(MENAFN) The US Securities and Exchange Commission (SEC) has filed charges against crypto entrepreneur Justin Sun and three of his wholly-owned companies, including Tron Foundation Limited, BitTorrent Foundation Ltd., and Rainberry Inc., formerly BitTorrent. The charges include fraud and securities law violations pertaining to the unregistered offer and sale of crypto asset securities, TRONIX (TRX), and BitTorrent (BTT).
The SEC's complaint also alleges that Sun and his companies manipulated the secondary market for TRX through wash trading, which involves simultaneous or near-simultaneous purchase and sale of a security to make it appear actively traded without an actual change in beneficial ownership. Additionally, the complaint claims that Sun orchestrated a scheme to pay celebrities to tout TRX and BTT without disclosing their compensation.
The SEC has also charged eight celebrities for illegally promoting TRX and BTT without disclosing their compensation. The complaint alleged that Sun and his companies offered and sold TRX and BTT as investments through multiple unregistered “bounty programs.”
These programs directed interested parties to promote the tokens on social media by joining and recruiting others to Tron-affiliated Telegram and Discord channels, and creating BitTorrent accounts in exchange for TRX and BTT distributions.
The SEC's action against Sun and his companies is part of its ongoing efforts to regulate the cryptocurrency industry and protect investors from fraud and other violations of securities laws. The lawsuit highlights the need for greater transparency and accountability in the crypto space, particularly with regard to celebrity endorsements and unregistered securities offerings.
As of 5 p.m. EDT, the price of TRX had fallen over 11% in response to the SEC's announcement. The lawsuit is likely to have significant implications for the future of the crypto industry, as regulators seek to establish clearer guidelines and standards for companies and individuals operating in this rapidly-evolving space.
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