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  • Also mentioned in the complaint are eight celebrities accused of promoting Tron’s crypto assets.
  • Besides, the agency accuses Sun of manipulating TRX trading volumes.

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The US Securities and Exchange Commission (SEC) has charged Tron’s founder Justin Sun for fraud and violation of securities laws alongside several celebrities accused of backing the blockchain’s cryptocurrencies.

Sun and three of his wholly-owned companies – Tron Foundation, BitTorrent Foundation, and Rainberry – allegedly offered to sell unregistered securities, Tronix (TRX) and BitTorrent (BTT). The agency is also accusing the blockchain entrepreneur of manipulating the trading volumes of the cryptocurrencies through wash trading.

Alongside Sun – who serves as the Ambassador and permanent representative of Grenada to WTO – celebrities, including Shaffer Smith (Ne-Yo), DeAndre Cortez Way (Soulja Boy), and Austin Mahone, were also accused of illegally marketing TRX and BTT without disclosing gains.

‘‘Sun and his companies offered and sold TRX and BTT as investments through multiple unregistered ‘’bounty programs’’ which directed interested parties to promote the tokens on social media, join and recruit others to Tron-affiliated Telegram and Discord channels, and create BitTorrent accounts in exchange for TRX and BTT distributions,’’ the complaint, made before a federal court in New York, said.

Selling BTT through unregistered monthly airdrops

SEC’s complaint also faulted Sun for offering to sell BTT in unregistered monthly airdrops and manipulating the secondary market for the digital asset.

‘‘From at least April 2018 through February 2019, Sun allegedly directed his employees to engage in more than 600,000 wash trades of TRX between two crypto asset trading platform accounts he controlled, with between 4.5 million and 7.4 million TRX trades daily,’’ the filing added.

Six of the eight celebrities mentioned in the case, except Cortez Way and Mahone, have reportedly paid more than $400,000 in penalties without admitting or denying the allegations.

Since the collapse of FTX, the SEC has increased its scrutiny of digital assets accusing several platforms, including Kraken and Coinbase, of engaging in the sale or offering of unregistered securities. The commission has also sued Terraform Labs, the company behind Terra LUNA and UST, for fraud and money laundering.

SEC’s complaint did not affect the price of Tron’s native token, TRX, which jumped 9% in the past day to trade at $0.065, according to CoinMarketCap.

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CryptoWhat
CryptoWhat was created in 2015 and has become one of the most trusted and well-respected sources of information on all things crypto. The blog's authors are dedicated to providing clear, concise, and jargon-free explanations of this complex technology, so that everyone can understand it.