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Breaking Justin Sun Hit With Summons in SEC Enforcement Action

2 mins
Updated by Michael Washburn
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In Brief

  • Tron's elusive founder has reportedly received a summons from a New York court.
  • The SEC charges Justin Sun with numerous securities law violations.
  • Sun is defiant in the face of the regulatory crackdown.
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Justin Sun, the founder of Tron Foundation and BitTorrent Foundation whose alleged securities law violations triggered an enforcement action last month from the Securities and Exchange Commission (SEC), has reportedly received a summons from a court in the Southern District of New York.  

A report in The Straits Times on Thursday said that the summons went to two addresses in Singapore. It gives him 21 days to respond.

The SEC on March 23 filed a lawsuit against Sun and three entities, Tron Foundation Limited, BitTorrent Foundation, and Rainberry Inc. The agency brought an array of charges against Sun.

Multiple Offenses

Sun stands accused of trading Tronix (TRX) and BitTorrent (BTT) without registering them as securities. And with failing to disclose payments made to celebrities, including Lindsay Lohan and Austin Malone, for their endorsements of crypto assets and products.

The SEC also charges Sun with the practice known as wash trading. This is a variant of “pump-and-dump” schemes. It involves purchasing and selling a security in a single transaction or a couple of tightly spaced transactions. Thus fostering the appearance of heavy trading activity, while there is no change in beneficial ownership.

The agency’s March 23 announcement of the enforcement action elaborated:

“From at least April 2018 through February 2019, Sun allegedly directed his employees to engage in more than 600,000 wash trades of TRX between two crypto asset trading accounts he controlled, with between 4.5 million and 7.4 million TRX wash traded daily.”

It was also blunt about Sun’s use of household names as endorsers.

“Sun further induced investors to purchase TRX and BTT by orchestrating a promotional campaign in which he and his celebrity promoters hid the fact that the celebrities were paid for their tweets.”

Even while the SEC’s enforcement action is ongoing, Sun has sounded an insouciant note in his public statements. In an April 11 tweet, he posted a video of a Hong Kong crypto industry social event. Sun wrote that hosting such a “remarkable event” in Hong Kong touched him deeply. He added:

“Our ultimate goal is to host cryptocurrency events in Beijing and Shanghai,” he said. “I am confident that we will be able to achieve it in a few years.”

Nowhere Sun did acknowledge that cryptocurrency sales and trading are illegal throughout China.

This is a developing story.

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Michael Washburn
Michael Washburn is a New York-based managing editor who joined BeInCrypto in March 2023. Over his career, he written extensively about the corporate legal world and the intersection of finance and law, has produced thousands of articles and features, and has mentored many reporters and researchers finding their way in a fast-changing industry.