Justin Sun Allegedly Involved In Illegal Wash Trading Activities TRX

Justin Sun, the founder of TRX, is suspected of carrying out illegal activities. (Photo; Doc. Bitcoin Exchange Guide)

JAKARTA - TRON (TRX) founder Justin Sun is accused of offering securities that are not registered by the US financial watchdog agency, the Securities and Exchange Commission (SEC). The SEC stated that TRON had violated securities laws by offering TRX and Bittorrent tokens (BTT).

"All TRX buyers, including those who submit value to TRX in addition to cash assets or cryptocurrencies, invest in the company along with the Sun and the Tron Foundation, which always has a significant number of TRXs," the SEC said.

The statement made the same accusations against BTT, stating that the token was 'told and sold as a securities, particularly as an investment contract'.

Then, the SEC accused Justin Sun of setting up a scheme to manipulate TRON (TRX) prices on crypto exchanges using different accounts and engaging in daily trading waste activities, moving large amounts of TRX through different exchanges. According to the SEC report, one of the accounts involved belonged to Sun's father.

For information, wash trading is a practice of market manipulation in which investors buy and sell their own assets with the aim of creating the impression of greater trading activity than it actually does. In practice, wash trading involves trading of the same assets by the same trader, or a collaborating trading group, which creates a high impression of trading volume and deceives the market into looking more liquid than it really is.

This can result in price manipulation, making these assets appear more popular and inviting investors who don't actually exist. This practice is widely considered a market crime and banned by many financial authorities and stock exchanges around the world.

Through this scheme, between 4.5 million and 7.4 million TRX are allegedly washed out every day, in more than 600,000 operations. As part of the SEC's actions, a number of well-known influencers and celebrities were also charged for promoting these securities without revealing that they were paid to do so.

The SEC claims that Sun indirectly ordered these celebrities not to disclose that they were part of the campaign, using employees as liaisons.

Among the celebrities included in the lawsuit were Lindsay Lohan, Jake Paul, DeAndre Cortez Way (AKA Soulja Boy), Austin Mahone, Michele Mason (AKAmen Lust), Miles Parks McColllum (AKA Lil Yachty), Shaffer Smith (AKA Ne-Yo), and Aliaune Thiam (AKA Askon).

"This case once again shows the high risk investors face when crypto asset securities are offered and sold without proper disclosure," said SEC chairman Gary Gensler.

Even so, until now the Tron Foundation itself has not responded to the allegations. This announcement shows that the SEC will not tolerate regulatory violations in the cryptocurrency market. This crackdown can also serve as a reminder for industry players to avoid non-illegal practices.