The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Justin Sun, accusing him of selling unregistered securities offerings, manipulative trading, and illegal promotion of crypto assets, involving the enlistment of celebrities to boost public interest in TRX and BTT tokens.
A legal document filed on March 22 in the Southern District of New York names Sun and his companies — the Tron Foundation, the BitTorrent Foundation, and Rainberry as defendants, alleging that Tron (TRX) and BitTorrent (BTT) tokens were securities.
The list of high-profile celebrities that endorsed TRX and BTT includes American rapper DeAndre Cortez Way, better known as Soulja Boy, American rapper Miles Parks McCollum, also known as Lil Yachty, singer Austin Mahone, actress Lindsay Lohan, YouTube personality Jake Paul and musician Aliaune Thiam, who goes by the name Akon. Additionally, Akon played a significant role in the development of ‘crypto cities’ in Senegal and Uganda.
According to the SEC, these individuals and businesses took part in the promotion of a digital token sale without properly registering it as a securities offering. The regulator claims that the individuals in question failed to comply with federal securities laws, thus misleading investors and the general public.
During the course of the lawsuit, the SEC aims to obtain lasting injunctions, recovery of unlawfully obtained profits, and monetary fines from the defendants. This legal action underscores the necessity of abiding by the rules and regulations when engaging in activities related to cryptocurrencies, with the objective of safeguarding investors and upholding the integrity of the market.
Tron is widely known for its ambitious goals and rapid development in the decentralized technology sector. However, this legal action could potentially hamper its progress and tarnish its reputation.
In recent years, the SEC has increased its scrutiny of digital asset offerings, focusing on the role of celebrities in promoting these investments. The regulator urges investors to be cautious when considering investments that are endorsed by prominent public figures, as their involvement does not guarantee the success or legitimacy of the project.