Key Points:
- The SEC has filed a lawsuit against TRON founder Justin Sun and other institutions for allegedly selling securities illegally.
- The securities named are the two coins TRON and BitTorrent.
- The agency also charged eight celebrities with promoting TRX.
The US Securities and Exchange Commission (SEC) filed a lawsuit against Justin Sun on Wednesday, accusing him of selling and airdropping unregistered securities, fraud, and market manipulation.
The SEC said in a news statement that it was suing Sun, the Tron Foundation, the BitTorrent Foundation, and BitTorrent (now known as Rainberry) for the sale of tronix (TRX) and bitTorrent (BTT) tokens since August 2017, which it characterized as unregistered crypto asset securities.
Sun’s Tron Foundation employees performed the transactions, the BitTorrent and Tron foundations managed the accounts, and Rainberry employees transferred monies for the trading, according to the filing.
“The Sun Defendants offered and sold TRX and BTT as securities and were thus required to register those offers and sales with the SEC unless an exemption from registration was available. But they never did so,” the SEC said in the filing.
Sun was also accused of hiding payments made to celebrities to promote TRX and BTT on social media accounts, making the public believe they had an unbiased interest in TRX and BTT and were not just paid claims.
American rapper DeAndre Cortez Way, popularly known as Soulja Boy, Austin Mahone, actress Lindsay Lohan, YouTuber Jake Paul, and singer Aliaune Thiam, commonly known as Akon, were among the celebrities supporting TRX and BTT.
Moreover, the agency accused Justin Sun of manipulative wash trading TRX, i.e., self-conducting requests to purchase and sell TRX on the secondary market to create the false impression that the currency was in high demand for trade between April 2018 and February 2019. The SEC mentions more than 600,000 wash trading transactions in the case, with daily trading volume ranging from 4.5 million to 7.4 million TRX.
Except for Soulja Boy and Mahone, all of the celebrities have agreed to pay a total of nearly $400,000 in disgorgement, interest, and penalties to resolve the accusations without admitting or denying wrongdoing in relation to the agency’s claims.
TRX has now lost more than 10% of its value since the news broke.
TRX price chart. Source: CoinMarketCap
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Harold
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