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Date: 2025-02-27 09:34:34
The United States Securities and Exchange Commission (SEC) is contemplating suspending its civil fraud lawsuit against TRON founder Justin Sun to examine a potential resolution that may benefit all parties involved and the general public.
In a letter submitted on Wednesday to the U.S. District Judge Edgardo Ramos in Manhattan, lawyers representing Sun and the SEC requested a halt in the case. They proposed to provide an update on the status 60 days after the stay, as initially reported by Reuters. The case, filed in March 2023, alleges that Sun and his companies unlawfully distributed Tronix (TRX) and BitTorrent (BTT) tokens and artificially inflated TRX trading volume.
More specifically, the SEC accused Sun of selling TRX and BTT tokens as investments without proper registration through unregistered "bounty programs." These programs incentivized individuals to promote the tokens on social media and chat groups and create BitTorrent accounts in exchange for TRX and BTT tokens. The SEC also claimed that Sun and his companies conducted monthly giveaways of BTT to U.S. investors who already held TRX in their wallets or on certain exchanges.
Furthermore, the SEC accused Sun of wash trading, creating the appearance of active trading and liquidity in the markets for these tokens. From April 2018 to February 2019, Sun allegedly instructed his employees to execute over 600,000 wash trades of TRX using two trading accounts under his control. These trades involved manipulating the market with daily wash trades of between 4.5 million and 7.4 million TRX. To carry out this scheme, Sun allegedly provided a large quantity of TRX. Additionally, he was accused of selling TRX in the secondary market, resulting in $31 million in proceeds.
Lastly, Sun also hired several high-profile celebrities to promote these tokens without disclosing their compensation. The SEC has also charged eight celebrities, including Lindsay Lohan, Akon, and Austin Mahone, for unlawfully promoting TRX and/or BTT without revealing that they were paid for these endorsements and the specific amounts they received.
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Previously, Justin Sun was in another legal situation when the blockchain protocol Chain considered taking legal action against him. This was due to Sun's allegations that the company was involved in Onyxcoin (XCN) market manipulation—an accusation that seems particularly ironic in light of the charges filed against Sun by the SEC.
Sun made these allegations in a post on Jan. 24, claiming that Chain was using high leverage and contracts that could harm exchange users. He suggested that crypto exchanges should exercise caution and indicated he would report Chain's alleged illegal activities to the SEC and DOJ. In response, Chain denied Sun's accusations, stating that it does not engage in trading its XCN and pointing out that the XCN token is managed by OnyxDAO. Following this, Sun reiterated his accusations, this time focusing on OnyxDAO and urging regulatory bodies to investigate.
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