Justin Sun, the founder of Tron, has received a summons from the U.S. District Court for the Southern District of New York related to a recent lawsuit filed by the Securities and Exchange Commission (SEC).
If Sun fails to respond to the summons within 21 days, he will be subject to “default judgment” and may face penalties.
- In a filing on Wednesday, the court instructed 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,” the filing stated.
- On March 22, the SEC filed a lawsuit against Sun for allegedly violating securities laws by issuing unregistered securities in the forms of BTT and TRX.
- The commission also accused Sun of wash trading to manipulate the price of TRX, in collaboration with 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 charged for promoting these tokens without disclosing that they were paid to do so. Kim Kardashian faced similar charges from the SEC last year for promoting Ethereum Max.
- Regulators and industry leaders continue to debate what constitutes a “security,” as the SEC and other agencies increase their scrutiny of crypto-creators for securities violations. SEC chairman Gary Gensler has repeatedly referred to the Howey Test, which defines 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.