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In the words of SEC Chair Gary Gensler, “Sun and his companies not only targeted U.S. investors in their unregistered offers and sales… but they also coordinated wash trading on an unregistered trading platform to create the misleading appearance of active trading in TRX.”
The US Securities and Exchange Commission charged TRON founder Justin Sun and three of his firms for selling unregistered crypto assets.
BREAKING: The SEC sues Justin Sun, the founder of #TRON
— whalechart 🐳 (@WhaleChart) March 22, 2023
According to the regulatory agency’s statement, Justin Sun allegedly offered TRON (TRX) and BitTorrent (BTT) tokens via unregistered bounty programs. The SEC accused Tron Foundation Limited, BitTorrent Foundation Ltd., and Rainberry Inc of using unregistered monthly airdrops to sell BTT tokens to US clients.
The SEC also sued Justin Sun over allegations of manipulating the TRX token’s prices via wash trading. The regulator claimed that Sun caused over 600K wash trades of TRX between April 2018 and February 2019. The SEC further alleged that the founder of TRON illegally sold $31M worth of TRX in secondary markets.
The SEC charged eight other celebrities, including Jake Paul and Lindsay Lohan, for aiding Sun’s scheme by promoting TRX and BTT on social media platforms to mislead US investors into purchasing said tokens. As a result, the accused celebrities must pay fines worth $400K to the SEC.
Gensler added,
“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 price of the TRX token tanked soon after the SEC’s announcement. As of writing, TRX is valued at $0.059, down by 10.5% in the last 24 hours.
The SEC’s charges against Justin Sun also caused a decline in BTT’s value, with the token’s prices down by 3% after the breakout of the news.