Sun and eight celebrities, including Lindsay Lohan, Jake Paul, and Soulja Boy, have been charged civilly by the SEC.
The SEC alleges in a complaint submitted on Wednesday that the crypto entrepreneur used his digital assets TRX and BTT in market manipulation and the unregistered offer and sale of securities. The celebrities who promoted the coin are accused of not revealing that they received payment for doing so and how much. As a result, according to the SEC, the public was mislead into thinking that these celebrities had unbiased interest in TRX and BTT, and were not just hired spokespersons.
The SEC also filed charges against Austin Mahone, Michele Mason, Lil Yachty, Ne-Yo, and Akon in addition to Lohan, Paul, and Soulja Boy. With the exception of Mahone and Soulja Boy, the SEC claims that the accused celebrities have settled the allegations for a total of more than $400,000 without admitting or disputing the SEC’s conclusions.
The initial coin offering (ICO) for the token connected to Sun’s cryptocurrency business was held. Sun is the proprietor of the Tron blockchain platform and BitTorrent (now Rainberry). This provides investors with the opportunity to purchase a new cryptocurrency, similar to an IPO (IPO). Nonetheless, he conducted the initial coin offering (ICO) in China right before the nation outlawed it, then left.
The SEC claims that Sun ran unlicensed “bounty schemes” where users were rewarded for promoting BTT and TRX on social media and for inviting friends to join its Telegram and Discord channels. Then, purportedly, Sun’s businesses would pay them in cryptocurrency for doing so. The SEC furthermore asserts that Sun directed his staff to execute hundreds of thousands of TRX wash trades between accounts that Sun completely controlled in order to give the false impression of real investor interest and maintain TRX’s price.
SEC Chair Gary Gensler issues a statement saying that this action highlights again the tremendous risk investors face when crypto asset securities are offered and sold without sufficient disclosure. By coordinating a marketing campaign in which he and his celebrity advocates concealed the fact that the celebrities were funded for their tweets, Sun further persuaded investors to buy TRX and BTT.