The founder of Tron, Justin Sun, has been given 21 days to respond to a summons by the US District Court for the Southern District of New York or face penalties related to alleged securities law violations. Sun's Twitter bio suggests he is based in Switzerland, while his recent social media activity indicates he has been in Hong Kong. He was reportedly born in China and holds citizenship in Grenada, while the Tron Foundation was established in Singapore in 2017. The Securities and Exchange Commission (SEC) filed a civil lawsuit against Sun, the Tron Foundation, the BitTorrent Foundation and Rainberry in March for "manipulative trading, and unlawful touting" of Tron as a crypto asset security. The regulator accused Sun of engaging in "manipulative wash trading" by using celebrities such as Soulja Boy, Lindsay Lohan, Jake Paul, and Akon to drive public interest in TRX and BitTorrent (BTT).
Sun is not the only figure in the crypto space to be targeted by US authorities in the wake of the 2022 market crash and multiple high-profile bankruptcies. Three Arrow Capital co-founder Kyle Davies was issued a subpoena by a bankruptcy judge in January. Unlike Sun's summons, which was sent to a physical address, the US court authorized a subpoena via Twitter in Davies' case, but he had failed to respond as of the time of publication.
The SEC's approach to the regulation of cryptocurrencies has been a source of contention in the industry, with some calling for clearer guidelines and others warning against the stifling of innovation. Earlier this year, SEC chairman Gary Gensler said that the agency was "looking closely" at cryptocurrency exchanges, suggesting that they may be subject to more stringent regulation in the future. Gensler has also expressed concern about the lack of investor protection in the cryptocurrency market.
The case against Sun follows a similar case brought by the SEC against Ripple Labs in December 2020, which alleged that the firm's XRP token was a security and that the company had raised more than $1.3 billion in unregistered securities offerings. Ripple CEO Brad Garlinghouse and executive chairman Chris Larsen were also named in the case. The lawsuit has caused controversy, with some in the crypto industry accusing the SEC of stifling innovation and overreach.
Sun has not yet publicly commented on the case against him and his companies. However, Tron has been making moves to expand its presence in the crypto market. In March, the company announced that it was partnering with blockchain firm BitGo to launch Wrapped Bitcoin (WBTC) on the Tron blockchain. The move is seen as an attempt to capitalise on the growing popularity of decentralised finance (DeFi) platforms, which allow users to earn interest on their cryptocurrency holdings.
Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.