Tron founder Justin Sun has been issued a summons by the U.S. District Court for the Southern District of New York in connection to a recent lawsuit from the Securities and Exchange Commission (SEC).
The billionaire will be subject to “default judgment” if he fails to respond to the summons within 21 days, implying that he will face penalties.
- In a Wednesday filing, the court ordered Sun to contact SEC attorney Adam B. Gottlieb with a response to the agency’s complaint.
- “If you fail to respond, judgment by default will be entered against you for the relief demanded in the complaint,” it read.
- On March 22, the SEC sued Sun for violating securities laws by issuing unregistered securities in the forms of BTT and TRX.
- The commission also accused the founder of wash trading to manipulate the price of TRX, in collaboration the Tron Foundation, the BitTorrent Foundation, and BitTorrent, all of which he owns.
- Numerous celebrities including Lindsay Lohan, Jake Paul, Michele Mason, Soulja Boy, Lil Yachty, Ne-Yo, and Akon were also charged for promoting such tokens without disclosing that they had paid to do so. Kim Kardashian faced similar charges from the SEC last year for promoting Ethereum Max.
- The SEC and other agencies have been cracking down on crypto-creators this year for securities violations as regulators and industry leaders continue arguing about what constitutes a “security.”
- SEC chairman Gary Gensler has repeatedly deferred to the Howey Test, which classifies securities as assets issued to raise money that come with an expectation of profit derived from the efforts of others. In a lawsuit against KuCoin in March, New York Attorney General Letitia James argued that even Ethereum is a security.