Tron (TRX) founder sues by the US SEC agency over wash trading & market manipulation

9 people, including Justin Sun, were sued by the US securities regulatory body SEC, over big fraud charges. 

Justin Sun is a popular crypto entrepreneur and he founded many crypto projects & also invested in many centralised & decentralised crypto companies. At present time, he is a senior advisor at the Huobi crypto exchange. In late 2021, Justin stepped down from the Tron blockchain CEO position to become the Permanent Representative of Grenada to the World Trade Organization. 

On 22 March 2023, The United States Securities and Exchange Commission (SEC) announced through a press release that the agency sued 9 people linked with the crypto companies Tron Foundation Limited, BitTorrent Foundation Ltd., and Rainberry Inc.

Under the charges, SEC dragged Tron founder Justin Sun and other eight celebrities who promoted the TRX coin & BTT coin. These people are Lindsay Lohan, Jake Paul, DeAndre Cortez Way (Soulja Boy), Austin Mahone, Michele Mason (Kendra Lust), Miles Parks McCollum (Lil Yachty), Shaffer Smith (Ne-Yo), and Aliaune Thiam (Akon). 

The SEC agency alleged that Justin & his crypto companies sold & offered unregistered crypto securities ( BTT & TRX) in the US via airdrop programs & crypto trade platforms. 

Allegations also dragged promotional strategies by Justin, where he hired many celebrities to promote his crypto token without any registration, which was unethical under the purview of the SEC agency. 

Fraud Charges 

The Securities regulatory body’s Investigation noted that Justin paid celebrities & promoters to tout TRX and BTT without disclosing their compensation. And also he conducted multiple wash trading to manipulate the TRX coin market. Justin secured around $31 million through unregistered TRX coin sales in the secondary marketplace, which was illegal & the whole activities happened without disclosure.

Wash trading is an unethical way to show the high trade volume, where a single entity/investor buys & sells that particular asset in the same market.

SEC investigation also revealed that Justin was conducting wash trading with the help of his employees and in the past, he conducted more than 600,000 wash trades for TRX coin. In short, he was controlling 4.5 million to 7.4 million TRX trade daily. 

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