Justin Sun, the cryptocurrency entrepreneur behind Tron Foundation and BitTorrent, has been charged by the Securities and Exchange Commission (SEC) for fraudulent activities, including market manipulation and unregistered offer and sales of his two crypto assets, TRX and BTT.
SEC also filed separate charges against eight celebrities, including Lindsay Lohan, Jake Paul and Soulja Boy, for not disclosing the fact that Sun paid them to promote his crypto assets.
Sun Engaged in Unregistered 'Bounty Programs' to Manipulate Crypto Assets Value, Says SEC
Per SEC's press release, Sun proceeded with unregistered offers and sales of his crypto assets by asking users to promote BTT and TRX using their social media accounts in exchange for crypto rewards. Aside from social media, people were also persuaded to get more recruits via Discord and Telegram channels.
SEC further stated that Sun's companies are liable for the "manipulative wash trading of TRX to create the artificial appearance of legitimate investor interest and keep TRX's price afloat." Under his directives, his companies participated in "hundreds of thousands" of wash trades between accounts, which are actually owned by Sun himself.
According to The Verge, this wash trading scheme was allegedly committed by Sun to increase the value of his crypto assets even though active trading was technically non-existent. According to SEC chief Gary Gensler, the scheme is another proof of the "high risk investors face when crypto asset securities are offered and sold without proper disclosure."
Due to Sun's activity, he was able to illegally profit from the investor's money, amounting to tens of millions of dollars, SEC stated.
As reported by CNBC, SEC also discovered similar cases of unregistered offer and sales with other crypto entities like Genesis, Gemini, and Terraform Labs by Do Kwon.
Related Article : 5 Cryptocurrency Scams Any Investor Should Aware Of
Lohan, Paul, Soulja Boy Among Celebrities Involved in Sun's Crypto Schemes
SEC also filed separate charges against eight celebrities who reportedly supported Sun's promotional campaign for TRX and BTT. SEC stated that these celebrities were actually paid by Sun to promote his crypto assets, but they did not disclose this in their social media posts.
Instead, these celebrities acted as if they were promoting TRX and BTT with only "unbiased interest" in mind when in fact, they were Sun's "paid spokespersons." With this, Sun and his paid celebrity promoters misled the public into purchasing crypto assets.
Aside from Lohan, Paul and Soulja Boy, the other celebrities charged by the SEC are Austin Mahone, Michele Mason, Lil Yachty, Ne-Yo and Akon. SEC said that with the exception of Mahone and Soulja, the involved personalities in Sun's crypto scheme have settled the charges, amounting to over $400,000. Upon settlement, these celebrities did not issue statements to admit or deny the allegations.
As reported by Reuters, Sun has yet to issue an answer after receiving a request for comment via Twitter. The lawyer who will serve as Sun's counsel for the charges is still unidentified. As for Lohan's lawyer, Andrew Brettler, he claimed that the actress was not aware of the disclosure requirements "until last March."
According to Brettler, the "Parent Trap" star agreed to return the "small amount of money" that she got from the promotion and pay whatever fine that is needed to resolve the issue. Meanwhile, the lawyers for other involved celebrities have yet to issue their own statements concerning the charges.
