U.S. SEC charges Justin Sun with securities and market manipulation

By: Mark Jessy

U.S. SEC charges Justin Sun with securities and market manipulation

March 23, 2023 9:54 AM

Sun participated in "massive wash trading," according to the SEC, to fraudulently boost the trading volume of TRX and BTT, both of which are unregistered securities.


The SEC charged Justin Sun on Wednesday with fraud, market manipulation, and the sale and airdrop of unregistered securities.

The SEC is suing Sun, the Tron Foundation, the BitTorrent Foundation, and BitTorrent (now known as Rainberry) for allegedly selling unregistered crypto asset securities in the form of tronix (TRX) and bitTorrent (BTT) tokens, according to a news release. The suspects were also accused of engaging in "massive wash trading" in order to "fraudulently influence" the TRX secondary market, according to the agency.

Sun, who was appointed Grenada's ambassador to the World Trade Organization last year, is now facing allegations that he directed his employees to "engage in more than 600,000 wash trades of TRX across two crypto asset trading platform accounts he controlled" in order to artificially inflate TRX trading volume. According to the court petition, Sun's Tron Foundation personnel performed the trades, the BitTorrent and Tron foundations maintained the accounts, and Rainberry staff contributed monies for the deals.

TRX, Tron's native coin, fell 13% following the SEC complaint. Other tokens that declined more than 5% on Wednesday included Huobi (HT), Just (JST), and Sun Token (SUN); all three are affiliated with Justin Sun.

Lindsay Lohan, Jake Paul, Soulja Boy, Lil Yachty, Ne-Yo, Akon, and Michele Mason have all been sued for allegedly advertising TRX and BTT without stating they were paid to do so. Many of these celebrities paid their fines.


Related: Jake Paul Sued by the SEC for Crypto Promotion

Despite Sun's statements on social media that paid celebrities were required to admit that they were being paid, the complaint argues that "Sun himself arranged the payments to celebrities and knew those payments were not revealed."

According to the corporation, daily TRX transactions ranged between 4.5 and 7.4 million TRX.

"Sun is said to have provided this system with the requisite amount of TRX. According to rumors, Sun gained $31 million via unregistered secondary market TRX sales." According to the Securities and Exchange Commission.

The case was mentioned by SEC Chair Gary Gensler as an example of the hazards associated with investing in unregistered securities, including cryptocurrency.

"As alleged, Sun and his firms not only targeted US investors with unregistered offers and transactions, but also generated millions of dollars in unlawful proceeds at the expense of investors," he added. "Sun pushed investors to buy TRX and BTT even further by starting a promotional campaign in which he and his celebrity promoters concealed the fact that the celebrities were paid for their tweets."