Justin Sun, investor in Trump-backed crypto business, gets break in fraud case
The Securities and Exchange Commission sued Sun and his crypto companies — Tron Foundation, BitTorrent Foundation and Rainberry — in March 2023, Reuters reported. The agency accused Sun of generating $31 million in digital assets by having his employees conduct hundreds of thousands of Tronix trades across two accounts he owned. This scheme could mislead investors and customers into thinking Sun's business is legitimate, the SEC charged. Sun was also accused of paying celebrities to promote his crypto assets and instructing them to not disclose that the endorsement was a paid sponsorship.
Last week, lawyers for the SEC and Sun asked a federal judge to pause the civil fraud case "to allow the parties to explore a potential resolution,' according to media outlets that cited court documents. The judge granted the request.
The development represented a complete shift for the SEC and fueled speculation that Trump is too cozy with the crypto industry. The SEC, Sun and the White House had no comment, CNN reported.
Sun purchased $75 million worth of tokens from World Liberty Financial, a crypto platform launched by Trump, his sons and Steve Witkoff, Trump's Middle East envoy, per CNN. The Trumps are not employees or owners of the business but can receive a cut of revenues from its cryptocurrencies. Sun is one of World Liberty Financial's advisers.
When Trump launched a meme coin days ahead of his inauguration, Anthony Scaramucci, a former Trump White House communications director, posted on X how the anonymous nature of crypto essentially means anyone could easily deposit money into Trump's bank account.
'Every favor — geopolitical, corporate or personal — is now on sale, right out in the open,' Scaramucci wrote.
Others think the pausing of Sun's case signals a looser outlook on crypto for federal regulators in the years ahead, thanks to Trump's embrace of the digital asset.
'This is, I guess, going to be the new approach — hands off crypto, not enforcing fraud … and I don't think it's going to end well,' Richard Painter, a law professor at the University of Minnesota, told CNN. 'The SEC is going to back off — because that's what the Trump administration wants — on whatever enforcement they are able to do. I think it's a very worrisome situation.'
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