- Tron founder Justin Sun issued summons by U.S. District Court in relation to SEC lawsui.
- Binance.US to delist TRX, Justin Sun’s crypto platform’s native token.
Tron’s creator, Justin Sun, has been served with a summons by the U.S. District Court for the Southern District of New York, relating to a recent lawsuit filed by the Securities and Exchange Commission (SEC). Sun has 21 days to respond to the SEC’s allegations of securities law violations, or he will be subject to “default judgment,” which could result in penalties.
Court Order and SEC Allegations
In a Wednesday filing, the court instructed Sun to provide a response to SEC attorney Adam B. Gottlieb regarding the agency’s complaint. Failure to respond could lead to a default judgment against Sun for the relief sought in the complaint. On March 22, the SEC accused Sun of violating securities laws by issuing unregistered securities in the form of BTT and TRX.
The commission also alleged that Sun engaged in wash trading to manipulate TRX prices, in collaboration with the Tron Foundation, the BitTorrent Foundation, and BitTorrent, all of which he owns.
Celebrity Involvement and Ongoing Debate
Several celebrities, including Lindsay Lohan, Jake Paul, Michele Mason, Soulja Boy, Lil Yachty, Ne-Yo, and Akon, were also charged for promoting these tokens without disclosing they were 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 to debate what constitutes a “security.” SEC Chairman Gary Gensler frequently refers to the Howey Test in determining what is classified as a security.
Binance.US Delists TRX and Impact on Tron
Binance’s US branch will soon delist TRX, the native token of Justin Sun’s cryptocurrency platform Tron. Additionally, Spell, with a smaller market cap of $81 million, will be delisted on April 18. Binance cited a periodic review and various factors influencing its decision, such as changes in a token’s risk profile, trading volume, liquidity, regulatory standing in the US, and evidence of fraudulent conduct. The exact reasons for delisting both tokens were not specified.
Deposits for both Spell and TRX will close on April 17 at 10 pm ET, but withdrawals will remain open. TRX experienced a 5% drop in value following the announcement, trading around $0.06, but recovered about half of the loss by 7:15 am ET on Wednesday, according to Blockworks Research. Spell was down around 4%.
Tron founder Sun seemed unfazed by the move, telling Reuters that the impact of Binance.US’s delisting would be “relatively small” and noting that TRX trading volume on Binance.US is less than $1 million a day, compared to the token’s total trading volume of $400 million.