- The SEC believes that Justin Sun committed securities fraud.
- The U.S. regulatory agency called TRX and BTT unregistered securities.
- The SEC also thinks Sun ran a wash trading scheme to prop up TRX trading volumes.
Regulators around the world have been on a roll this year suing multiple crypto-related individuals and companies that have allegedly been involved in criminal activities.
But the latest person to be charged with fraud and other criminal offenses is perhaps the most known to crypto yet. That person is Tron founder and crypto billionaire Justin Sun.
SEC Sues Justin Sun Over Fraud
The U.S Securities and Exchange Commission (SEC) shocked the crypto world on Wednesday when it announced that it has sued Tron (TRX) founder Justin Sun over alleged securities fraud and other offenses.
The SEC alleges that Sun sold unregistered securities through three of his wholly-owned companies, Tron Foundation Limited, BitTorrent Foundation Ltd., and Rainberry Inc. (formerly BitTorrent).
Tronix (TRX) and BitTorrent (BTT) are the crypto assets that the SEC is alleging are unregistered securities.
The SEC is also suing Sun for operating a wash trading scheme to artificially inflate the trading volume of TRX. The agency argues that Sun directed his employees to engage in more than 600,000 wash trades of TRX between two crypto asset trading platform accounts he controlled, with between 4.5 million and 7.4 million TRX wash traded daily.
“This scheme required a significant supply of TRX, which Sun allegedly provided. As alleged, Sun also sold TRX into the secondary market, generating proceeds of $31 million from illegal, unregistered offers and sales of the token.”
TRX and BTT both dumped on the news but have somewhat recovered. TRX is trading at $0.064, down 3.6% on the day, according to data from CoinGecko.
The SEC chairman Gary Gensler said that this case “demonstrates again the high risk investors face when crypto asset securities are offered and sold without proper disclosure.”
“As alleged, Sun and his companies not only targeted U.S. investors in their unregistered offers and sales, generating millions in illegal proceeds at the expense of investors, but they also coordinated wash trading on an unregistered trading platform to create the misleading appearance of active trading in TRX. Sun further induced investors to purchase TRX and BTT by orchestrating a promotional campaign in which he and his celebrity promoters hid the fact that the celebrities were paid for their tweets.”
The SEC also sued the celebrities that promoted Sun’s tokens on Twitter without disclosing that they were paid to do os. The celebrities include Lindsay Lohan, Jake Paul, DeAndre Cortez Way (Soulja Boy), Austin Mahone, Michele Mason (Kendra Lust), Miles Parks McCollum (Lil Yachty), Shaffer Smith (Ne-Yo), and Aliaune Thiam (Akon). All of them, except Cortez Way and Mahone, agreed to pay over $400,000 to settle the charges.
On the Flipside
- Justin Sun has yet to comment on the charges.
Why You Should Care
Justin Sun has been one of the most famous people in the crypto space. The charges brought against Sun might offer a glimpse of how he claimed that fame.
Read more about Justin Sun’s offer to buy Credit Suisse:
As Justin Sun Offers to Buy Credit Suisse, Is a Solely Web3 Bank Even Feasible?
Read more about Nexon building its game on Polygon:
