The Securities and Exchange Commission is currently focusing on Justin Sun and three of his businesses, which are also crypto-related. The regulatory authority has now accused them of fraud and other violations of the securities laws.
The Allegations and SEC Charges
According to reports, the SEC is now pursuing charges against Sun, the Tron Foundation, the BitTorrent Foundation, and Rainberry, the company formerly known as BitTorrent, for the unregistered offer and sale of the cryptocurrencies Tronix and BitTorrent. As BitTorrent was seen to have fallen by 2%, these charges caused Tronix to decline by 13%.
The Securities and Exchange Commission has also accused eight celebrities, in addition to cryptocurrency companies, of illegally promoting Sun’s cryptocurrency. These celebrities include the actress Lindsay Lohan, the YouTube star Jake Paul, the rappers Soulja Boy and Lil Yachty, the singers Ne-Yo, Akon, and Austin Mahone, as well as the adult film star Kendra Lust.
Additionally, the Securities and Exchange Commission has filed charges against the aforementioned parties for “fraudulently manipulating the secondary market for TRX through extensive wash trading” as well as for using well-known people to promote Tronix and BitTorrent without properly disclosing their fees.
Using an “age-old script to deceive investors,” according to Gurbir Grewal, director of the SEC’s Division of Enforcement, Sun and the other entities offered securities without complying with the SEC’s registration and disclosure requirements before influencing the market for those securities. Sun also paid celebrities to promote the unregistered offerings while specifically instructing them to withhold their payment, according to Grewal.
In order to settle the accusations, the accused celebrities (aside from Soulja Boy and Mahone) have now agreed to pay a total of more than $400K in disgorgement, interest, and penalties. “Although we’re neutral on the technologies at issue, we’re everything but neutral when it comes to investor protection,” Grewal then issued a warning.
The Effect of the Charges on Justin Sun’s Business
Tron’s native token TRX was noticed to have dropped today when this news broke. TRX has dropped almost 12% in the last 24 hours, according to CoinGecko data, and is currently trading for $0.059. Its value plummeted after the SEC publicized the allegations against its founder.
In addition to the previously reported allegations, the Securities and Exchange Commission is saying that the crypto entrepreneur, Justin Sun, manipulated the price of BitTorrent’s BTT coin. The aforementioned token’s price was also seen to have declined by 2.3% in the hour following the revelation, trading hands for $0.000000621040 at the time of writing.