Crypto Crisis: Celebrities and Tron Founder Face SEC Charges for Unlawful Activities

Crypto Crisis: Celebrities and Tron Founder Face SEC Charges for Unlawful Activities

Table of Content

In this article, we’ll delve into the recent lawsuit filed by the U.S. Securities and Exchange Commission (SEC) against Justin Sun, Tron’s founder, and a group of high-profile celebrities for alleged violations in the cryptocurrency space.

Key Takeaways:

  • SEC sues Justin Sun and a slew of celebrities for crypto securities violations
  • Tron Foundation, BitTorrent Foundation, and Rainberry also named in the lawsuit
  • Two tokens, TRX and BTT, are central to the case
  • SEC claims unlawful promotion and failure to register tokens as securities
  • Celebrities accused of not disclosing payment for endorsements

SEC Targets Tron Founder and Celebrities in Lawsuit

The SEC has taken legal action against Justin Sun, the founder of Tron, along with his Tron Foundation, BitTorrent Foundation, and Rainberry. 

The commission alleges that Sun and the other defendants were involved in the “unregistered offer and sale, manipulative trading, and unlawful touting of crypto asset securities.” 

The tokens at the heart of the case are TRON (TRX) and BitTorrent (BTT), which the SEC considers unregistered crypto asset securities.

Failure to Register and Manipulative Trading Allegations

According to the SEC’s filing, the defendants should have registered the offer and sale of TRX and BTT with the SEC, as they were being sold as securities. 

However, they failed to do so. The SEC also accuses the defendants of directing the “manipulative wash trading of TRX,” which created a false impression of legitimate investor interest and helped maintain TRX’s price.

Celebrities Drawn into the Legal Battle

Alongside Justin Sun and his organizations, several well-known celebrities, including Lindsay Lohan, Jake Paul, Soulja Boy, Austin Mahone, Michelle Mason, Lil Yachty, Ne-Yo, and Akon, have also been sued by the SEC. 

The agency claims that these celebrities were paid to promote TRX and BTT on social media without disclosing their compensation or the amounts they received. 

As a result, the public was misled into believing that these celebrities had an unbiased interest in TRX and BTT, rather than being paid spokespersons.

Celebrities Settle Charges, Sun Awaits Verdict

All the famous people implicated in the situation, excluding Soulja Boy and Mahone, have chosen to settle the accusations with the SEC by paying more than $400,000 to cover disgorgement, interest, and penalties. 

They did so without accepting or rejecting the SEC’s accusations.

SEC Chair Emphasizes Investor Risks in the Crypto Space

SEC Chair Gary Gensler highlighted the risks investors face when dealing with crypto asset securities offered and sold without proper disclosure. 

He emphasized that Sun and his companies not only targeted U.S. investors in their unregistered offers and sales, but they also coordinated wash trading on an unregistered trading platform to give the false impression of active trading in TRX.

Conclusion

The SEC’s lawsuit against Justin Sun, his organizations, and several high-profile celebrities serves as a reminder of the potential risks and regulatory scrutiny surrounding the cryptocurrency market. 

As the case unfolds, it will likely shape the ongoing debate about the classification of cryptocurrencies as securities and the need for greater transparency in the industry.

 

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Written by

Alexander Sterling

Alexander Sterling

Alexander Sterling is a renowned financial writer with over 10 years in the finance sector. With a strong economics background, he simplifies complex financial topics for a wide audience. Alexander contributes to top financial platforms and is working on his first book to promote financial independence.

Reviewed By

Judith

Judith

Judith Harvey is a seasoned finance editor with over two decades of experience in the financial journalism industry. Her analytical skills and keen insight into market trends quickly made her a sought-after expert in financial reporting.