SEC Charges Crypto Entrepreneur Justin Sun and his Companies for Fraud and Other Securities Law Violations

Today (March 23, 2023) the Securities and Exchange Commission (SEC) charged Justin Sun, the founder of the cryptocurrency platform Tron, and his companies with fraud and other securities law violations. The charges stem from Sun’s alleged unregistered initial coin offering (ICO) of Tron, which raised over $70 million in 2017.

According to the SEC’s press release [1], Sun and his companies misled investors about Tron’s business relationships and partnerships, as well as the use of the ICO proceeds. The SEC also alleges that Sun and his companies engaged in market manipulation by artificially inflating the price of Tron’s cryptocurrency, TRX, through coordinated trades and false public statements.

Stephanie Avakian, the Director of the SEC’s Enforcement Division, stated, “Investors have a right to accurate and truthful information when making investment decisions, and Sun and his companies allegedly deprived investors of that right.” The SEC is seeking disgorgement of ill-gotten gains, monetary penalties, and permanent injunctions against Sun and his companies.

This is not the first time that Sun has faced legal trouble. In 2020, he was accused of illegally distributing a digital asset, which resulted in him being banned from China’s social media platform Weibo. Sun has also faced controversy for canceling a highly-publicized lunch with billionaire Warren Buffett.

The SEC’s charges against Sun and his companies serve as a reminder that ICOs and cryptocurrency-related investments are not immune to securities laws and regulations. Investors should exercise caution and do their due diligence before investing in these types of assets.

References:

• [1] SEC Charges Crypto Entrepreneur Justin Sun and his Companies for Fraud and Other Securities Law Violations. Securities and Exchange Commission. (2023, March 23). https://www.sec.gov/news/press-release/2023-59