SEC sues Tron founder Justin Sun for market manipulation

SEC sues Tron founder Justin Sun for market manipulation

23.03.2023 09:12 (Updated 23.03.2023 09:03)
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by Yana Popenkova
2 min read

SEC filed charges of fraud and other securities violations against Justin Sun and his wholly-owned companies Tron, BitTorent, and Rainberry. Justin Sun fired back, saying the charges lack merit.

SEC said in the March 22 press release that it’s suing Justin Sun and the companies for selling unregistered securities: tronix (TRX) and bitTorrent (BTT) tokens. In addition, SEC accuses Justin Sun of “fraudulently manipulating the secondary market for TRX through extensive wash trading.”

From at least April 2018 through February 2019, Sun allegedly 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. 

According to the court filing, SEC finds TRX and BTT tokens are securities and that Justin Sun and Co. didn’t register the offering with the regulator. In addition, SEC has charged eight celebrities of shilling TRX and BTT, who were paid to promote TRX and BTT but didn’t disclose the amount of their payments so that the public was led to believe these celebrities had an “unbiased interest in TRX and BTT.”

Gurbir S. Grewal, Director of the SECโ€™s Division of Enforcement, said:

 Sun paid celebrities with millions of social media followers to tout the unregistered offerings, while specifically directing that they not disclose their compensation.

With the exception of Cortez Way and Mahone, the celebrities (Lindsay Lohan, Kendra Lust, Lil Yachty, Ne-Yo and Akon) agreed to pay a total of more than $400,000 in disgorgement, interest, and penalties to settle the charges, without admitting or denying the SECโ€™s findings.

Justin Sun responded to allegations, saying the SEC’s complaint lacks merit:

The market reacted to the news: the Tron Network tronix (TRX) token lost about 13%, from $0.067 to $0.058, and is now trading at $0.062, according to CoinMarketCap.

Other Sun-related tokens also went down. Sun token (SUN) and Just (JST) slid more than 8% after the announcement. Huobi (HT) fell 10%.

Author

  • Previously worked in the arts, now specializes in covering crypto with an emphasis on DeFi, blockchain and mass adoption. Offers simple and clear writing, always looking for new ways to present information. Major in International Relations, minor in English, in a spare time reads postmodern literature, does yoga and watches movies.

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