stands for “Verification Blockchain.” “I mean, I’m boring,” Lu laughs.

He originally came up with the idea while serving as the chief information officer for Louis Vuitton China. Although he got to jet between store openings and rub shoulders with celebrities, behind the scenes, Lu was also responsible for the entire information systems of Louis Vuitton’s operations in China. 

During that period, Lu had become more interested in Bitcoin, having read the white paper, and began to research blockchain technology more broadly.

After developing a track-and-trace system that followed Louis Vuitton products through the manufacturing steps, Lu realized it would be far more effective if multiple entities could access that data through blockchain technology. That would become the first spark of VeChain’s creation.

Vitalik Buterin was a major part of Sunny Lu’s early blockchain beginnings

His ideas turned into action not long after a chance meeting with Ethereum co-founder Vitalik Buterin in Shanghai in 2015.

Fenbushi Capital founder Bo Shen introduced the pair, and they ended up traveling together on a couple of trips around different cities in China, talking at length about smart contracts, the EVM and what could be built on top of the blockchain. 

“He’s open. He was friendly to, you know, have the technical discussion,” Lu says of Buterin. “He’s a genius.”

Those conversations convinced Lu that instead of trying to force enterprise use cases onto existing blockchains, he should build a bespoke chain focused on large-scale, real-world business applications. 

“After a few conversations with Vitalik, I was like, okay, why wouldn’t I just build my own dedicated [blockchain] focused on what I need?”

Fenbushi Capital ultimately became the first investor in VeChain, and Buterin was a general partner at the time.

Lu says blockchain technology excitement is down

More recently though, Lu has been feeling bearish on mainstream adoption and senses something is off in today’s crypto market downturn, despite having weathered several previous crypto winters. 

He says in past bear cycles, even when crypto token prices sank, there would still be mainstream headlines in the news about use cases for blockchain technology and involvement, but not so much anymore.

“Every project had a….  direction, for some functionalities, use cases,” he says. “But today, I don’t know how long we haven’t had any of those kinds of discussions,” he adds.

Lu argues that so much of the discussion and media is focused on crypto exchange-traded funds, liquidity, and trading curves, which “cannot be like 100% for the entire crypto space,” he says. 

He emphasizes there must be a focus on genuine use cases, because what is mainly lagging in the sector is real utility and user growth.