Tron founder Justin Sun is facing a civil lawsuit from the United States Securities and Exchange Commission (SEC).
It is over the alleged unregistered offering and sale of TRX tokens as crypto asset securities. The summons was issued by the US District Court for the Southern District of New York on 12 April, ordering Sun to respond within 21 days.
Failure to do so could result in a “judgment by default,” indicating penalties related to securities law violations. The court directed Sun to contact SEC attorney Adam Gottlieb in response.
Sun’s location is uncertain, with his Twitter bio listing Switzerland as his base, although social media activity indicates he may have recently been in Hong Kong. Sun was reportedly born in China and claims citizenship in Grenada, while the Tron Foundation was established in Singapore in 2017.
In March, the SEC filed a lawsuit against Sun, the Tron Foundation, the BitTorrent Foundation, and Rainberry for their role in the alleged orchestration of the unregistered offer and sale, manipulative trading, and unlawful touting of Tron as a crypto asset security.
The SEC accused Sun of engaging in manipulative wash trading to increase public interest in TRX and BitTorrent (BTT) by using celebrities such as Soulja Boy, Lindsay Lohan, Jake Paul, and Akon.
All the celebrities allegedly involved in the scheme had settled with the regulator except for Austin Mahone and Soulja Boy. The SEC declared its intention to “permanently prohibit” Sun from serving as an officer or director of any firm offering crypto securities if it prevails in the case.
Sun is just one of several crypto industry figures who have come under scrutiny from US regulators in the wake of the 2022 market crash and numerous bankruptcies.
A bankruptcy judge subpoenaed Three Arrow Capital co-founder Kyle Davies in January, but unlike Sun’s summons, Davies’ was authorized through Twitter. As of the time of publication, Davies had not responded to the subpoena.
Tron’s Justin Sun US Court
In conclusion, the Tron founder Justin Sun has been issued a summons by a US court to respond to the SEC’s civil lawsuit, which alleges the unregistered sale of TRX tokens as crypto asset securities. Sun must respond within 21 days, or judgment by default may be entered.
The SEC also accused Sun of manipulative wash trading, using celebrities to drive public interest in TRX and BTT. Sun faces the prospect of being permanently barred from serving as an officer or director of any firm offering crypto securities if the regulator prevails in the case.