SEC targets Justin Sun firms on fraud allegations

The Securities and Exchange Commission (SEC) has charged crypto entrepreneur Justin Sun and three of his businesses, Tron Foundation Limited, BitTorrent Foundation Ltd., and Rainberry Inc., for the unregistered offer and sale of crypto asset securities like Tron (TRX) and BitTorrent (BTT).

The Commission claims in a press release issued on March 22 that Sun and his businesses advertised and sold TRX and BTT as investments through a number of unregistered “bounty programs” that instructed participants to advertise the tokens on social media and bring new members to Telegram and Discord channels connected to Tron.

Additionally, Sun and his businesses are accused of giving out BTT to investors who had purchased and stored TRX in Tron wallets or on affiliated cryptocurrency trading platforms through unreported monthly airdrops.

Sun is also accused of coordinating a plot to pay celebrities to promote TRX and BTT without revealing their income and of manipulating the secondary TRX market fraudulently through significant wash trading.

SEC charges eight celebrities 

Eight celebrities, including Lindsay Lohan, Jake Paul, DeAndre Cortez Way (Soulja Boy), Austin Mahone, Michele Mason (Kendra Lust), Miles Parks McCollum (Lil Yachty), Shaffer Smith (Ne-Yo), and Aliaune Thiam (Akon), were also charged for promoting TRX and/or BTT illegally without disclosing that they were paid to do so.

Additionally, according to the investigations, Sun allegedly gave orders to his staff to carry out between 4.5 million and 7.4 million to 600,000 TRX wash trades every day between two accounts on crypto asset trading platforms that he controlled.

According to the press statement from the SEC, Sun reportedly supplied the substantial amount of TRX that was needed for this operation. As claimed, Sun also allegedly sold TRX on the secondary market, earning $31 million from unauthorized, illegitimate token offers and sales.

Except for two of the celebrities charged, everyone else has agreed to settle the allegations without admitting or rejecting the findings by paying a total of more than $400,000 in disgorgement, interest, and penalties.