SEC Vs Justin Sun Case Update: Regulator Provides Additional Information In Lawsuit Against Tron Founder
The United States Securities and Exchange Commission (SEC) has filed new court documents in its ongoing lawsuit against Justin Sun, the founder of the TRON blockchain, and the companies allegedly owned and controlled by him.
The SEC’s latest filing provides additional information to support its earlier allegations made in March 2023. The SEC accuses Sun of orchestrating unregistered offers and sales, “manipulative trading,” and “unlawful touting of crypto asset securities.”
Justin Sun Accused Of Orchestrating ‘Manipulative Wash Trading’
According to the SEC’s filing, Justin Sun, through various companies he owns and controls, including Tron Foundation Limited, BitTorrent Foundation, and Rainberry, executed the offer and sale of two crypto assets deemed as “securities” by the US SEC called TRX, Tron’s native token and BitTorrent’s BTT.
The SEC argues that these offerings and sales should have been registered with the SEC or qualified for an exemption, but no such registration or exemption was filed. Sun is alleged to Have engaged in public offers and sales of TRX and BTT without adhering to regulatory requirements.
The SEC also accuses Justin Sun of directing “manipulative wash trading” of TRX to create a “false appearance “of legitimate investor interest and maintain the token’s price.
The Tron Foundation, BitTorrent Foundation, and Rainberry, along with their employees, allegedly facilitated wash trading under Sun’s instruction. This involved conducting “hundreds of thousands” of wash trades between accounts controlled by Sun without any genuine change in ownership or legitimate economic purpose.
SEC Seeks Restitution And Penalties
In addition to the allegations mentioned above, Justin Sun is accused of materially misrepresenting the truth about the touting campaign to deceive investors allegedly.
The SEC points out that Sun falsely claimed on social media that any celebrities promoting TRON must disclose their compensation. However, the SEC alleges that Sun himself arranged undisclosed payments to celebrities involved in promoting TRON, indicating a violation of anti-touting provisions.
The SEC asserts that TRON’s founder’s actions violated various provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. These include registration and anti-fraud provisions, anti-manipulation rules, and aiding and abetting violations.
In its prayer for relief, the SEC requests the court to find the defendants liable for the alleged violations, impose permanent restraints and conduct-based injunctions, prohibit Justin Sun from acting as an officer or director of certain “securities-registered entities,” order disgorgement of ill-gotten gains with prejudgment interest, impose civil monetary penalties, and grant any further relief deemed necessary to protect investors.
The SEC’s new court filing against Justin Sun and his associated companies intensifies the legal battle surrounding allegations of unregistered offerings, manipulative trading, and deceptive touting of crypto assets.
As the case progresses, the outcome will likely have a significant impact and notorious implications on the regulatory landscape of digital assets.
The native token of the TRON blockchain, TRX, is trading at $0.1110. It has broken its month-long downtrend with a 1.4% price spike over the past 24 hours.
Featured image from CNBC, chart from TradingView.com
