SEC sues Justin Sun, other celebrities who helped promote Tron Coin

The U.S. Securities and Exchange Commission SEC announced Wednesday that it is pursuing a lawsuit against the founder of Tron, Justin Sun. The SEC also brought civil charges against eight celebrities who helped promote the coin, including the YouTuber-turned-boxer Jake Paul, the actress Lindsey Lohan and the rapper Soulja Boy.

Sun founded in 2014 Tron, a DAO blockchain ecosystem, as well as its associated coin, Tronix TRX USD, which made him an early mover in the space.

The SEC lawsuit alleges that Sun illegally promoted unregulated securities by having celebrities endorse the cryptocurrencies without disclosing that the celebrities were paid to do so.

The case includes Lindsay Lohan, Jake Paul, DeAndre Cortez Way Soulja Boy Austin Mahone, adult actress Michele Mason, Kendra Lust Miles Parks McCollum Lil Yachty Shaffer Smith Ne-Yo and Aliaune Thiam Akon All celebrities except for Mahone and Soulja Boy agreed to pay a $400,000 fee to settle the charges. The suit alleges that celebrities promoted the BitTorrent BTT USD token, as well as the Tron, using social media platforms.

Sun is accused of trying to inflate the asset prices of TRX and BTT tokens by using a method called wash trading in which one buys and sells assets back to themselves, artificially inflating volume. Sun's employees at Rainberry, a platform, said they would conduct the trades using company money.

Brian Armstrong, CEO of Coinbase, Advocates for Clearer Regulations on cryptocurrencies in Washington D.C.

SEC Chair Gary Gensler said this case shows the high-risk investors face when they are offered and sold without disclosure. He and his celebrity promoters hid the fact that the celebrities were paid for their tweet by orchestrating a promotional campaign. The case against Sun and the associated celebrities is part of a larger movement by the SEC to try and get rid of unregulated criptocurrency exchanges and assets. Some prominent people in the industry are in favor of more regulation to protect investors, including Brian Armstrong, CEO of Coinbase.