The US Securities and Exchange Commission (SEC) has launched a complaint against Justin Sun, the creator of the blockchain platform TRON, and three related businesses over claims of unauthorized sales of the cryptocurrencies BitTorrent (BTT) and Tron (TRX).
Sun and his businesses, Tron Foundation, BitTorrent Foundation, and Rainberry, were charged with conspiring to distribute billions of Tronix (TRX) and BitTorrent (BTT) cryptocurrency assets and increase trade volume artificially since August 2017.
The SEC has also filed charges against several influencers for endorsing tron without revealing that they received payment for doing so.
Justin Sun is accused of manipulating the market and selling unregistered securities.
In a press release, the SEC stated that it was bringing legal action against Sun, the Tron Foundation, the BitTorrent Foundation, and BitTorrent (now known as Rainberry) for the sale of Tronix (TRX) and BitTorrent (BTT) tokens, which the regulator referred to as unregistered securities backed by digital assets. The defendants were also accused by the regulator of engaging in “extensive wash trading” to “fraudulently manipulate” the secondary market for TRX.
Regarding the allegations, the Tron network did not respond right away. Although Sun did not immediately respond to all of our inquiries for comment, on Thursday he tweeted that the “complaint lacks merit.”
On the SEC allegation, the native token of Tron, TRX, plummeted 13%. On Wednesday, the value of more Justin Sun-related tokens such as Huobi (HT), Just (JST), and Sun Token (SUN) decreased by more than 5%.
Celebrities Are Also Accused of Promoting Tron and the BitTorrent Token Illegally
Several influencers and celebrities were also prosecuted as part of the U.S. SEC’s case for endorsing these securities without declaring that they received payment for doing so. According to the SEC, Sun used its employees as intermediaries to covertly order these celebrities to withhold their campaign participation.
Actress Lindsay Lohan, online influencer and former boxer Jake Paul, pornographic entertainer Kenda Lust, and musicians Austin Mahone, Lil Yachty, Soulja Boy, Akon, and Ne-Yo were among the celebrities cited by the regulator as having participated in marketing.
Of those famous people, all but two consented to a settlement and paid over $400,000 in fines and penalties. They are not obligated to accept or reject the SEC’s conclusions.
The settlement was rejected by Austin Mahone and Soulja Boy, who are listed as defendants. According to the SEC’s most recent filing, both people will keep breaking securities law’s anti-touting rules “until restrained and enjoined.”