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U.S. SEC Sues Tron Founder Justin Sun; Claims TRX & BTT Are Unregistered Securities

WikiBit 2023-03-23 11:01

Abstract:Justin Sun has been sued by the U.S. Securities and Exchange Commission, which has accused him of engaging in market manipulation through the use of wash trading to artificially inflate the trading volumes of TRX and BTT.

  The U.S. Securities and Exchange Commission has filed numerous charges against cryptocurrency tycoon Justin Sun and three affiliated companies, including the notable Tron Foundation Limited. These charges pertain to the unregistered offer and sale of two cryptocurrencies, as well as accusations of market manipulation and the distribution of airdrops that involve comparable securities without proper registration.




  SEC Files Lawsuit Against Justin Sun

  In a press release on Wednesday, the SEC announced that it intends to file a lawsuit against Justin Sun, the Tron Foundation, the BitTorrent Foundation, and Rainberry over the sale of Tron (TRX) and BitTorrent (BTT) tokens, which the watchdog considers to be unregistered securities. The regulator also claimed that the defendants participated in “extensive wash trading” in an attempt to fraudulently manipulate TRX's secondary market.


  Sun gained notoriety after attending a $4.5 million dinner with Warren Buffet in 2020. According to the allegations, Sun attempted to artificially inflate TRX's trading volume by engaging in over 600,000 wash trades of TRX between two crypto asset trading platform accounts that he controlled, involving his own employees. The SEC claims that this scheme required a significant supply of TRX, which Sun allegedly provided. The sale of TRX in the secondary market also generated proceeds of $31 million from illegal, unregistered offers and sales of the token.

  The SEC stated, “As alleged, Sun also sold TRX into the secondary market, generating proceeds of $31 million from illegal, unregistered offers and sales of the token.”

  As per the official SEC documents, the quantity of TRX traded daily through these wash trades varied from 4.5 million to 7.4 million TRX.



  SEC Charges 8 High Profile Celebrities

  The SEC also pressed charges against eight prominent celebrities, including actress Lindsay Lohan, media personality Jake Paul, and rapper DeAndre Cortez Way, for unlawfully endorsing TRX and BTT without disclosing their compensation. Singer Austin Mahone and four other celebrities make up this group.

  However, the SEC reported that, with the exception of Cortez Way and Mahone, the celebrities have agreed to pay a combined amount of $400,000 to resolve the allegations. This sum includes disgorgement, interest, and penalties, and neither party admitted nor denied the SEC's conclusions.

  Following this news, the price of TRON's native cryptocurrency, TRX, has fallen as widespread fear and panic selling sets in. As of now, the Tron price stands at $0.05, a decline of 13.43% in the last hour compared to a drop of 14.06% in the last 24 hours.

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