Note that the regulator has already created quite a few problems for the cryptocurrency industry in 2023. First of all, the Commission has banned staking on cryptocurrency exchange Kraken for Americans, which resulted in a $30 million fine for the exchange for lack of litigation.

The regulator has also banned the subsequent issuance of BUSD Stablecoin from Paxos and Binance. As a result, the supply of the token can now only go down over time, as Paxos now has no right to issue new BUSDs. That said, the Commissions had no previous complaints against the company, well the latter had successfully issued the equivalent of billions of dollars worth of stackable tokens.

The cryptocurrency community’s main complaint about such actions is that the Commissioners are trivializing nonsense. That is, they failed to prevent the collapse of blockchain giants such as BlockFi, Celsius, Voyager and FTX in 2022, with the collapse of the latter actually causing billions in losses to their users.

However, the regulator has now decided to lash out at all industry players – and that includes adequate industry representatives. One must also remember the statements of Gary Gensler, head of the Commission, who for some reason calls all altcoins securities, although he has no authority to do so, in addition, it can be recognized only by the court.

Be that as it may, Tron’s creator Justin Sun is now in the regulator’s crosshairs.

What Tron’s creator is being sued for

The Securities and Exchange Commission announced tonight that a lawsuit has been filed against Justin Sun and three of his companies. The companies in question are Tron Foundation Limited, BitTorrent Foundation Ltd and Rainberry Inc, formerly BitTorrent. The reason for the claims is the sale and distribution of unregistered securities, fraud and market manipulation.


According to the regulator, the securities are allegedly TRX and BTT tokens. Well the airdrop of the latter is seen as the distribution of unregistered securities, which is illegal activity.


Here’s a relevant quote from a press release from the US Securities and Exchange Commission, cited by Decrypt.

Sun violated the anti-fraud and market manipulation provisions of federal securities laws by orchestrating a scheme to artificially inflate TRX’s trading volume in the secondary market.


It is worth noting that such allegations are not factual because they need to be proven first. Well, it has to be done in court, if Justin agrees to deal with the meetings, rather than want to pay a fine.


According to the Commission, the alleged market manipulation took place between April 2018 and February 2019. That’s when San allegedly tasked his subordinates to make more than 600,000 fictitious trades with the Tron token (TRX) on two crypto exchanges that Justin owned. According to the Commission, such a move helped the entrepreneur make a total of $31 million in illicit profits from the sale of tokens.

At the same time, the regulator reported claims against celebrities who promoted TRX and BTT without disclosing the fact that they received money for advertising. The list of the latter included actress Lindsay Lohan, blogger Jake Paul, porn actress Michelle Mason, as well as music artists Soulja Boy, Lil Yachty, Akon, Ne-Yo and Austin Mahon. Here’s the full list of the selebrities who have faced allegations.

As noted by the Commission, each of the listed stars besides Soulja Boy and Mahon has agreed to pay more than $400,000 in fines. This will avoid a lawsuit and also avoid admitting and denying guilt at the same time.

Gurbir Grewal, head of the Commission’s enforcement division, confirmed the regulator’s position. According to him, Justin Sun has directly told the mentioned stars not to mention the fact of receiving payment for tweets.

Here are the relevant records that prompted the lawsuit. For example, Lindsay Lohan stated that she was “exploring decentralised finance and had already taken a closer look at JST and SUN tokens based on the Tron network”. She allegedly liked the blockchain’s high speed and zero fees, for which Lohan praised SUN.

Performer Lil Yachty said he will get a TRX tattoo when the token reaches 50 cents. The tweet was published on 11 February 2021, although Tron never ended up breaking its price record of 23 cents from 5 January 2018.

Blogger Jake Paul retweeted Lil Yachty’s post.

Well Ne-Yo shared his thoughts on the “perfect cryptocurrency portfolio” which supposedly should include tokens from the Tron ecosystem.

According to sources, Lohan and Lil Yachty got $10,000 each for these tweets, Ne-Yo got $12,000, well Jake Paul somehow managed to earn $25,000 for retweeting another “Influencer” publication.

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Justin Sun has responded to the situation. Here is his quote.

The Commission’s civil lawsuit filed today is just one of the latest examples of actions taken against prominent players in the blockchain and cryptocurrency world. We believe the complaint is unfounded, and in the meantime we will continue to build the most decentralised financial system possible.

It is no secret that the regulatory framework for digital assets from the Commission is still in its infancy and needs further development.

We are keen to work with governments and regulators around the world who want to establish transparent guidelines for regulation and engagement with the cryptocurrency industry, given the important role it can play.

For example, the day before, Dominica recognised TRX and BTT as official tender in the country.


Recall that Justin Sun is one of the most affluent members of the crypto industry. For example, in November 2022, he was considering a financial bailout and was tentatively ready to provide "billions of dollars", as reported by Bloomberg. It can therefore be assumed that he will not agree to pay the fine, but will go to court.

Still, the Commission's position on recognising cryptocurrencies as securities is very shaky, as the regulator has not provided adequate rules for such projects. Accordingly, the court may indeed not recognize TRX as a security.



We don't think this case will necessarily end in Justin Sun's defeat. Yes, the covert PR of the Tron ecosystem by celebrities does deserve to be punished, as such activity has surely led to losses for gullible investors.

But can it be argued that Sun was distributing unregistered securities if the court did not recognise TRX as such? One would like to believe that Justin will decide to put up a legal fight and be able to stop the Commission's current terror against the crypto industry. Still, as the SEC's December 2020 case against Ripple shows, the regulator is clearly failing to prove that the XRP token is a security. Probably won't succeed here either.


Follow developments in our cryptochat of former and would-be millionaires. Here we report on other important developments from the blockchain world.