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The United States Securities and Exchange Commission (SEC) has accused crypto entrepreneur Justin Sun and three of his companies of engaging in laundering trades with Tronix (TRX) tokens. The securities regulator also accused the two sides of offering and selling unregistered TRX and BitTorrent (BTT) tokens.
In a press statement released on Wednesday, the SEC disclosed that it also filed charges against eight American celebrities for promoting TRX and/or BTT without disclosing that they were paid to do so. They also failed to disclose how much they were paid, regulators said.
Today we billed crypto entrepreneur Justin Sun and three wholly owned companies for the unregistered offering and sale of Tronix and BitTorrent crypto asset securities.
Read more: https://t.co/4tXgKNof6Q
— U.S. Securities and Exchange Commission (@SECGov) March 22, 2023
These celebrities include actress and singer Lindsay Lohan, social media influencer and professional boxer, Jake Paul, rapper and record producer, DeAndre ‘Soulja Boy’ Way, singer Austin Mahone, and porn star Michele Mason, known as ‘Kendra Lust. Other celebrities include rapper and record producer Miles ‘Lil Yachty’ McCollum, singer Shaffer ‘Ne-Yo’ Smith, and singer and entrepreneur, Aliaune ‘Akon’ Thiam.
However, the SEC noted that all of the celebrities except “Soulja Boy,” and Mahone, had agreed to pay a total of more than $400,000 to settle the lawsuits without admitting or denying the findings.
SEC Accuses Justin Sun of ‘Extensive Wash Trading’
According to the SEC, in its complaint filed with the district court in New York, the SEC accused Sun of conducting “extensive laundering trades” by inflating TRX trading volume on the secondary market, thereby violating the anti-fraud and market manipulation provisions of the federal securities laws. The regulator also accused TRON’s founders of making $31 million in illegal profits from the sale of “unregistered” TRX to the secondary market.
“From at least April 2018 to February 2019, Sun allegedly directed its employees to engage in more than 600,000 TRX wash trades between two crypto asset trading platform accounts that it controlled, with between 4.5 million and 7.4 million TRX wash trades daily, explained the SEC.
In addition, regulators allege that Sun and its companies, Tron Foundation Ltd., BitTorrent Foundation Limited, and Rainberry Inc., organized several unregistered “gift programs” in which they offered and sold TRX and BRT as investments. They also hold an unregistered monthly airdrop where they sell BTT to investors including those living in the United States.
“This case again demonstrates the high risks investors face when cryptocurrencies are offered and sold without proper disclosure,” said Gary Gensler, chairman of the SEC, in the statement.
Initial Reaction
The initial reaction from stakeholders in the cryptocurrency industry suggests they are not surprised by the SEC’s actions.
Wow. Literally explaining to a few people last night what Justin Sun is doing with wash trades $TRX
Am getting ready to actually add some Tron to the portfolio as I think it’s going to do well. But now… will TRX face suppression like XRP?https://t.co/ZiKFtZsVBN
— Ben Armstrong (@Bitboy_Crypto) March 22, 2023
The SEC suing TRON founder Justin Sun on charges of fraud and market manipulation is the least surprising thing that has happened in crypto.
— Mr Whale (@WhaleWire) March 22, 2023
The United States Securities and Exchange Commission (SEC) has accused crypto entrepreneur Justin Sun and three of his companies of engaging in laundering trades with Tronix (TRX) tokens. The securities regulator also accused the two sides of offering and selling unregistered TRX and BitTorrent (BTT) tokens.
In a press statement released on Wednesday, the SEC disclosed that it also filed charges against eight American celebrities for promoting TRX and/or BTT without disclosing that they were paid to do so. They also failed to disclose how much they were paid, regulators said.
Today we billed crypto entrepreneur Justin Sun and three wholly owned companies for the unregistered offering and sale of Tronix and BitTorrent crypto asset securities.
Read more: https://t.co/4tXgKNof6Q
— U.S. Securities and Exchange Commission (@SECGov) March 22, 2023
These celebrities include actress and singer Lindsay Lohan, social media influencer and professional boxer, Jake Paul, rapper and record producer, DeAndre ‘Soulja Boy’ Way, singer Austin Mahone, and porn star Michele Mason, known as ‘Kendra Lust’. Other celebrities include rapper and record producer Miles ‘Lil Yachty’ McCollum, singer Shaffer ‘Ne-Yo’ Smith, and singer and entrepreneur, Aliaune ‘Akon’ Thiam.
However, the SEC noted that all of the celebrities except “Soulja Boy,” and Mahone, had agreed to pay a total of more than $400,000 to settle the lawsuits without admitting or denying the findings.
SEC Accuses Justin Sun of ‘Extensive Wash Trading’
According to the SEC, in its complaint filed with the district court in New York, the SEC accused Sun of conducting “extensive laundering trades” by inflating TRX trading volume on the secondary market, thereby violating the anti-fraud and market manipulation provisions of the federal securities laws. The regulator also accused TRON’s founders of making $31 million in illegal profits from the sale of “unregistered” TRX to the secondary market.
“From at least April 2018 to February 2019, Sun allegedly directed its employees to engage in more than 600,000 TRX wash trades between two crypto asset trading platform accounts that it controlled, with between 4.5 million and 7.4 million TRX wash trades daily, explained the SEC.
In addition, regulators allege that Sun and its companies, Tron Foundation Ltd., BitTorrent Foundation Limited, and Rainberry Inc., organized several unregistered “gift programs” in which they offered and sold TRX and BRT as investments. They also hold an unregistered monthly airdrop where they sell BTT to investors including those living in the United States.
“This case again demonstrates the high risks investors face when cryptocurrencies are offered and sold without proper disclosure,” said Gary Gensler, chairman of the SEC, in the statement.
Initial Reaction
The initial reaction from stakeholders in the cryptocurrency industry suggests they are not surprised by the SEC’s actions.
Wow. Literally explaining to a few people last night what Justin Sun is doing with wash trades $TRX
Am getting ready to actually add some Tron to the portfolio as I think it’s going to do well. But now… will TRX face suppression like XRP?https://t.co/ZiKFtZsVBN
— Ben Armstrong (@Bitboy_Crypto) March 22, 2023
The SEC suing TRON founder Justin Sun on charges of fraud and market manipulation is the least surprising thing that has happened in crypto.
— Mr Whale (@WhaleWire) March 22, 2023
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