While the global crypto market appears to have plummeted due to federal reserve chairman Jerome Powell’s recent announcement on the spike in interest rates, Tron blockchain native token (TRX) and Houbi exchange native token (HT) seem to have slumped for other reasons.
On March 22, the U.S. Securities Exchange and Commission (SEC) charged Tron founder, Justin Sun over the offering of unregistered sale of crypto asset securities and the manipulation of the market to pump the price of Tron as well as other related tokens.
More Details On The Allegations
Claiming the violation of Section 5 of the Securities Act, the SEC stated that Justin Sun, the Tron Foundation, the BitTorrent Foundation, and BitTorrent (also known as Rainberry), would be sued on charges of fraud and initiation of a broad “wash trading” scheme that manipulated the trading volume of TRX.
SEC chairman Gary Gensler noted:
As alleged, Sun and his companies not only targeted U.S. investors in their unregistered offers and sales, generating millions in illegal proceeds at the expense of investors, but they also coordinated wash trading on an unregistered trading platform to create the misleading appearance of active trading in TRX.
In addition, the SEC noted Sun sold a large amount of his TRX holdings on a secondary market, which resulted in $31 million generated from illegal proceeds, unregistered offers, and sales of the token (TRX).
According to the lawsuit, Sun’s scheme involved Tron Foundation employees participating in over 600,000 illicit trades via accounts controlled by Tron and Bittorent foundation. Gary Gensler added that Sun used the participation of public figures to initiate his plot.
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.
Alongside the charges against Sun, the SEC sued several celebrities involved in promoting TRX. Public figures include Boxer and Influencer, Jake Paul, Actress and Singer Lindsay Lohan, and Influencer Michele Mason, as well as rappers and singers Soulja Boy, Lil Yachty, Ne-Yo, and Akon.
Tron (TRX) And Huobi (HT) Plummets Neary 10%
Though the SEC allegation against Sun hasn’t been confirmed to be accurate, the news has resulted in a crash in Tron, HT, and several other Justin Sun-related tokens such as Bittorent (BTT), Just (JST), and Sun token (SUN).
Over the past 24 hours, Tron has seen a sharp decline, falling from a high of $0.067 before the SEC announcement to a low of $0.062 at the time of writing, down by 7.2%. Though the asset still ranks firmly as #16 among the largest crypto by market cap, nearly $500 million have been removed from its market cap in the last 24 hours.
In contrast, Huobi (HT) has also fallen drastically in the last 24 hours, recording a 9.3% loss in value at the time of writing, with a trading price of $3.67 after trading at a high of $4.04 as of March 22. The token ranks #81 among the largest crypto by market cap with a 24-hour trading volume of $20 million.
Meanwhile, Justin Sun was quick to reply to the SEC allegations. The Tron founder said,
The SEC’s civil complaint earlier today is just the latest example of actions it has taken against well-known players in the blockchain and crypto space. We believe the complaint lacks merit, and in the meantime will continue building the most decentralized financial system.