• Mon. Jun 24th, 2024

SEC Takes Action against Justin Sun for Alleged Securities Law Violations

Megan Ford

ByMegan Ford

Mar 24, 2023

In a recent development, Justin Sun, the founder of TRON Foundation, along with his other companies Rainberry Inc and BitTorrent, has been charged by the United States Securities Authorities for violating securities laws.

According to the SEC, they allegedly conducted the unregistered sale of crypto assets securities, which led to the filing of charges against them. This move by the SEC is a part of their ongoing efforts to regulate the cryptocurrency market and prevent fraudulent activities in the space.

Despite the lack of court rulings on whether cryptocurrencies are securities, the SEC has persisted in establishing them as such. The recent charges against Justin Sun and his companies for the unregistered sale of BitTorrent (BTT) and Tronix (TRX) tokens have only armored this situation.

The SEC argues that these tokens should have been registered as securities before being offered and sold to the public. It appears determined to hold those who fail to comply with this regulation accountable. As the debate over whether cryptocurrencies qualify as securities continue, the SEC’s actions remind us that regulatory compliance is crucial for anyone operating in cryptocurrency.

(Advertisement)Artificial Intelligence Crypto Trading
CypherMind-HQ.com Artificial Intelligence Crypto Trading System – Get Ahead of the Curve with this sophisticated AI system! Harness the power of advanced algorithms and level up your crypto trading game with CypherMindHQ. Learn more today!

Facing the consequences: Allegations of Wash Trading Lead to Charges

In addition to the charges of unregistered sale of securities, the SEC has accused Justin Sun and his companies of engaging in extensive wash trading. The commission alleges that they attempted to influence the subordinate market for TRX through this fraudulent practice.

Wash trading involves simultaneously selling and buying the same token to give the appearance of high trading volume and activity on a platform. However, this action can deceive customers and create a false demand for a particular asset.

If found guilty, the defendants could face severe consequences for their actions. The SEC’s determination to investigate and prosecute such fraudulent activities underscores the need for transparency and accountability in the cryptocurrency market.

As per the regulatory authority, TRON Foundation’s staff carried out more than six hundred thousand wash transactions of the token between a couple of accounts under Sun’s control. The Chief Executive Officer directed this activity, which saw a daily washing of TRX worth four to six million dollars.

SEC Accuses Company of Operating a Controversial Incentive Scheme

In addition to the charges against the company, the SEC has also filed charges against eight celebrities for their involvement in an illegal “bounty program” to promote BTT and TRX tokens.

The celebrities were allegedly incentivized with distributions of BTT and TRX tokens to advertise the tokens on their social media platforms and recruit others to join the tokens’ Discord and Telegram channels and create BitTorrent profiles.

This program was found to violate securities laws, and the SEC is taking action to hold those involved accountable for their actions. The eight identities named in the fillings are Aliaune Thiam (Akon), Shaffer Smith (Ne-Yo), Miles Parks McCollum (Lil Yachty), Michele Mason (Kendra Lust), Austin Mahone, DeAndre Cortez Way (aka Soulja Boy), Lindsay Lohan, and Jake Paul.

The SEC has claimed that the celebrities involved in these promotions failed to fully disclose the nature of the incentives they received to the public. It also neglected to disclose the threats affiliated with investing in such tokens. The conduct of Sun and his associates constitute what the federal securities laws were developed to prevent, irrespective of the terminology they employed.

Megan Ford

Megan Ford

Megan Ford is an accomplished news writer with a talent for capturing the essence of a story. With a keen eye for detail and a dedication to accuracy, her articles provide readers with a captivating and well-rounded perspective on current events.

Leave a Reply

Your email address will not be published. Required fields are marked *

Don't Miss Out On CypherMindHQ

#1 Artificial Intelligence Crypto Trading System

Sign Up Now

Try Crypto Engine With a Trusted Broker