SEC Sues Tron Founder and Celebrities Including Lindsay Lohan, Jake Paul, and Soulja Boy for Crypto Securities Violations


The US Securities and Exchange Commission has sued Justin Sun, the founder of Tron, over allegations of orchestrating “unregistered offering and selling, manipulative trading, and illegal promotion of crypto-asset securities.” advertiser Wednesday.

The SEC said it is suing Sun, his Tron Foundation, and the BitTorrent and BitTorrent Foundation (now Rainberry) over the sale of two tokens: TRON or TRXand bitTorrent or BTT. Both TRX and BTT have been referred to as unregistered crypto-asset securities by the SEC, sparking controversy over whether cryptocurrencies are actually securities.

The prices of both tokens dropped after the SEC charges.

“The Sun Defendants offered and sold TRX and BTT as securities and were therefore required to register such offerings and sales with the SEC unless there is an exemption from registration,” advertiser. “But they never did.”

The SEC also alleged that the defendants in the case directed “manipulative wash trading in TRX to artificially create the appearance of an investor’s legitimate interest and to keep the price of TRX constant.”

The SEC also noted that from mid-March 2018 to mid-February 2019, the Sun and Tron Foundation offered and sold approximately 542.6 million TRX tokens to investors, equating to a net proceeds of over $31.9 million for both parties.

The government agency has also sued a host of celebrities and influencers, including Lindsay Lohan, Jake Paul, Soulja Boy, Austin Mahone, Michelle Mason, Lil Yachtty, Ne-Yo, and Akon.

“Although the celebrities were paid to promote TRX and BTT, their social media advertisements did not disclose that they were paid or the amounts of their payments,” the SEC wrote in the filing. Thus, the public was misled into believing that these celebrities had an unbiased interest in TRX and BTT, and were not simply paid spokespeople for themselves.

All of the celebrities except Soulja Boy and Mahone agreed to pay in excess of $400,000 “in inconvenience, interest, and penalties” to settle the charges, without admitting or denying blame regarding the SEC allegations.

“This case illustrates once again the high stakes that investors face when crypto-asset securities are offered and sold without proper disclosure,” said SEC Chairman Gary Gensler. statement. “Allegedly, Sun and his companies have not only targeted US investors with their unregistered offerings and sales, generating millions in illegal proceeds at the expense of investors, but have also orchestrated wash trading on an unregistered trading platform to create the misleading appearance of active trading in TRX. He also urged Sun helped investors buy TRX and BTT by staging a promotional campaign in which he and famous promoters hid the fact that celebrities were paid for their tweets.”


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