Justin Sun, Tron Founder, and Celebrities Charged with Fraud by SEC
Background
Justin Sun, the founder of Tron and Grenada’s immediate former Ambassador and Permanent Representative to the World Trade Organization (WTO), has been charged with fraud by the US Securities and Exchange Commission (SEC) along with eight other celebrities.
The Charges
The SEC alleged that Sun and his companies, Tron Foundation, BitTorrent Foundation, and Rainberry, have been scheming since August 2017 to distribute billions of crypto assets known as Tronix (TRX) and BitTorrent (BTT), and artificially inflate trading volume.
Sun and his companies were also accused of offering and selling TRX and BTT as investments through multiple unregistered “bounty programs” and unregistered monthly airdrops to investors, including in the United States. The SEC said these unregistered offers and sales violated Section 5 of the Securities Act.
The Commission also alleged that Sun violated the anti-fraud and market manipulation provisions of the federal securities laws by orchestrating a scheme to artificially inflate the apparent trading volume of TRX in the secondary market.
The Investigation
According to a court document filed on Wednesday in the US District Court Southern District of New York, the SEC’s investigation found that Sun and his companies offered and sold TRX and BTT as investments through multiple unregistered “bounty programs,” which directed interested parties to promote the tokens on social media, join and recruit others to Tron-affiliated Telegram and Discord channels, and create BitTorrent accounts in exchange for TRX and BTT distributions.
The SEC said that Sun and his companies concealed payments to celebrities to promote TRX and BTT on social media accounts, misleading the public into thinking they had “unbiased interest in TRX and BTT, and were not merely paid, spokespersons.”
The Consequences
All but two of the celebrities accused of illegally promoting Sun’s crypto assets agreed to settle without admitting wrongdoing and together paid more than US$400,000.
Conclusion
The SEC’s charges against Justin Sun and the other celebrities accused of promoting his crypto assets highlight the importance of proper registration and disclosure in the cryptocurrency industry. The case serves as a warning to individuals and companies involved in the crypto market to ensure compliance with federal securities laws.
FAQs
Q: What did the SEC charge Justin Sun with?
A: The SEC charged Justin Sun and his companies with fraud and violations of federal securities laws.
Q: What were the allegations against Justin Sun and his companies?
A: The allegations included offering and selling TRX and BTT as investments through multiple unregistered “bounty programs” and unregistered monthly airdrops, and artificially inflating trading volume.
Q: What was the settlement amount paid by the celebrities accused of illegally promoting Sun’s crypto assets?
A: The settlement amount was more than US$400,000.