Per reporter: Cai Ding Per editor: He Xiaotao, Gao Han, Gai Yuanyuan
According to the official website of the U.S. Securities and Exchange Commission (SEC), the SEC formally indicted Justin Sun, founder of Tron and a member of Huobi's global advisory board, on March 22, Eastern time, accusing him of illegal securities sales, fraud and market manipulation, and charged celebrities who promoted related cryptocurrencies for separate violations, including actress Lindsay Lohan and rapper Soulja 8 American celebrities including Boy.
Specifically, Justin Sun and his companies TRON, BitTorrent Foundation and Rainberry are accused of distributing billions of crypto assets known as Tronix (TRX) and BitTorrent (BTT) since August 2017 and manipulating the trading volume of these assets.
Sun said in a tweet on March 23 that he believes the SEC's complaint against him and his three companies is "unfounded" and that "we will continue to build the most decentralized financial system."
Sun noted that the SEC's regulatory framework for digital assets is still in its infancy and needs to be further developed, "and it's no secret." "Given the important role the cryptocurrency industry can play, we are eager to work with governments and regulators around the world that are committed to establishing transparent regulatory and cooperation guidelines," Sun said. He mentioned that Dominica has recently adopted Tronix (TRX) and BitTorrent (BTT) as legal tender.
Sun Yuchen was accused of "left hand to right hand",
Artificially exaggerated TRX volume
SEC officials said that Sun artificially inflated TRX's trading volume through a large number of fake transactions, including buying and selling at the same time or almost simultaneously, but did not really change the ownership of the asset. According to the SEC, at least from April 2018~February 2019, Sun Justin ordered employees to conduct more than 600,000 "left-handed-right-handed" transactions between two accounts he controlled.
The SEC also alleges that by creating the false and misleading appearance of legal transactions, Justin Son was more likely to sell TRX in the secondary market while keeping TRX prices stable, and made approximately $31 million in proceeds from the illegal, unregistered TRX offering and sale.
"As alleged in the allegations, not only did Sun and his company target U.S. investors in unregistered transactions, generating tens of millions of dollars in illicit gains at the expense of investors, but they also conducted 'left-handed-right-handed' trading on an unregistered trading platform to create the misleading appearance that TRX was actively traded." Sun further induced investors to buy TRX and BTT, and he and his celebrity 'associates' orchestrated promotions to hide the fact that celebrities were getting paid for their tweets. SEC Chairman Gary Gensler added in the statement.
In addition, Gurbir S. Grewal, director of the SEC's Division of Enforcement, said, "As the allegations describe, Sun and others used an age-old tactic of issuing securities without complying with registration terms and letter approval requirements, and then manipulating those securities markets to mislead and harm investors." ”
Sun did not immediately respond to the SEC's allegations.
Interestingly, just last weekend, Justin Sun was criticized for allegedly "rubbing the heat" - on Sunday, local time, TRON founder Justin Sun posted on social media, claiming that he intends to bid $1.5 billion to buy Credit Suisse and make it a cryptocurrency-friendly institution.
In a series of tweets on March 19, Sun wrote: "UBS's acquisition of Credit Suisse failed. I would like to make my own offer to acquire Credit Suisse for $1.5 billion and integrate it into the world of Web 3.0. Switzerland has always been one of the most crypto-friendly countries in the world. ”
Image source: Screenshot of Sun Yuchen's social media account
Cryptocurrency TRX plunged 13%
8 celebrities in the United States were charged
TRX fell 13% on the day after the SEC news. Other tokens associated with Justin Sun, including Huobi (HT), Just (JST) and Sun Token (SUN), also fell more than 5% on Wednesday.
Image source: Coinmarketcap
Shares of U.S.-listed cryptocurrency trading platform Coinbase also fell sharply on Wednesday, closing the day down 8.16% before falling further after hours to fall nearly 16%. Previously, the SEC issued a "Wells Notice" to Coinbase, a formal notice indicating that the SEC plans to take enforcement action against the recipient.
Image source: Yahoo Finance
In addition, Sun was accused of concealing payments to celebrities to promote TRX and BTT on social media, thereby misleading the public into believing that these celebrities "have a genuine interest in TRX and BTT, not just paid spokespersons." The SEC said Mr. Sun's actions came at the expense of other investors, thereby pocketing tens of millions of dollars in illicit gains.
Gurbir S. Grewal, director of the SEC's Division of Enforcement, noted that "Justin Sun pays celebrities with millions of social media followers to peddle these unregistered products and specifically instructs them not to disclose compensation." This is exactly what federal securities laws do. ”
In addition to the two celebrities mentioned above, other celebrities indicted include singers Akon, Austin Mahone and Ne-Yo, a total of eight American celebrities. Among them, with the exception of Soulja Boy and Austin Mahone, all celebrities indicted in this case agreed to settle. The two who did not agree to the settlement, although they made a total profit of more than $400,000, did not admit to wrongdoing.
Image source: SEC official website
The lawyer for American actress Lindsay Lohan said that it was not until March 2022 that Lohan knew that these actions needed to be disclosed to the public. In a statement, her attorney noted that "from the beginning, Lohan cooperated with the SEC's investigation and eventually agreed to hand over the small amount of money she received and pay a fine to resolve the matter." ”
The Daily Economic News reporter noted that the SEC has been stepping up its efforts to crack down on the cryptocurrency industry in recent years. Gary Gensler called the industry the "Wild West" rife with misconduct. After the collapse of cryptocurrency exchange FTX last November, the SEC stepped up its crackdown. The aforementioned "Wells notice" from the SEC to Coinbase is the latest example.
Sun Yuchen and his people
According to public information, Sun Justin was born in July 1990, graduated from the history department of Peking University with a bachelor's degree, and studied at the University of Pennsylvania, an Ivy League school in the United States. In 2015, Justin Sun was selected as one of the 30 Under 30 Entrepreneurs of Forbes China and was selected as a lakeside university.
Sun Yuchen, often considered good at hype marketing because of his high-profile behavior, once said that he would hire Luo Yonghao and pay off debts for Wang Sicong.
In 2019, he photographed Buffett's lunch at a sky-high price of 30 million yuan, and used more than a month before and after to warm, announce and cancel this lunch, and released Buffett's pigeons three times in a row.
However, more than a day after announcing the cancellation of the lunch meeting with Buffett, he fell into the vortex of "money laundering", "illegal fundraising", and "border control".
In the early morning of July 25, 2019, Sun Yuchen posted on Weibo that he was deeply guilty of excessive marketing and hype-loving behavior, and expressed his sincere apologies to the public, media, and regulators.
On the evening of December 12, 2019, Sun Yuchen's Weibo account was closed, and the relevant page showed that the account could no longer be viewed due to complaints of violation of laws and regulations and the relevant provisions of the Weibo Community Convention.
Finally, in February 2020, Sun Yuchen said on social platforms that he had dinner with Buffett at a private country club in Omaha, Nebraska, on January 23 of that year.
According to Global People, Zhang Jieping, the author who reported on Sun Yuchen, recalled that what impressed her most about Sun was that she was "not shy." "I'm a post-80s generation, and my generation always feels embarrassed when talking to others about their strengths. You don't see that in him, he will keep talking about how good he is. ”
Reporter | Cai Ding
Editor|He Xiaotao Gao Han Gao Yuanyuan
Proofreading | Wang Yuelong
| Daily Economic News nbdnews original article|
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