The SEC's complaint, filed in the U.S. District Court for the Southern District of New York, charged Justin Sun and three of his firms with "the unregistered offer and sale of crypto asset securities."
Wash Trading is when a person buys and sells a security in order to mislead the market. In this case, the SEC alleged that Sun oversaw efforts to make the Tronix (TRX) and BitTorrent (BTT) coins appear to have higher trading volumes.
| Celebrity Party | Charge / Status | Context |
|---|---|---|
| Justin Sun / Firms | Anti-fraud & Market Manipulation violations | 600,000+ wash trades; unregistered airdrops. |
| Lohan, Akon, Paul, et al. | Illegal touting of TRX/BTT | Six of eight celebrities settled regulatory claims. |
| Kim Kardashian (Reference) | Touting EthereumMAX | Settled for $1.26 million in October 2022. |
“As alleged, Sun and his companies coordinated wash trading on an unregistered trading platform to create the misleading appearance of active trading in TRX. Sun further induced investors by orchestrating a promotional campaign in which he and his celebrity promoters hid the fact that the celebrities were paid for their tweets.” — SEC Chair Gary Gensler.
The case against Sun reignites arguments also found in the long-running SEC v. Ripple case, in which executives were accused of selling the XRP token in unregistered sales. This case demonstrates again the high-risk investors face when crypto asset securities are offered and sold without proper disclosure.