SEC Drops Charges in Tron Case
The U.S. Securities and Exchange Commission has dismissed its case against Justin Sun and several companies tied to him after reaching a settlement agreement.
According to a final judgment filed in the U.S. District Court for the Southern District of New York, the agency dropped its charges against Sun, the Tron Foundation, and the BitTorrent Foundation.
However, a related entity - Rainberry, formerly BitTorrent Inc. - agreed to pay a $10 million civil penalty as part of the settlement.
The court must still formally approve the judgment.
Background of the 2023 Lawsuit
The case originally began in 2023 when the SEC accused Sun and his companies of conducting unregistered securities offerings involving the TRON (TRX) and BitTorrent (BTT) tokens.
Regulators also alleged that Sun manipulated the price of TRX through wash trading and orchestrated promotional campaigns involving celebrities who allegedly failed to disclose they were paid for endorsements.
At the time, the SEC claimed the promotional campaign violated U.S. securities laws governing marketing disclosures.
Celebrity Promotion Allegations
Eight celebrities were initially named in the SEC complaint for promoting TRX and BTT tokens without revealing compensation.
Among those accused were Lindsay Lohan and Jake Paul.
Six of the celebrities ultimately settled with regulators, agreeing to pay roughly $400,000 in disgorgement, interest, and penalties without admitting wrongdoing.
Two others, including musicians Cortez “Soulja Boy” Way and Austin Mahone, were not part of those settlements at the time.
Settlement Terms and Conditions
Under the new settlement terms, Rainberry will pay the $10 million penalty and commit not to engage in deceptive securities-related market practices in the future.
The defendants agreed to the settlement without admitting or denying the SEC’s allegations, a common arrangement in regulatory cases.
The agreement also resolves jurisdictional disputes raised during the litigation regarding whether the SEC had authority over certain aspects of Sun’s activities.
Political and Regulatory Context
The settlement comes amid broader shifts in U.S. crypto enforcement policy.
Since Donald Trump returned to office, the SEC has dropped or paused several cases involving prominent crypto companies, including actions against Binance, Coinbase, and Uniswap.
Critics argue the agency has softened its stance toward the industry, while supporters say regulators are recalibrating enforcement while Congress works on broader crypto legislation.
Sun’s Connections to Trump-Linked Projects
Sun has also made major investments in crypto initiatives linked to the Trump family.
Reports indicate he purchased at least $75 million worth of the WLFI token issued by the Trump-backed World Liberty Financial project and another $100 million in the Official Trump (TRUMP) memecoin launched shortly before the presidential inauguration.
Sun was later invited to a gala dinner hosted by Trump and received a commemorative “Trump Golden Torbillon.”
At times, the World Liberty Financial project has also reportedly held significant TRX token positions.
Debate Over SEC Enforcement Strategy
The resolution of the Sun case has intensified political debate over the SEC’s role in crypto regulation.
Earlier this year, several Democratic lawmakers criticized the regulator for stepping back from enforcement actions against major industry players.
According to congressional statements, crypto companies collectively donated more than $85 million to Trump’s reelection campaign, raising questions among critics about potential regulatory influence.
Despite the controversy, the settlement effectively closes one of the most prominent enforcement cases involving a major crypto founder in recent years.
