SEC Sues Justin Sun and Major Celebs: All You Should Know
- The SEC accused Tron founder Justin Sun of orchestrating the “unregistered offer and sale” of tokens and manipulative trading as well.
- The regulator claims that Sun made celebrities like Lindsay Lohan, Jake Paul, and Akon to promote them via their social media platforms.
- The suit claims that Sun sold tokens via unregistered “bounty programs” that “directed interested parties to promote the tokens on social media.”
- Between April 2018 and February 2019, the entrepreneur wash traded between 4.5 million and 7.4 million TRX daily, according to the SEC.
The United States Securities and Exchange Commission (SEC) has become increasingly strict when it comes to crypto promotion and offerings and has recently fined many celebrities, including Kim Kardashian, for the same. Interestingly, as per a recent press release, the regulator has sued the founder of Tron blockchain, Justin Sun, for the “orchestration of the unregistered offer and sale, manipulative trading, and unlawful touting of crypto asset securities.”
As per the release, the SEC has filed a lawsuit against crypto entrepreneur Sun, who is the founder of the Tron Foundation, the BitTorrent Foundation, and Rainberry, in a District Court for the Southern District of New York, over the sale of cryptocurrencies Tron (TRX) and BitTorrent (BTT). The regulator noted that Sun was involved in the sale of securities while adding that he engaged in “manipulative wash trading” as well.
To increase the public interest in these tokens, the SEC claims that Sun hired celebrities to promote them via their social media platforms. It is crucial to note that the celebrities who were hired to promote TRX and BTT include American rapper DeAndre Cortez Way, also known as Soulja Boy; Austin Mahone; actress Lindsay Lohan; YouTuber Jake Paul; and singer Aliaune Thiam, also known as Akon.
Other celebrities mentioned in the lawsuit include pornographic film actor Michele Mason, also known as Kendra Lust; rapper Miles Parks McCollum, better known as Lil Yachty; and artist Shaffer Smith, also known as Ne-Yo.
“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,” said SEC Chair Gary Gensler.
According to the release, the SEC alleges that Sun sold BTT and TRX via many unregistered “bounty programs” that “directed interested parties to promote the tokens on social media, join and recruit others to Tron-affiliated Telegram and Discord channels, and create BitTorrent accounts in exchange for TRX and BTT distributions.”
The regulator also alleges that Sun, the BitTorrent Foundation, and Rainberry airdropped tokens to the wallets of many investors in the US and did not register these assets as securities with the SEC. Additionally, the agency also accused Sun of violating “the antifraud and market manipulation provisions of the federal securities laws by orchestrating a scheme to artificially inflate the apparent trading volume of TRX in the secondary market.”
Interestingly, the regulator claims that at least between April 2018 and February 2019, Sun directed his employees to engage in more than 600,000 wash trades of TRX between the accounts of two crypto asset exchanges that he controlled. It is crucial to note that as per the SEC, the entrepreneur washed between 4.5 million and 7.4 million TRX wash traded daily.
The release claims that “Sun also sold TRX into the secondary market, generating proceeds of $31 million from illegal, unregistered offers and sales of the token.” The SEC confirmed that except Cortez Way and Mahone, the other celebrities “agreed to pay a total of more than $400,000 in disgorgement, interest, and penalties to settle the charges, without admitting or denying the SEC’s findings.”
As reported earlier by Bitnation, Gensler recently suggested that all the PoS crypto tokens may be considered securities and contradicted CFTC Chair Rostin Behnam’s statement when he said that stablecoins and Ether (ETH) are not securities.