- Justin Sun and several celebrity promoters of Tron-related tokens have been hit with multiple charges by the SEC
- Sun has been accused of wash trading, an unregistered sale of securities and improper promotion
- The celebrity promoters have been accused of not revealing that they were paid to promote Tron and its tokens
Justin Sun has been hit with serious charges relating to wash trading, an unregistered sale of securities and improper promotion of Tron and BitTorrent tokens by the Securities and Exchange Commission (SEC). At the same time, a number of celebrities, including actress Lindsay Lohan, YouTuber Jake Paul, and singer Aliaune Thiam, also known as Akon, have been hit with charges of promoting Tron-based tokens without revealing that they were paid to do so. The case has echoes of the EthereumMax case, which saw Kim Kardashian pay a $1.26 million settlement.
Sun Famous for Hyping Up His Projects
Sun has been famous in the crypto space since 2017 for his somewhat underhand tactics when it comes to promoting Tron and its connected coins and platforms, and it seems that his actions may finally have caught up with him. The SEC has charged him with “the orchestration of the unregistered offer and sale, manipulative trading, and unlawful touting of crypto asset securities”, asking for a jury trial in the process.
The March 22 filing names Sun, the Tron Foundation, the BitTorrent Foundation, and Rainberry over the offer and sale of Tron (TRX) and BitTorrent (BTT) tokens, alleging the tokens were securities. This may also concern Binance, which facilitated the BitTorrent ICO through its Launchpad platform, becoming the first token to get such an honor.
Tron responded that the actions taken against him were yet more signs that the SEC is targeting “well known players in the crypto and blockchain space” and said he would fight the charges:
The SEC’s civil complaint earlier today is just the latest example of actions it has taken against well known players in the blockchain and crypto space. We believe the complaint lacks merit, and in the meantime will continue building the most decentralized financial system.
— H.E. Justin Sun 孙宇晨 (@justinsuntron) March 23, 2023
Celebrity Promoters Will Settle
The SEC further alleges that Sun engaged in “manipulative wash trading” by using celebrity promoters such as those mentioned in the suit to tout the various coins. However, many didn’t state that they were receiving financial inducement to do so, which, as many celebs have found out in the past, only ends one way.
While the celebrity touts will almost certainly settle with the SEC, the crimes leveled against Sun are more serious. The trading manipulation charge is borderline criminal rather than civil, and Sun will be lucky to get away with merely a fine or settlement, with the SEC potentially banning him from operating a financial company.
