Justin Sun, the billionaire founder of Tron, is being sued by the Securities and Exchange Commission (SEC) for alleged violations of securities laws and market manipulation laws.
The United States Security and Exchange Commission (SEC) has initiated legal action against Justin Sun, a controversial cryptocurrency entrepreneur, in relation to a plan to pay celebrities to promote Tron’s TRX and BitTorrent (BTT) tokens. The lawsuit was filed against Sun in the United States District Court for the District of Columbia. The lawsuit was filed because of Sun’s scheme to pay celebrities to promote Tron’s TRX and BitTorrent (BTT) tokens.
According to a press statement presented by the SEC, the case is especially centered on Sun’s exploitation of celebrities in order to promote tokens on his Tron blockchain without disclosing the fact that the celebrities were paid to do so.
During this same time period, Sun is alleged to have worked to create the appearance of high trading volume in the TRX token by directing his employees to carry out more than 60,000 so-called wash trades across two different trading platforms. This is said to have been done in order to create the impression that TRX was being traded at a high volume.
Wash trades are trades where the same person acts as both the buyer and the seller, and they are frequently undertaken to artificially increase trading volumes either on specific exchanges or for specific tokens.
Distribution of unregistered securities using airdrops
The United States Security and Exchange Commission (SEC) noted in its release that so-called airdrops and bounty programs that guaranteed payment in tokens constituted “unregistered offers and sales” of securities, which is a violation of Section 5 of the United States Securities Act.
As a result of this, the Securities and Exchange Commission (SEC) has decided to charge Justin Sun with having violated the antifraud and market manipulation provisions of the federal securities laws.
There have been eight famous people charged.
Eight celebrities, including the YouTuber Jake Paul and the actress Lindsay Lohan, were also charged by the SEC for their roles in promoting the token without disclosing that they were paid by Sun to do so. In addition to Sun and his companies, the SEC brought these charges against Sun and his companies.
With the exception of DeAndre Cortez Way (also known as Soulja Boy) and Austin Mahone, all of the celebrities indicted in the case have agreed to a settlement with the SEC totaling a total of more than $400,000.
Gary Gensler, the chairman of the Securities and Exchange Commission, stated in a comment that the case demonstrates the “high-risk investors face when crypto assets securities are offered and sold without proper disclosure.” Gensler also stated:
Allegations say that Sun and his companies targeted U.S. investors in their unregistered offers and sales, making millions of dollars in illegal profits at the expense of investors. They are also said to have coordinated wash trading on an unregistered trading platform to make it look like TRX was actively traded when it wasn’t.
30 May 2023
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