Several promoters of the Tronix (TRX) and BitTorrent (BTT) cryptocurrencies have been charged by the Securities and Exchange Commission (SEC).
Crypto entrepreneur Justin Sun and his companies Tron Foundation Limited, BitTorrent Foundation Ltd., and Rainberry (formerly BitTorrent) have been charged with fraud and other securities law violations, the SEC said in a Wednesday (March 22) press release.
The SEC’s complaint alleges that Sun and his companies violated Section 5 of the Securities Act by making unregistered sales and offers of TRX and BTT and that they violated the antifraud and market manipulation provisions of the federal securities laws by artificially inflating the apparent trading volume of TRX, according to the press release.
“This case demonstrates again the high risk investors face when crypto asset securities are offered and sold without proper disclosure,” SEC Chair Gary Gensler said in the release.
Rainberry did not immediately reply to PYMNTS’ request for comment.
At the same time Sun and his companies were charged, eight celebrities were charged with illegally touting one or both of the cryptocurrencies without disclosing that they were compensated for doing so. They include Lindsay Lohan, Jake Paul, DeAndre Cortez Way (Soulja Boy), Austin Mahone, Michele Mason (Kendra Lust), Miles Parks McCollum (Lil Yachty), Shaffer Smith (Ne-Yo) and Aliaune Thiam (Akon), according to the release.
“Sun paid celebrities with millions of social media followers to tout the unregistered offerings, while specifically directing that they not disclose their compensation,” Gurbir S. Grewal, director of the SEC’s Division of Enforcement, said in the release. “This is the very conduct that the federal securities laws were designed to protect against regardless of the labels Sun and others used.”
Six of the celebrities agreed to pay to settle the charges, without admitting or denying the findings; Cortez Way and Mahone did not.
This news comes about a week after the SEC charged cannabis company American Patriot Brands with fraud, alleging they made false and misleading statements to investors, and about a month after it charged Terraform Labs and its founder Do Hyeong Kwon with violating federal registration and anti-fraud provisions.