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- The SEC filed a lawsuit against Tron’s founder Justin Sun and BitTorrent in SDNY.
- Sun allegedly sold unregistered securities.
SEC filings in the US District Court for (SDNY) named Justin Sun and others over the sale of Tron. The United States financial watchdog, the Securities and Exchange Commission (SEC), has asked for a jury trial against the founder for the “orchestration of unregistered offer and sale, manipulative trading, and unlawful touting of crypto asset securities.”
The US SEC and Justin Sun
On March 22, 2023, the SEC filed a lawsuit in the US District Court for the Southern District of New York. The filings have the names of Tron founder Justin Sun, along with the BitTorrent Foundation and Rainberry, all alleged for selling Tron (TRX) & BitTorrent (BTT); allegations are that these tokens were, in fact, securities.
The financial watchdog has also accused Justin Sun for his engagement in “manipulative wash trading,” persuading the public to buy the two tokens with the help of influential celebrities.
The Securities and Exchange Commission’s filing
The SEC filings further adds that Justin Sun’s offerings for the sale of TRX and BTT violated the parameters of the Securities Act. Tron’s founder has also been alleged to carry out over 600,000 wash trades for TRX from April 2018 to February 2019. This act facilitated the sale of more than $31 million worth of tokens.
The SEC enforcement director Gurbir Grewal said that even if the regulator seems neutral on the technology front of crypto, they can not be neutral with investor protection. The complaint further says that Justin and others exploited a very old loophole; they offered securities without registration and manipulated the market into believing they were securities.
The Celebrity Connection
The celebrities roped in to promote BTT and TRX were DeAndre Cortez, aka Soulja Boy, an American rapper; Lindsay Lohan, an actress; Jake Paul, a YouTuber; and Aliaune Thiam, aka Akon. The singer Akon was also behind another crypto project to create a crypto city in Senegal and Uganda.
However, these celebrities are said to be paid for the promotion of TRX and BTT, but it is not clear what the mode of payment and the amount they received were. This is being considered as an act of misleading people, as general investors might have thought that their icons have unbiased interest in TRX and BTT.
Actions Against Celebrities
Almost all the celebrities involved in the case have agreed to pay around $400,000 in disgorgement, penalties and interest, other than Mahone and Soulja Boy. The SEC also plans to prohibit Tron’s founder from working as a director or officer in any firm offering crypto securities.
The SEC previously reached a $1.2 million settlement with Reality TV celebrity Kim Kardashian in October 2022. She allegedly promoted EthereumMax (EMAX) tokens through her social media accounts. In February 2023, the SEC fined a former NBA player for promoting EMAX on his social media.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
