- 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 worldwide have been on a roll this year, suing multiple crypto-related individuals and companies allegedly 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
On Wednesday, the U.S. Securities and Exchange Commission (SEC) shocked the crypto world when it announced that it had sued Tron (TRX) founder Justin Sun over alleged securities fraud and other offenses.
Sponsored
The SEC alleges Sun sold unregistered securities through three wholly-owned companies; Tron Foundation Limited, BitTorrent Foundation Ltd., and Rainberry Inc. (formerly BitTorrent).
Tronix (TRX) and BitTorrent (BTT) are the crypto assets the SEC alleges are unregistered securities.
The SEC is also suing Sun for operating a wash trading scheme to inflate the trading volume of TRX artificially. 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.
Sponsored
“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 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 so. 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 is one of the most famous people in the crypto space. The charges against him might show 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:
Polygon Empowers Nexon to Launch MapleStory NFT Universe
