Newsflash: Tron’s TRX Plummets 11% After U.S. SEC Sues Justin Sun For Securities Violations

The United States Securities and Exchange Commission (SEC) on Wednesday charged Tron founder Justin Sun and three of his firms, including digital asset network company Tron Foundation for market manipulation, fraud, and airdropping unlicensed securities to investors.

The complaint, filed in the U.S. District Court for the Southern District of New York, also accuses eight celebrities of violating security laws by illegally promoting Sun-tied cryptocurrencies.

Justin Sun Sued

Justin Sun has some legal trouble to contend with.

The SEC has lodged a lawsuit against him for the alleged “orchestration of the unregistered offer and sale, manipulative trading, and unlawful touting of crypto asset securities.”

In addition to Sun himself, the securities watchdog said it was taking the Tron Foundation, BitTorrent, and Rainberry — three companies owned by Sun — to court. The lawsuit claims that Sun and his companies offered and sold Tron (TRX) and BitTorrent (BTT) as investments via numerous unregistered “bounty programs”.

The SEC further accuses the defendants of manipulating the price of TRX and BTT on the secondary markets. “Sun violated 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,” the regulator said in the March 22 press release.

The alleged market manipulation reportedly happened between April 2018 and February 2019, when Sun told his employees to perform at least 600,000 TRX wash trades. The Commission claimed that approximately 4.5 million and 7.4 million TRX tokens were wash traded on a daily basis, netting Sun a total of $31 million in illicit gains at the expense of investors.

The SEC also announced it was charging a handful of celebrities including actress Lindsay Lohan, internet personality Jake Paul, rapper DeAndre Cortez Way or Soulja Boy, singer Austin Mahone, adult entertainment star Michelle “Kendra Lust” Mason, Lil Yachty, Ne-Yo, and Akon.

The agency revealed that the celebrities each agreed to cough up over $400,000 in penalties, disgorgement, and interest to settle their charges, without admitting to or denying them.

TRX recoiled 11.10% in the span of 30 minutes on the SEC charges. The price of other Sun-linked tokens such as BTT and Just (JST) also plunged, according to CoinGecko data.

SEC Enforcement Cases Mount

In 2022, many pundits believed the SEC was waiting for the outcome of the critical legal battle with Ripple before initiating further court cases against other crypto firms. But the top American financial cop leaped out of the gates this year with a series of enforcement actions with huge implications for the crypto market.

The SEC under Gary Gensler, went after Genesis and Gemini earlier this year for yield products it considered unregistered securities. The agency also sued Kraken for its staking service in the United States. Moreover, the SEC sent a message to the litany of celebrities that have marketed crypto tokens for money, including Kim Kardashian.

The next in line for the SEC’s scrutiny could be Paxos, which received a Wells notice from the commission that it may be in violation of securities laws for issuing the Binance USD stablecoin — a claim Paxos categorically refutes. San Francisco-based crypto exchange Coinbase could also soon face enforcement action relating to its listing of possible unregistered securities.

Text source: ZyCrypto

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