The 22nd of March, 2023, in Washington, DC—
Justin Sun and His Organizations: An Overview
The SEC has filed charges against Justin Sun, an entrepreneur in crypto assets, and three of his wholly-owned companies, Tron Foundation Limited, BitTorrent Foundation Ltd., and Rainberry Inc. (formerly BitTorrent), for selling and offering Tronix (TRX) and BitTorrent (BTR) (BTT) securities without being registered.
The Securities and Exchange Commission has charged Sun and his companies with fraud for manipulating the secondary market for TRX through a lot of “wash trading” and paying celebrities to promote TRX and BTT without saying how much they were paid. Wash trading is when a security is bought and sold at the same time or very close to the same time to make it look like it is being traded a lot even though the real owner hasn’t changed.
The following eight celebrities were all accused by the Securities and Exchange Commission at the same time of illegally promoting TRX and/or BTT without declaring that they were compensated to do so and the amount of pay they received.
Singer and actress Lindsay Lohan
Featuring: Jake Paul
Road Named After DeAndre Cortez: “Soulja Boy”
That’s Austin Mahone, of course.
To: Michele Mason (Kendra Lust)
Author: Miles Parks McCollum (Lil Yachty)
This man: • Shaffer Smith (Ne-Yo)
Involving: Aliaune Thiam (Akon)
The SEC filed a lawsuit in the U.S. against Sun and his companies were sued in New York’s Southern District Court for offering and selling TRX and BTT as investments through numerous unregistered “bounty programs.” told participants 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.
The complaint also says that Sun, the BitTorrent Foundation, and Rainberry offered and sold BTT to investors, including those in the United States, who had bought and held TRX in Tron wallets or on participating crypto asset trading platforms through unregistered monthly airdrops. The lawsuit says that each of these so-called “private placements” broke Section 5 of the Securities Act.
The Commission also says that Sun lied and messed with the market to make it look like there was a lot of demand for TRX on the secondary market when there wasn’t. Sun allegedly had his employees participate in between 4.5 million and 7.4 million daily wash trades of TRX between two accounts he controlled on a crypto asset trading platform from at least April 2018 through February 2019.
Sun is said to have given a lot of TRX, which was important for this strategy to work. To make matters worse, Sun allegedly made $31 million from unregistered sales of TRX on the secondary market.
Gary Gensler, the head of the SEC, said that “This case shows again the huge risk investors face when crypto asset securities are sold without enough information.
“According to the complaint, “Sun and his companies not only solicited U.S. investors in unregistered offers and sales, making millions in illegal profits at the expense of investors, but they also coordinated wash trading on an unregistered trading platform to make it look like there was a lot of trading in TRX.”Sun also obscured the fact that his celebrity advocates were being paid for their tweets as part of a larger promotional effort that he orchestrated to get investors to buy TRX and BTT.
When it comes to protecting investors, the Securities and Exchange Commission is anything but neutral, according to Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. “As alleged in the complaint, Sun and others employed an age-old playbook to mislead and injure investors by selling securities without complying with registration and disclosure requirements and then manipulating the market for those exact instruments.
Sun also enlisted the help of celebrities with millions of social media followers to promote the unregistered products, and he paid them to do so under the express condition that they not reveal that they had received any payment for doing so. No matter what names Sun and others gave their actions, they violated the very laws meant to safeguard investors in the securities market.
Except for Cortez Way and Mahone, all of the celebrities charged today have reached settlements with the SEC in which they will pay more than $400,000 in disgorgement, interest, and penalties without admitting or denying the SEC’s findings.
Adam B. Gottlieb, Anne Rosenfield, John Lucas, and John Marino led the SEC inquiry. David Hirsch, Jorge G. Tenreiro, Michael Brennan, and Paul Kim oversaw the project. Timothy Halloran and Mr Gottlieb, reporting to Melissa Armstrong, will head the SEC’s litigation efforts.
