Key Takeaways:
- The SEC charges Justin Sun with market manipulation and violation of securities laws.
- Crypto mogul Sun has been spotted amid controversy before.
YEREVAN (CoinChapter.com) – The Securities and Exchange Commission (SEC) has charged Tron (TRX) founder and Grenadian diplomat Justin Sun with fraud and market manipulation, as announced on March 22.
SEC Chair Gary Gensler further asserted that the CEO generated “millions in illegal proceeds” at the expense of US investors. He also alleged that Sun “coordinated wash trading on an unregistered trading platform to create the misleading appearance of active trading in TRX.”
This case demonstrates again the high-risk investors face when crypto asset securities are offered and sold without proper disclosure. [Sun] orchestrated a promotional campaign in which he and his celebrity promoters hid the fact that the celebrities were paid for their tweet.
said the SEC Chair.
The CEO responded to the accusations, declaring he does not hold profits paramount.
I want to make it clear: I have no enemies. TRON’s mission is to create a better, more decentralized world for all 8 billion people on earth – even those who oppose us. We are steadfast in pursuing our dream, not because it’s profitable, but because it’s the right thing to do.
he said in a recent tweet.
However, the regulatory agency might have “struck gold” in the case of Justin Sun, as the crypto mogul has pumped coins to his advantage on numerous occasions and engaged in morally questionable conduct.
Justin Sun’s shady business
Sun was called the “hype man of the century” in 2020 after acquiring BitTorrent, a slow-pace crypto exchange at the time. He then advertised BTT and TRX through his social media platforms, urging his followers to jump on the ban “wagon.
Sources report that Sun was caught amid other controversies, such as “giving away Tesla cars” and bidding millions on a “showy power lunch,” as well as launching products that effectively rewarded “piracy and products that exploited pornography.”
Sun also acquired the Huobi exchange, suspiciously in time before a 90% price pump in Q4 2022. According to crypto reporter Colin Wu, the Tron founder told Bloomberg that he already held “tens of millions of HT (Huobi Token).”
HT is up 86% in the last seven days. It is possible that Justin Sun obtained the HT held by Huobi while acquiring Huobi.
tweeted Wu.
Also read: Coinbase Gets Wells “Horse Head” Notice from SEC’s Regulatory Mafia.
Questionable moral conduct
Moreover, Sun faced accusations of rug-pulling Huobi employees. According to numerous tweets, the CEO has shut down “internal communication at Huobi. @BitRunX reported several “violations in the company. “Sun wants to cancel the main body of the domestic company,” read the tweet, blaming Sun for ignoring labor laws.
The employee originally signed a domestic contract and paid social security. Now the domestic company is canceled, and the domestic company contract is terminated, but the compensation stipulated in the labor law has not been followed.
said @BitRunX.
The allegations quickly spread in the Twitterverse, with many accusing Sun of “saving his own hide” while leaving hundreds of people unemployed.
Huobi seems to be melting down in real-time, possibly along with His Excellency Justin Sun’s fortune… Shut down all intra-employee IMs etc., Maybe fired a bunch of people. Employees are now angry (or Sun is ruggin’).
read the warnings.
Also read: Steady T” on la” s! Justin Sun pledges $2B to destroy” “sho” t TRX” traders.
Also, while Huobi faced liquidation issues in March 2023, Sun assured his followers that their funds were “safe.”
Meanwhile, despite the funds being “safe” on the platform, Sun said Huobi was setting up a $100 million fund to bolster liquidity and added the exchange “will bear all leverage-through position losses on the platform.”
Early on March 10, Sun withdrew $80 million worth of stablecoins from the exchange, 40 million USDT, 20 million USDC, and 20 million USDD. The crypto mogul then deposited the noted amount of USDT and USDC to Aave and JustLend.
Sun allegedly tried to hire a SEC “inside man.”
According to a journalist investigation conducted in 2022, Sun was well aware of the risks he could face from the SEC. Since the agency was the watchdog that might “bite at Sun’s heels,” it made sense to befriend the structure.
“You know what would be amazing? If we had somebody from the SEC be part of the company,” Sun allegedly said at a meeting, according to a former employee. He wanted to hire David Labhart, a lawyer and eight-year veteran of the SEC’s compliance division.
Justin was trying to pitch to him that he wanted [Labhart] specifically for proving that TRX is not a security, but a utility token.” (A legal expert on securities told me there was no reason to believe the “utility token” argument was valid anyway and that there’s no judicial opinion that describes tokens this way.)
said the undisclosed former employee.
“Justin would be in trouble, but he didn’t care,” a former employee recalled Sun’s initiated BTT token ICO. Looks like the SEC caught up to Sun after all.
Also read: FOMC agrees on 25 bps interest rate hike – what are the consequences?
