SEC Files Charges Against Tron Founder Justin Sun and Several Celebrities for Cryptocurrency Violations
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SEC is charging Tron founder Justin Sun for fraud, market manipulation, and securities violations.
The charges also extend to some of Sun’s celebrity backers, including Jake Paul, Soulja Boy, Akon, and Lindsay Lohan, for allegedly promoting TRX and BTT without disclosing compensation.
The cryptocurrency industry has long been scrutinized by regulators. Yet the latest target of the U.S. Securities and Exchange Commission’s (SEC) watchful eye is Justin Sun, the founder of Tronix (TRX) and BitTorrent (BTT) tokens. The SEC has recently unveiled charges against Sun for selling and airdropping unregistered securities and allegations of fraud and market manipulation.
Tron’s founder was charged for “fraudulently manipulating the secondary market for TRX through extensive wash trading,” as well as “orchestrating a scheme to pay celebrities to tout TRX and BTT without disclosing their compensation.”
The SEC labeled TRX and BTT as unregistered securities within the crypto asset category, which further fuels the ongoing discussion on whether cryptocurrencies should be classified as securities.
According to the press release, between April 2018 and February 2019, Justin Sun allegedly instructed his staff to conduct over 600,000 wash trades of TRX on two trading platforms he managed, with a daily wash trading volume ranging from 4.5 million to 7.4 million TRX. Sun himself provided a substantial amount of TRX for these transactions. He is also accused of unlawfully selling TRX on the secondary market, which resulted in illegal profits of $31 million from prohibited offers and sales of the token.
The charges also extend to some of Sun’s high-profile celebrity backers: Jake Paul, Lindsay Lohan, Austin Mahone, Kendra Lust, Lil Yachty, Ne-Yo, Akon, and Soulja Boy. They allegedly promoted TRX and BTT without properly disclosing that they received compensation for doing so. The agency has accused them of illegal touting.
Except for Soulja Boy and Mahone, the celebrities that were charged today have agreed to settle the charges by paying over $400,000 in disgorgement, interest, and penalties to the SEC. The individuals didn’t admit or deny the findings made by the SEC.
Following the news, BitTorent (BTT) slightly dropped in value, and Tron (TRX) quickly fell by 13%.
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