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TRX, HT, BTT Crashed After SEC Accused Justin Sun of Securities Fraud

TRX, HT, BTT Crashed After SEC Accused Justin Sun of Securities Fraud
© Copyright Image: CryptoPotato

On March 22nd, the United States Securities and Exchange Commission (SEC) sued Tron founder Justin Sun for selling and distributing unregistered securities through the TRX and BTT tokens, violating Section 5 of the Securities Act.

According to the SEC press release, Justin Sun, the Tron Foundation, the BitTorrent Foundation, and BitTorrent (now known as Rainberry) face charges of fraud and market manipulation for creating an extensive “wash trading” scheme that manipulated the trading volume of TRX.

The SEC also sued actress and singer Lindsay Lohan, influencer and boxer Jake Paul, influencer Michele Mason, and rappers and singers Soulja Boy, Lil Yachty, Ne-Yo, and Akon for illegally promoting TRX and BTT without disclosing that they had been paid to do so.

Most of these celebrities, except for Cortez Way and Mahone, have agreed to pay over $400,000 in restitution, interest, and fines to settle the SEC charges.

Sun Attempted to Inflate TRX Trading Volume Artificially

According to the SEC lawsuit, from April 2018 to February 2019, Justin Sun attempted to artificially inflate the trading volume of TRX through wash trading schemes, making the Tron Foundation employees participate in more than 600,000 illegal trades using accounts controlled by the Tron and BitTorrent foundations.

Additionally, the SEC reported that Sun sold much of his TRX tokens on the secondary market, “generating proceeds of $31 million from illegal, unregistered offers and sales of the token (TRX).”

SEC Chairman Gary Gensler said Sun influenced investors to purchase TRX and BTT through deceptive promotional campaigns that involved the participation of public figures who, despite being paid for their collaboration, did not disclose it at the time of promoting the financial products.

“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.”

Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, added that despite being neutral “about the technologies at issue, we’re anything but neutral when it comes to investor protection.”

As such, they will not allow Sun to get away with using the “age-old playbook to mislead and harm investors by first offering securities without complying with registration and disclosure requirements and then manipulating the market for those very securities.”

Tokens Associated with Tron Drop Sharply

After the SEC announcement, several tokens linked to Justin Sun, such as TRX, HT, JST, and SUN, fell sharply, demonstrating investors’ dissatisfaction with the regulators’ statements.

TRX was among the tokens most affected by the SEC measures, falling more than 15% in less than two hours, from $0.06720 to $0.056. The Huobi token (HT) fell 10% from $3,952 to $3,553.

TRX-USDT 4-hour candelsticks. Image: Tradingview

It is worth mentioning that the price drop of these tokens could be accompanying BTC, which a few hours ago lost the $28,800 area and went to test $26,460 after the announcement by Jerome Powell, the Federal Reserve Chairman, about the increase in interest rates.

Sun’s Response

Tron’s founder was quick to respond to the allegations, arguing that they “lack merit” and are just a part of the US regulators’ attempts to blast the cryptocurrency industry.

The post TRX, HT, BTT Crashed After SEC Accused Justin Sun of Securities Fraud appeared first on CryptoPotato.

Read more: https://cryptopotato.com/trx-ht-btt-crashed-after-sec-accused-justin-sun-of-securities-fraud/

Text source: CryptoPotato

Disclaimer: Financial information and news are not financial advice, read the disclaimer.
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