SEC Sues Tron Founder Justin Sun for Market Manipulation and Offering Unregistered Securities
The U.S. Securities and Exchange Commission (SEC) has taken action against Justin Sun, the founder of Tron, and the Tron Foundation, issuing charges for offering unregistered securities and market manipulation. Additionally, a group of influencers have been charged by the organization for promoting tron without disclosing that they were being compensated for their endorsements.
Tron Founder Justin Sun Charged for Selling Unregistered Securities and Market Manipulation
The U.S. SEC announced today a series of charges against Tron founder Justin Sun, and the Tron Foundation, declaring that the foundation offered TRX as an unregistered security, violating securities laws. Bittorrent token (BTT), which was launched after Sun took over Bittorrent Inc. in 2018, was also mentioned as being part of these offerings. In the filed complaint, the SEC states:
All TRX purchasers, including those who tendered value for TRX other than cash or crypto assets, invested in a common enterprise alongside Sun and the Tron Foundation, who at all times retained significant TRX holdings.
The statement makes similar allegations regarding BTT, stating it “was offered and sold as a security, specifically as an investment contract.”
The SEC also declares that Justin Sun orchestrated a scheme to manipulate the price of tron (TRX) on crypto exchanges using different accounts involved in daily wash trading activities, tasking part of his team in moving significant amounts of TRX through different exchanges. One of the accounts involved, according to the SEC complaint, belonged to Sun’s father.
Through this scheme, between 4.5 million and 7.4 million TRX were allegedly wash traded daily, in more than 600,000 operations.
Celebrities Also Charged for Illegal Promotion of Tron and Bittorrent Token
As part of the action of the U.S. SEC, a series of influencers and celebrities were also charged for promoting these securities without disclosing they were being paid to do so. The SEC claims that Sun indirectly instructed these celebrities to not disclose they were being part of a campaign, using employees as messengers.
Among the celebrities that were included in the lawsuit are Lindsay Lohan, Jake Paul, DeAndre Cortez Way (AKA Soulja Boy), Austin Mahone, Michele Mason (AKA Kendra Lust), Miles Parks McCollum (AKA Lil Yachty), Shaffer Smith (AKA Ne-Yo), and Aliaune Thiam (AKA Akon). All of them, except for Cortez Way and Mahone, have already settled with the regulator, paying more than $400,000 in “disgorgement, interest, and penalties.”
SEC chair Gary Gensler stated:
This case demonstrates again the high-risk investors face when crypto asset securities are offered and sold without proper disclosure.”
What do you think about the legal actions that the U.S. SEC is exerting against Justin sun and the Tron Foundation? Tell us what you think in the comments section below.