Sun was found driving without a valid license and was reportedly not injured in the accident here Sunday afternoon, reports Xinhua.
The 21-year-old Monday apologized and said he has failed as a role model.
"I should have been a role model as an athlete and a public figure but I failed my responsibility," said Sun.
"I am deeply sorry for what I have done and will reflect on my behaviour. Because I have been focusing on training and competition, I ignored learning some legal knowledge, which led to my mistake," he wrote on Weibo, the Chinese microblogging equivalent to Twitter.
Sun was driving luxury SUV Porsche Cayenne he claimed was borrowed from a relative when a bus hit his car from the back.
Hangzhou police then found the famous swimmer could not provide a driver's license.
"After looking into the system, we did not find any record of his license. Sun admitted he did not have one," Hangzhou police official said.
Sun faces a fine between 200 and 2,000 yuan and up-to-15-day detention
It was not the first time Sun was in the news for the wrong reason. Sun had a famous fallout with his coach Zhu Zhigen and is also known for his clashes with journalists.
Sun rocketed to join basketball giant Yao Ming and tennis queen Li Na as Chinese sports icons after winning two gold medals at the 2012 London Games, but he went through a difficult year after the Games.
Sun has been struggling to balance his romance and career, which led to strained relationships with his long-time mentor Zhu.
Despite gestures of reconciliation in March from both sides, Sun still asked to leave Zhu, with whom he had trained for 10 years, and worked with former Chinese head coach Zhang Yadong.
Sun was crowned with three titles at the August World Championships.
--IANS (Posted on 04-11-2013)