The Securities and Exchange Commission (SEC) of the United States maintains its tough stance against crypto security offerings. On Wednesday, March 22, the regulator ordered a jury trial for Tron creator Justin Sun for orchestrating the unlicensed offer and sale, manipulative trading, and unlawful promotion of crypto asset securities.
The SEC said in a press release that it was suing the well-known businessman, and some of his businesses, as well as celebrities. His companies mentioned in the statement include the Tron Foundation, the BitTorrent Foundation, and BitTorrent (now known as Rainberry) over the sale of Tronix (TRX) and BitTorrent (BTT) tokens, which the regulator classified as unregistered crypto securities.
In connection with the charges against Sun, we also charged 8 celebrities for illegally touting Sun’s crypto asset securities.
— U.S. Securities and Exchange Commission (@SECGov) March 22, 2023
The SEC names eight celebrities in the lawsuit
The regulator further alleged the defendants “fraudulently manipulated” TRX’s secondary market through an “extensive wash trading” scheme, driving public interest in the two tokens by enlisting the help of celebrities. It notes:
“As alleged, Sun also sold TRX into the secondary market, generating proceeds of $31 million from illegal, unregistered offers and sales of the token.”
The celebs advertising TRX and BTT were American rapper DeAndre Cortez Way, popularly known as Soulja Boy; Austin Mahone; Shaffer Smith (Ne-Yo); actress Lindsay Lohan; Michele Mason (Kendra Lust); YouTuber Jake Paul; and musician Aliaune Thiam, also known as Akon.
Crypto-critic SEC Chair Gary Gensler argued in the statement that the case serves as further evidence of the considerable risk that investors face when crypto assets are issued and sold without adequate disclosure.
He claimed Sun and his businesses made “unregistered offers” and sales specifically to US investors, generating millions of dollars in illicit profits at the cost of the investors.
Meanwhile, the other accused celebrities, with the exception of Cortez Way and Mahone, allegedly agreed to pay a total of more than $400,000 in “disgorgement, interest, and penalties” to resolve the allegations without acknowledging or disputing the SEC’s findings.
Justin Sun-affiliated tokens see a massive selloff.
After yesterday’s allegations of market manipulation, fraud, and other offenses, the price of Tron’s native TRX coin plummeted. Data from Coinmarketcap indicated that TRX, which was trading for $0.062 at the time of writing, had fallen by 7.58% during the previous day. Yet, it has only recovered by 0.41% in the last hour.
Other tokens connected to Justin Sun, including Huobi (HT), Just (JST), and Sun Token (SUN), also fell more than 5% on Wednesday.
