- Justin Sun, the creator of Tron, has been accused of fraud and selling unregistered securities, according to the Securities and Exchange Commission.
- In the complaint filed, a number of famous people were also named, including Lindsay Lohan, Jake Paul, Soulja Boy, Lil Yachty, and Akon
Justin Sun, the creator of Tron, has been charged by the Securities and Exchange Commission for reportedly marketing and influencing unregistered crypto asset securities.
The SEC also targeted eight celebrities who Sun purported to have paid—without revealing their payment to the public—to promote TRX and BTT. Lohan, Jake Paul, Ne-Yo (Shaffer Smith), and Soulja Boy are among them. (DeAndre Cortez Way). Except for Soulja Boy and Austin Mahone, six of the eight individuals mentioned have already reached a settlement with the organization and consented to pay fines totaling more than $400,000.
This is not the first time where celebrities and influencers with huge fan following have fallen under SEC’s scrutiny. In the most recent instance, NBA player Paul Pierce ran afoul of the SEC for engaging in cryptocurrency fraud.
The sale of tronix (TRX) and bitTorrent (BTT) tokens, which the regulator referred to as unregistered crypto asset securities, prompted the SEC to announce in a news statement that it was suing Sun, the Tron Foundation, the BitTorrent Foundation, and BitTorrent (now known as Rainberry). The regulator also claimed that the accused engaged in “extensive wash trading” to “fraudulently exploit” the secondary market for TRX.
Consequently, the value of Tron’s native TRX token plummeted; according to CoinGecko data, TRX has lost nearly 11.6% of its value in the last day.
The SEC claims that Sun ran unregistered “bounty programs” where users were rewarded for promoting BTT and TRX on social media and for inviting friends to join its Telegram and Discord groups.
Then, supposedly, Sun’s businesses would pay them in cryptocurrency for doing so. The SEC further alleges that Sun targeted the fraudulent wash trading of TRX to generate an inflated illusion of legitimate investor interest and maintain TRX’s price. There is also a speculation that his associates “participated in hundreds of thousands of TRX wash trades among accounts that Sun effectively managed.
In SEC Chair Gary Gensler words, this case serves as an additional cautionary tale that just because influential people or celebrities support certain investment opportunities, such as securities backed by cryptoassets, doesn’t mean that those investment goods are appropriate for all investors.
According to SEC enforcement head Gurbir Grewal, Tron and his supporters’ alleged actions were part of a “age-old playbook to mislead and harm investors.”
This scheme needed a sizable supply of TRX, which Sun allegedly supplied, according to the SEC release. As claimed, Sun also sold TRX into the secondary market, earning $31 million from unauthorized, unlawful token offers and sales.