The SEC has charged diplomat Justin Sun for fraud and unregistered securities violations. Some of Sun’s backers including actress and celebrity Lindsay Lohan has also been charged. Sun is allegedly accused of fraudulently manipulating the secondary market of two crypto tokens through extensive wash trading. The crypto assets Tronix and BitTorrent were endorsed by a number of celebrities. But Sun allegedly failed to divulged that the celebrity endorsements had been compensated for his services.
The SEC alleged that Sun engaged in fraud by manipulating the trading activity of the two tokens, creating the appearance of active trading when it did not exist. The unregistered offer and sale charges, on the other hand, are similar to charges the SEC has unveiled against other crypto offerings and exchanges, including Genesis, Gemini and Do Kwon’s Terraform Labs.
This case demonstrates again the high risk investors face when crypto asset securities are offered and sold without proper disclosure. He orchestrated a promotional campaign in which he and his celebrity promoters hid the fact that the celebrities were paid for their tweet,,” Gary Gensler, Chair – SEC
The eight celebrities and influencers names so far are actress Lindsay Lohan, social media influencer Jake Paul, musicians Soulja Boy and Austin Mahone, Lil Yachtym Ne-Yo and Akon and adult entertainer Kendra Lust. With the exception of Soulja Boy and Mahone, all celebrities settled penalties against the charges made.
Celebrities promoted TRC and BTT
Celebrities endorsed TRX and BTT tokens on social media and other channels and recruited others via Tron-affiliated Telegram and Discord channels. The SEC described this activity as an “age-old playbook to mislead and harm investors”. The celebrities claimed that they were specifically asked by Sun not to disclose that any form of compensation had been exchanged.
This latest charge by the SEC is the latest of a number of actions it has taken against the pillars of the crypto sector.
33 year-old Justin Sun is a Chinese-born Grenadian citizen. He is the founder of Tron, a blockchain DAO ecosystem. Sun served as Permanent Representative of Grenada to the World Trade Organization (WTO) in Geneva. Sun foundation settlement platform Ripple in China. He was named Sun Davos Global Shaper in 2014.
Sun also founded Peiwo, an app similar to China’s Snapchat. It matches and connects users by analyzing 10-second voice samples as well as their interests. Peiwo has introduced a host of channels for users to bring together like-minded friends, with online games, talent shows and live streaming. It has matched more than 4 billion chats to date.