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SEC charges crypto entrepreneur Justin Sun and his companies for fraud

444 points by VagueMag 4y ago

WiSaGaN 4y ago
For reference, back in 2017, the Chinese authority outlawed his ICO activities, and required him to hand back all the proceeds to the investors (or victims depending on your view) before letting him out of the country.
WhereIsTheTruth 4y ago
[flagged]
- capableweb 4y ago
  I'm sure you also think NYSE should have been punished for listing Enron at one point?
  - monero-xmr 4y ago
    And SVB
  - chris_va 4y ago
    If you buy a stock on NYSE, you don't actually hand money over to NYSE itself...
    - capableweb 4y ago
      As far as I know, there are three ways stock exchanges usually make money. Listing fees, trading fees and market data feeds. Trading fees literally means that when you trade stocks, small part of that goes to the stock exchange, quite literally the same as handing money over to NYSE itself. At least (AFAIK) most cryptocurrency exchanges don't have listing fees, where cryptocurrency projects would pay the exchange for listing their cryptocurrency.
uticus 4y ago
> The SEC also charged Sun and his companies with fraudulently manipulating the secondary market for TRX through extensive wash trading... 1. How is this detected by the SEC? 2. Why isn't this something that is easily detectable by the average investor?
- deleted 4y ago
  [deleted]
- nickff 4y ago
  It looks like at least some of Justin Sun's suspicious behavior had been 'detected' by non-regulators some time ago: https://cryptoslate.com/justin-sun-backs-ftx-debt-token-fud-in-possible-securities-law-breach/ https://cryptoslate.com/justin-sun-backs-ftx-debt-token-fud-... That was from a quick Google search, so I'm sure there are many more accusations. It seems like the SEC has never been the 'first' to detect a fraud, and they've frequently ignored ones that have been pointed out to them (such as Madoff).
- toomuchtodo 4y ago
  Vendors + training https://www.coindesk.com/business/2020/02/10/inside-chainalysis-multimillion-dollar-relationship-with-the-us-government/ https://www.coindesk.com/business/2020/02/10/inside-chainaly... https://www.coindesk.com/markets/2019/07/12/irs-confirms-it-trained-staff-to-find-crypto-wallets/ https://www.coindesk.com/markets/2019/07/12/irs-confirms-it-...
- MomoXenosaga 4y ago
  The average "investor" is a gambling addict or financially desperate Reddit cryptocurrency poster. They don't care beyond NUMBER GO UP and I am certain Justin Sun knows that too.
  - xeromal 4y ago
    It feels similar to those late note collectible coin programs that people buy into. "Get your pristine 1950 silver eagle collection for 5000$ before they're all sold out!"
brutusurp 4y ago
Been waiting for this since Tron was released.
code_biologist 4y ago
There's currently US congressional hearings going on about cryptocurrency regulation. This is admittedly from a very pro-crypto source, but great video overview of the most recent testimony: https://www.youtube.com/watch?v=xohK2W07F0Q https://www.youtube.com/watch?v=xohK2W07F0Q I'm very very glad for any consumer protection, but it does come across like the SEC is setting up a narrative of crypto risk as a reason to repress transactions between it and the traditional banking system.
- smackeyacky 4y ago
  Is this one of those "self aware wolf" situations?
- cal5k 4y ago
  The revelation that FDIC (allegedly) forced Signature's acquirer to divest of cash holdings from crypto companies is another bit of evidence that anti-crypto regulatory activism is a very real thing. Which is quite silly because crypto is still small peanuts compared to the bank failures that happened recently.
  - ForHackernews 4y ago
    You mean the bank failures where good regulations and government intervention mean that depositors aren't out a cent? _Those_ bank failures? I'm not sure this is quite the example you think it is...
  - paxys 4y ago
    I don't see the "anti-crypto regulatory activism" you are calling out. If FDIC is bailing out a bank and its depositors, that too well beyond its insurance limit, it absolutely has to ensure that the bank is not going to continue to gamble with customer funds. Heck "no customer deposits going into crypto" should be a hard requirement to be eligible for FDIC insurance.
    - ursuscamp 4y ago
      Is the FDIC going to tell Silicon Valley bank to stop taking deposits from tech companies, or make them stop purchasing long-term treasuries? My guess is no…
kerblang 4y ago
Whoa celebrity charges too. You just knew Jake Paul had his hand in so much bad crypto he was gonna get nailed eventually. I suppose Coffeezilla will struggle to suppress the glee. Edit: > With the exception of Cortez Way and Mahone, the celebrities charged today agreed to pay a total of more than $400,000 in disgorgement, interest, and penalties to settle the charges, without admitting or denying the SEC’s findings Meh ok pfft
- yunohn 4y ago
  > without admitting or denying the SEC’s findings I’ve never understood why this loophole of “non admission of guilt” exists in our legal systems.
  - adoxyz 4y ago
    To protect the wealthy. Pay a small fine that represents a tiny portion of your ill-gotten gains and move on without any repercussions.
    - Alupis 4y ago
      > To protect the wealthy. Hardly. The SEC cannot say you are guilty without proving it within the bounds of the legal system. This "non admission of guilt" is a way to sidestep a lengthy, costly legal process and get a result for the impacted parties sooner rather than much much later.
      - joecool1029 4y ago
        Saves time and money for all involved parties. It's literally like a parking ticket in this sector. Years back I had clients who were penny stock promoters and every one of their sites had to have a disclaimer which if you clicked and read listed how much and from who they were paid for each promotion. That's all it would have taken for them to avoid this fine even as grimy as the industry is.
      - dragonwriter 4y ago
ljhsiung 4y ago
>> The SEC simultaneously charged the following eight celebrities for illegally touting TRX and/or BTT without disclosing that they were compensated for doing so and the amount of their compensation. • Lindsay Lohan • Jake Paul • DeAndre Cortez Way (Soulja Boy) • Austin Mahone • Michele Mason (Kendra Lust) • Miles Parks McCollum (Lil Yachty) • Shaffer Smith (Ne-Yo) • Aliaune Thiam (Akon) I had to doubletake. Never did I ever think I'd see this permutation of celebrities in an SEC report.
- tmpz22 4y ago
  If you're an E-list celebrity on TMZ you're a B-list on Cameo I guess.
- hn_throwaway_99 4y ago
  And a perfect snapshot for what a steaming pile of BS all this crypto-hucksterism was in the first place. I admit, I don't understand humans. I'm just trying to comprehend how anyone would think it a good idea to buy a token because any one of these celebrities hawked it.
  - jallen_dot_dev 4y ago
    It's simple: they thought they could later sell it for more. Celebrities hawking it is "bullish" because other people (suckers) will see the hype and want to buy their bags. Unfortunately for them, they were the suckers.
    - Gigachad 4y ago
      Everyone knows it’s a scam, they just don’t know when the rug gets pulled. So they buy thinking they won’t be the last in the scam chain.
      - ShamelessC 4y ago
        Then they barely understand what a scam actually is.
VagueMag 4y ago
The SEC's major focus on wash trading in this complaint might have some interesting implications for the broader crypto ecosystem.
thowland 4y ago
It's not clear that the SEC has jurisdiction here; there doesn't seem to be a bright line test deciding if crypto is a security or a commodity. This behavior might be better regulated by the FTC than the SEC.
- arcticbull 4y ago
  Sure there is, it's the Howey Test and the SEC has a whole publication on how to apply it to crypto. Fun fact, it's probably safe to assume that any ICO is a securities offering. [1] This is a case of "there is a bright line but the community doesn't like where they painted it, so they pretend there isn’t one." [1] https://www.sec.gov/corpfin/framework-investment-contract-analysis-digital-assets https://www.sec.gov/corpfin/framework-investment-contract-an...
  - junofan 4y ago
    The CFTC disagrees [1]. Hardly a bright line. [1]: https://decrypt.co/123032/cftc-chair-says-ethereum-is-a-commodity-despite-genslers-bitcoin-only-position?amp=1 https://decrypt.co/123032/cftc-chair-says-ethereum-is-a-comm...
    - arcticbull 4y ago
      He would say that because he wants jurisdiction. His argument appears to be "let's just sunk-cost our way through instead of actually doing the correct thing." > “It’s been listed on CFTC exchanges for quite some time, and for that reason,” said Behnam, who argued that it creates a “direct jurisdictional hook” for the agency to police both ETH’s derivatives market and underlying market. Either way they're literally only talking about ETH, which is again, clearly a security as following their framework, nothing else has a long history of being listed on a CFTC exchange. But I digress.
      - junofan 4y ago
        I feel like you’re painting good-faith disagreement as “community pretending there isn’t a bright red line” or “he would say that because he wants jurisdiction,” so I don’t think there’s more to talk about.
mavu 4y ago
Mhhmm, is it popcorn time yet?
javier123454321 4y ago
Honestly, most (if not all with the exception of bitcoin) of the 'crypto' projects function effectively like a startup with the coin as the stock. There are some differences from securities, but mostly similarities. You are buying something with the hope that the development team will deliver on promised value in the future. This will at least clarify the regulatory landscape going forward.
- mjr00 4y ago
  Except with a startup or a company's stock, you ostensibly care that what the company is building or doing could potentially have value in the future. With the crypto projects over the past few years, it's purely been about whether or not you hop in early enough in the pyramid to resell your tokens to a greater fool before it collapses.
  - Clubber 4y ago
    It's like a company "Stocks, Inc" that just issues their own stocks as a product. When you put it that way, it definitely sounds suspect.
    - mjburgess 4y ago
      Yes: there is no product.
    - wmf 4y ago
      Do not look into SPACs; you may not like what you find.
      - vkou 4y ago
        The product of a SPAC is 'selling' another company the rights to be traded on a stock exchange. That's, in theory, a non-trivial product, given how much IPO underwriters tend to charge.
      - latchkey 4y ago
stusmall 4y ago
Is this the first example of someone getting charged for wash trading in the cryptoworld? It was my understanding it was common, but unsavory, for new tokens to do this to artificially pump their volume up.
- davidgerard 4y ago
  nope! The FTX crew.
deleted 4y ago
[deleted]
deleted 4y ago
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smcl 4y ago
Was this not the guy who was trying to buy Credit Suisse?
- rippercushions 4y ago
  His Excellency Justin Sun, Permanent Representative of Grenada to the World Trade Organization (WTO) in Geneva, has a long track record of tweeting outlandish claims and occasionally even doing outlandish things. If anything I'm mostly amazed it took the SEC this long.
pwb25 4y ago
It's so funny how SEC think they can just walk around and charge anyone in the world with some made up law imagine chinese SEC or egyptian SEC doing that to americans
- iLoveOncall 4y ago
  First, all laws are made up. Second, the Chinese SEC or the Egyptian SEC can very well charge Americans with whatever they want. It's just that those Americans probably don't care enough about China or especially Egypt to abide by the punishment they receive and would rather not do business with those countries and never set foot in it. I, iLoveOncall, am hereby charging you with the crime of idiotic comment, for which you will receive the death penalty by ball slapping. Surrender yourself to the Republic of iLoveOncallandia to receive your punishment. It's literally the same thing.
  - pwb25 4y ago
    exactly they can on paper, but no one will care or be expected to care. that's what the ridicolous difference is
- xtracto 4y ago
  They can do it... it's as if Iran's government prosecutor body charged someone living in the US of "not wearing a burka" or whatever crazy law. They can definitely do it, and they can try to move strings to get to them. Their success will depend on their power to enforce it and coerce other countries to surrender the person(s). It's like the news we have seen in the last days, of different countries committing to arrest Putin for whatever crimes. But yeah, I agree with your overall sentiment: This is a USA legal system/government arm (SEC) playing "world police". They should just tag Tron and related cryptos as "sanctioned/illegal schemes" and prosecute anyone in their country who uses/operates them. Anything else is just meddle with other countries' citizens.
  - pwb25 4y ago
    Yes they can, but a countrys law is for that country. Not for other countries. Just like you can not be prosecuted for driving as a woman in US where it is legal
1vuio0pswjnm7 4y ago
Will Signal be next. https://www.theverge.com/22872133/signal-cryptocurrency-payments-encryption-invite-regulator-scrutiny https://www.theverge.com/22872133/signal-cryptocurrency-paym...
- WhereIsTheTruth 4y ago
  Something is weird indeed, why some companies are allowed, but not some individuals? Cryptocurrencies are ponzi schemes, and for some reasons institutions are protecting some of them, why is that? Is it because they depend on it? https://www.mckinsey.com/featured-insights/mckinsey-explainers/what-is-central-bank-digital-currency-cbdc https://www.mckinsey.com/featured-insights/mckinsey-explaine... Why would they depend on fraud? My last comment got "flagged" because i said the exchanges are selling ponzi schemes, hence my questions Are they trying to create a giant world wide financial crash? because that's what's going to happen if none of that is regulated/banned (see FTX)
  - bboygravity 4y ago
    > My last comment got "flagged" because i said the exchanges are selling ponzi schemes, hence my questions Earlier you write "cryptocurrencies are a ponzi scheme". That doesn't make any sense. Also if centralized crypto exchanges are ponzi's (I agree, many/all are) so are many "normal" stock brokers. Many of them take your money and give you nothing (but change some values in the GUI you see to "reflect that you bought stock"). Your order probably doesn't hit any lit exchange (doesn't ever influence stock price), In the best case you hold an IOU in street name that is maybe, maybe not taken into account by clearing houses and in the worse case your order info is sold to hedge funds who front-run your trade (aka stealing), your IOU is subsequently lent out to shorters and/or you are prevented from buying/selling at crucial moments (on purpose). See recent Robin Hood debacle with clients unable to sell winning short positions in SVB (because their "short positions" don't exist in the real world).
- deleted 4y ago
  [deleted]
KomoD 4y ago
About damn time!
jongjong 4y ago
I can understand the wash trading aspect being a crime; it deceives investors which is akin to lying about the asset but I can't bring myself to accept 'selling unregistered securities' as a crime... Especially given that registering a security can cost $60K+ - That's simply not a fee which most small projects can afford; it's effectively locking entrepreneurs out of opportunities in a way which is against fundamental free market principles. Surely it's unconstitutional. If the seller is honest about the asset which the investor is buying, I don't see how the government should have anything to do with that. If the investor is not capable of understanding an accurate and concise description of the asset, then that's the investor's fault; the government should not protect people from their own negligence or ignorance - The system relies on keeping capital in the hands of intelligent, knowledgeable people; this is the foundation of a functioning system.
- knorker 4y ago
  > If the seller is honest about the asset which the investor is buying That "if" is doing some olympic heavy lifting since we're talking about cryptocurrencies.
- travisjungroth 4y ago
  > Surely it's unconstitutional. It’s not. Free market principles are not protected by the constitution. The closest is the Commerce Clause and its mention of contracts. But that’s the idea states can’t just wipe out existing contracts (debts). The government can regulate them. > the government should not protect people from their own negligence or ignorance This is an extreme position to take. All governments do this.
  - anonkogudhyfhhf 4y ago
    All these people deceived, lied and committed fraud. All governments, even in libertarian utopias, prosecute such criminality and predatory behaviour
- rkagerer 4y ago
  ...the government should not protect people from their own negligence or ignorance Oh sweet summer child how I wish this were the Zeitgeist of our time.
varenc 4y ago
Can anyone explain the connection between Justin Sun, his companies, and the BitTorrent protocol? Wikipedia is a little light on details. It sounds like BitTorrent Inc was renamed to Rainberry and was then sold to Justin Sun/TRON, and then at some point that company released a BitTorrent Token (BTT). Does BTT have any technical relationship with the actual BitTorrent protocol?
- capableweb 4y ago
  He bought BitTorrent Inc at one point. The token has no connection to the protocol. The whitepaper he/they put out for BTT was a plagiarised paper from some other crypto or p2p protocol, only switching out the name.
bigcat12345678 4y ago
The fraudster vs. SEC; let's see which party wins the duel. Chinese Gov exiled Mr. Sun, and SEC now declared hostility to him as well; guess fraudster indeed are hated universally. Similar example is Wengui Guo.
EVa5I7bHFq9mnYK 4y ago
Wait, so next time I see a Macbook in a movie I should go file a complaint?
- simple-thoughts 4y ago
  Yes, they are promoting an unregistered security according to the Howey test. - MacBooks are purchased with the intent to generate profits; - Require an investment of money; and - Have an expectation that Apple will perform work on behalf of the purchaser including updates, maintainable, and promotion. Clearly, MacBooks are an unregistered security and promoters are committing fraud. We must take action to protect the innocent investors! /s
Mizoguchi 4y ago
Half million in penalties is pocket money for Jake Paul. But Kendra Lust, come on. At $5K per scene that's a lot of work wasted. Give this fine woman a break.
- loeg 4y ago
  The $400k is a total across all of the celebrities. Jake Paul paid the most, at $100k.
friend_and_foe 4y ago
For those of you who don't know, he owns the BitTorrent trademark.
user3939382 4y ago
I hear this stuff and then think back to the charts I’ve seen of executives unloading huge positions right before bad news and my opinion, with the information I’ve gotten through the grapevine, is that the SEC is full of shit. Like the IRS they love to target celebrities because it raises the profile of the careerists working on the cases. Selective enforcement isn’t justice. Come get me when they file a case against Jeff Bezos, the chairman of Goldman Sachs, Chuck Schumer, someone in that club.
- deleted 4y ago
  [deleted]
- cycrutchfield 4y ago
  Got any proof there bud?
  - birracerveza 4y ago
    https://www.reuters.com/business/finance/fed-officials-sell-stocks-avoid-apparent-conflict-interest-2021-09-09/ https://www.reuters.com/business/finance/fed-officials-sell-... Now look at the SPY.
  - user3939382 4y ago
    [flagged]
throwaway128128 4y ago
Good. Justin Sun is a serial bullshitter, one of the most egregious self-promoting token pumpers out there. Check out this article if you want a profile on this narcissist: https://www.theverge.com/21459906/bittorrent-tron-acquisition-justin-sun-us-china https://www.theverge.com/21459906/bittorrent-tron-acquisitio...
- spaceman_2020 4y ago
  The biggest surprise in the crypto world wasn't the collapse of FTX or 3AC or Terra... ...it was the realization that Justin Sun is still standing. His Excellency must be coated in teflon.
  - agentgumshoe 4y ago
    Or connected to the right people, as with his Tether bros
throwaway4good 4y ago
Isn't Justin Sun a diplomat from Grenada now? He would have diplomatic immunity even on travels in the US or in countries that were willing to extradite him to the US.
- kenneth 4y ago
  He's lost his ambassadorship (at the request of the US govt) recently. It was quite obvious that pressuring Grenada to drop their protection was the precursor to filing charges.
- MomoXenosaga 4y ago
  That didn't save Noriega. If America wants him a fancy passport won't save him.
amitrip 4y ago
[flagged]
FreeTrade 4y ago
This feels a bit like the Alex Jones moment. Start with the most outrageous examples... But it won't be 12 months before they're charging perfectly decent people.
nailer 4y ago
Can someone explain: > unregistered offer and sale of crypto asset securities Tronix (TRX) and BitTorrent (BTT) Was there a BitTorrent token? Was it associated with Bram Cohen or did it just use the name? Update: apparently Cohen sold bittorrent to this guy.
- latchkey 4y ago
  Bram moved onto Chia.
anonkogudhyfhhf 4y ago
"Crypto entrepreneur" haha most of these crypto scams and copy and paste same playbook scams

444 points by VagueMag 4y ago

For reference, back in 2017, the Chinese authority outlawed his ICO activities, and required him to hand back all the proceeds to the investors (or victims depending on your view) before letting him out of the country.

WhereIsTheTruth 4y ago

[flagged]

capableweb 4y ago
I'm sure you also think NYSE should have been punished for listing Enron at one point?
- monero-xmr 4y ago
  And SVB
- chris_va 4y ago
  If you buy a stock on NYSE, you don't actually hand money over to NYSE itself...
  - capableweb 4y ago
    As far as I know, there are three ways stock exchanges usually make money. Listing fees, trading fees and market data feeds. Trading fees literally means that when you trade stocks, small part of that goes to the stock exchange, quite literally the same as handing money over to NYSE itself. At least (AFAIK) most cryptocurrency exchanges don't have listing fees, where cryptocurrency projects would pay the exchange for listing their cryptocurrency.

uticus 4y ago

> The SEC also charged Sun and his companies with fraudulently manipulating the secondary market for TRX through extensive wash trading... 1. How is this detected by the SEC? 2. Why isn't this something that is easily detectable by the average investor?

deleted 4y ago
[deleted]
nickff 4y ago
It looks like at least some of Justin Sun's suspicious behavior had been 'detected' by non-regulators some time ago: https://cryptoslate.com/justin-sun-backs-ftx-debt-token-fud-in-possible-securities-law-breach/ https://cryptoslate.com/justin-sun-backs-ftx-debt-token-fud-... That was from a quick Google search, so I'm sure there are many more accusations. It seems like the SEC has never been the 'first' to detect a fraud, and they've frequently ignored ones that have been pointed out to them (such as Madoff).
toomuchtodo 4y ago
Vendors + training https://www.coindesk.com/business/2020/02/10/inside-chainalysis-multimillion-dollar-relationship-with-the-us-government/ https://www.coindesk.com/business/2020/02/10/inside-chainaly... https://www.coindesk.com/markets/2019/07/12/irs-confirms-it-trained-staff-to-find-crypto-wallets/ https://www.coindesk.com/markets/2019/07/12/irs-confirms-it-...
MomoXenosaga 4y ago
The average "investor" is a gambling addict or financially desperate Reddit cryptocurrency poster. They don't care beyond NUMBER GO UP and I am certain Justin Sun knows that too.
- xeromal 4y ago
  It feels similar to those late note collectible coin programs that people buy into. "Get your pristine 1950 silver eagle collection for 5000$ before they're all sold out!"

brutusurp 4y ago

Been waiting for this since Tron was released.

code_biologist 4y ago

There's currently US congressional hearings going on about cryptocurrency regulation. This is admittedly from a very pro-crypto source, but great video overview of the most recent testimony: https://www.youtube.com/watch?v=xohK2W07F0Q https://www.youtube.com/watch?v=xohK2W07F0Q I'm very very glad for any consumer protection, but it does come across like the SEC is setting up a narrative of crypto risk as a reason to repress transactions between it and the traditional banking system.

smackeyacky 4y ago
Is this one of those "self aware wolf" situations?
cal5k 4y ago
The revelation that FDIC (allegedly) forced Signature's acquirer to divest of cash holdings from crypto companies is another bit of evidence that anti-crypto regulatory activism is a very real thing. Which is quite silly because crypto is still small peanuts compared to the bank failures that happened recently.
- ForHackernews 4y ago
  You mean the bank failures where good regulations and government intervention mean that depositors aren't out a cent? _Those_ bank failures? I'm not sure this is quite the example you think it is...
- paxys 4y ago
  I don't see the "anti-crypto regulatory activism" you are calling out. If FDIC is bailing out a bank and its depositors, that too well beyond its insurance limit, it absolutely has to ensure that the bank is not going to continue to gamble with customer funds. Heck "no customer deposits going into crypto" should be a hard requirement to be eligible for FDIC insurance.
  - ursuscamp 4y ago
    Is the FDIC going to tell Silicon Valley bank to stop taking deposits from tech companies, or make them stop purchasing long-term treasuries? My guess is no…

kerblang 4y ago

Whoa celebrity charges too. You just knew Jake Paul had his hand in so much bad crypto he was gonna get nailed eventually. I suppose Coffeezilla will struggle to suppress the glee. Edit: > With the exception of Cortez Way and Mahone, the celebrities charged today agreed to pay a total of more than $400,000 in disgorgement, interest, and penalties to settle the charges, without admitting or denying the SEC’s findings Meh ok pfft

yunohn 4y ago
> without admitting or denying the SEC’s findings I’ve never understood why this loophole of “non admission of guilt” exists in our legal systems.
- adoxyz 4y ago
  To protect the wealthy. Pay a small fine that represents a tiny portion of your ill-gotten gains and move on without any repercussions.
  - Alupis 4y ago
    > To protect the wealthy. Hardly. The SEC cannot say you are guilty without proving it within the bounds of the legal system. This "non admission of guilt" is a way to sidestep a lengthy, costly legal process and get a result for the impacted parties sooner rather than much much later.
    - joecool1029 4y ago
      Saves time and money for all involved parties. It's literally like a parking ticket in this sector. Years back I had clients who were penny stock promoters and every one of their sites had to have a disclaimer which if you clicked and read listed how much and from who they were paid for each promotion. That's all it would have taken for them to avoid this fine even as grimy as the industry is.
    - dragonwriter 4y ago

ljhsiung 4y ago

>> The SEC simultaneously charged the following eight celebrities for illegally touting TRX and/or BTT without disclosing that they were compensated for doing so and the amount of their compensation. • Lindsay Lohan • Jake Paul • DeAndre Cortez Way (Soulja Boy) • Austin Mahone • Michele Mason (Kendra Lust) • Miles Parks McCollum (Lil Yachty) • Shaffer Smith (Ne-Yo) • Aliaune Thiam (Akon) I had to doubletake. Never did I ever think I'd see this permutation of celebrities in an SEC report.

tmpz22 4y ago
If you're an E-list celebrity on TMZ you're a B-list on Cameo I guess.
hn_throwaway_99 4y ago
And a perfect snapshot for what a steaming pile of BS all this crypto-hucksterism was in the first place. I admit, I don't understand humans. I'm just trying to comprehend how anyone would think it a good idea to buy a token because any one of these celebrities hawked it.
- jallen_dot_dev 4y ago
  It's simple: they thought they could later sell it for more. Celebrities hawking it is "bullish" because other people (suckers) will see the hype and want to buy their bags. Unfortunately for them, they were the suckers.
  - Gigachad 4y ago
    Everyone knows it’s a scam, they just don’t know when the rug gets pulled. So they buy thinking they won’t be the last in the scam chain.
    - ShamelessC 4y ago
      Then they barely understand what a scam actually is.

VagueMag 4y ago

The SEC's major focus on wash trading in this complaint might have some interesting implications for the broader crypto ecosystem.

thowland 4y ago

It's not clear that the SEC has jurisdiction here; there doesn't seem to be a bright line test deciding if crypto is a security or a commodity. This behavior might be better regulated by the FTC than the SEC.

arcticbull 4y ago
Sure there is, it's the Howey Test and the SEC has a whole publication on how to apply it to crypto. Fun fact, it's probably safe to assume that any ICO is a securities offering. [1] This is a case of "there is a bright line but the community doesn't like where they painted it, so they pretend there isn’t one." [1] https://www.sec.gov/corpfin/framework-investment-contract-analysis-digital-assets https://www.sec.gov/corpfin/framework-investment-contract-an...
- junofan 4y ago
  The CFTC disagrees [1]. Hardly a bright line. [1]: https://decrypt.co/123032/cftc-chair-says-ethereum-is-a-commodity-despite-genslers-bitcoin-only-position?amp=1 https://decrypt.co/123032/cftc-chair-says-ethereum-is-a-comm...
  - arcticbull 4y ago
    He would say that because he wants jurisdiction. His argument appears to be "let's just sunk-cost our way through instead of actually doing the correct thing." > “It’s been listed on CFTC exchanges for quite some time, and for that reason,” said Behnam, who argued that it creates a “direct jurisdictional hook” for the agency to police both ETH’s derivatives market and underlying market. Either way they're literally only talking about ETH, which is again, clearly a security as following their framework, nothing else has a long history of being listed on a CFTC exchange. But I digress.
    - junofan 4y ago
      I feel like you’re painting good-faith disagreement as “community pretending there isn’t a bright red line” or “he would say that because he wants jurisdiction,” so I don’t think there’s more to talk about.

mavu 4y ago

Mhhmm, is it popcorn time yet?

javier123454321 4y ago

Honestly, most (if not all with the exception of bitcoin) of the 'crypto' projects function effectively like a startup with the coin as the stock. There are some differences from securities, but mostly similarities. You are buying something with the hope that the development team will deliver on promised value in the future. This will at least clarify the regulatory landscape going forward.

mjr00 4y ago
Except with a startup or a company's stock, you ostensibly care that what the company is building or doing could potentially have value in the future. With the crypto projects over the past few years, it's purely been about whether or not you hop in early enough in the pyramid to resell your tokens to a greater fool before it collapses.
- Clubber 4y ago
  It's like a company "Stocks, Inc" that just issues their own stocks as a product. When you put it that way, it definitely sounds suspect.
  - mjburgess 4y ago
    Yes: there is no product.
  - wmf 4y ago
    Do not look into SPACs; you may not like what you find.
    - vkou 4y ago
      The product of a SPAC is 'selling' another company the rights to be traded on a stock exchange. That's, in theory, a non-trivial product, given how much IPO underwriters tend to charge.
    - latchkey 4y ago

stusmall 4y ago

Is this the first example of someone getting charged for wash trading in the cryptoworld? It was my understanding it was common, but unsavory, for new tokens to do this to artificially pump their volume up.

davidgerard 4y ago
nope! The FTX crew.

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smcl 4y ago

Was this not the guy who was trying to buy Credit Suisse?

rippercushions 4y ago
His Excellency Justin Sun, Permanent Representative of Grenada to the World Trade Organization (WTO) in Geneva, has a long track record of tweeting outlandish claims and occasionally even doing outlandish things. If anything I'm mostly amazed it took the SEC this long.

pwb25 4y ago

It's so funny how SEC think they can just walk around and charge anyone in the world with some made up law imagine chinese SEC or egyptian SEC doing that to americans

iLoveOncall 4y ago
First, all laws are made up. Second, the Chinese SEC or the Egyptian SEC can very well charge Americans with whatever they want. It's just that those Americans probably don't care enough about China or especially Egypt to abide by the punishment they receive and would rather not do business with those countries and never set foot in it. I, iLoveOncall, am hereby charging you with the crime of idiotic comment, for which you will receive the death penalty by ball slapping. Surrender yourself to the Republic of iLoveOncallandia to receive your punishment. It's literally the same thing.
- pwb25 4y ago
  exactly they can on paper, but no one will care or be expected to care. that's what the ridicolous difference is
xtracto 4y ago
They can do it... it's as if Iran's government prosecutor body charged someone living in the US of "not wearing a burka" or whatever crazy law. They can definitely do it, and they can try to move strings to get to them. Their success will depend on their power to enforce it and coerce other countries to surrender the person(s). It's like the news we have seen in the last days, of different countries committing to arrest Putin for whatever crimes. But yeah, I agree with your overall sentiment: This is a USA legal system/government arm (SEC) playing "world police". They should just tag Tron and related cryptos as "sanctioned/illegal schemes" and prosecute anyone in their country who uses/operates them. Anything else is just meddle with other countries' citizens.
- pwb25 4y ago
  Yes they can, but a countrys law is for that country. Not for other countries. Just like you can not be prosecuted for driving as a woman in US where it is legal

1vuio0pswjnm7 4y ago

Will Signal be next. https://www.theverge.com/22872133/signal-cryptocurrency-payments-encryption-invite-regulator-scrutiny https://www.theverge.com/22872133/signal-cryptocurrency-paym...

WhereIsTheTruth 4y ago
Something is weird indeed, why some companies are allowed, but not some individuals? Cryptocurrencies are ponzi schemes, and for some reasons institutions are protecting some of them, why is that? Is it because they depend on it? https://www.mckinsey.com/featured-insights/mckinsey-explainers/what-is-central-bank-digital-currency-cbdc https://www.mckinsey.com/featured-insights/mckinsey-explaine... Why would they depend on fraud? My last comment got "flagged" because i said the exchanges are selling ponzi schemes, hence my questions Are they trying to create a giant world wide financial crash? because that's what's going to happen if none of that is regulated/banned (see FTX)
- bboygravity 4y ago
  > My last comment got "flagged" because i said the exchanges are selling ponzi schemes, hence my questions Earlier you write "cryptocurrencies are a ponzi scheme". That doesn't make any sense. Also if centralized crypto exchanges are ponzi's (I agree, many/all are) so are many "normal" stock brokers. Many of them take your money and give you nothing (but change some values in the GUI you see to "reflect that you bought stock"). Your order probably doesn't hit any lit exchange (doesn't ever influence stock price), In the best case you hold an IOU in street name that is maybe, maybe not taken into account by clearing houses and in the worse case your order info is sold to hedge funds who front-run your trade (aka stealing), your IOU is subsequently lent out to shorters and/or you are prevented from buying/selling at crucial moments (on purpose). See recent Robin Hood debacle with clients unable to sell winning short positions in SVB (because their "short positions" don't exist in the real world).
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KomoD 4y ago

About damn time!

jongjong 4y ago

I can understand the wash trading aspect being a crime; it deceives investors which is akin to lying about the asset but I can't bring myself to accept 'selling unregistered securities' as a crime... Especially given that registering a security can cost $60K+ - That's simply not a fee which most small projects can afford; it's effectively locking entrepreneurs out of opportunities in a way which is against fundamental free market principles. Surely it's unconstitutional. If the seller is honest about the asset which the investor is buying, I don't see how the government should have anything to do with that. If the investor is not capable of understanding an accurate and concise description of the asset, then that's the investor's fault; the government should not protect people from their own negligence or ignorance - The system relies on keeping capital in the hands of intelligent, knowledgeable people; this is the foundation of a functioning system.

knorker 4y ago
> If the seller is honest about the asset which the investor is buying That "if" is doing some olympic heavy lifting since we're talking about cryptocurrencies.
travisjungroth 4y ago
> Surely it's unconstitutional. It’s not. Free market principles are not protected by the constitution. The closest is the Commerce Clause and its mention of contracts. But that’s the idea states can’t just wipe out existing contracts (debts). The government can regulate them. > the government should not protect people from their own negligence or ignorance This is an extreme position to take. All governments do this.
- anonkogudhyfhhf 4y ago
  All these people deceived, lied and committed fraud. All governments, even in libertarian utopias, prosecute such criminality and predatory behaviour
rkagerer 4y ago
...the government should not protect people from their own negligence or ignorance Oh sweet summer child how I wish this were the Zeitgeist of our time.

varenc 4y ago

Can anyone explain the connection between Justin Sun, his companies, and the BitTorrent protocol? Wikipedia is a little light on details. It sounds like BitTorrent Inc was renamed to Rainberry and was then sold to Justin Sun/TRON, and then at some point that company released a BitTorrent Token (BTT). Does BTT have any technical relationship with the actual BitTorrent protocol?

capableweb 4y ago
He bought BitTorrent Inc at one point. The token has no connection to the protocol. The whitepaper he/they put out for BTT was a plagiarised paper from some other crypto or p2p protocol, only switching out the name.

bigcat12345678 4y ago

The fraudster vs. SEC; let's see which party wins the duel. Chinese Gov exiled Mr. Sun, and SEC now declared hostility to him as well; guess fraudster indeed are hated universally. Similar example is Wengui Guo.

EVa5I7bHFq9mnYK 4y ago

Wait, so next time I see a Macbook in a movie I should go file a complaint?

simple-thoughts 4y ago
Yes, they are promoting an unregistered security according to the Howey test. - MacBooks are purchased with the intent to generate profits; - Require an investment of money; and - Have an expectation that Apple will perform work on behalf of the purchaser including updates, maintainable, and promotion. Clearly, MacBooks are an unregistered security and promoters are committing fraud. We must take action to protect the innocent investors! /s

Mizoguchi 4y ago

Half million in penalties is pocket money for Jake Paul. But Kendra Lust, come on. At $5K per scene that's a lot of work wasted. Give this fine woman a break.

loeg 4y ago
The $400k is a total across all of the celebrities. Jake Paul paid the most, at $100k.

friend_and_foe 4y ago

For those of you who don't know, he owns the BitTorrent trademark.

user3939382 4y ago

I hear this stuff and then think back to the charts I’ve seen of executives unloading huge positions right before bad news and my opinion, with the information I’ve gotten through the grapevine, is that the SEC is full of shit. Like the IRS they love to target celebrities because it raises the profile of the careerists working on the cases. Selective enforcement isn’t justice. Come get me when they file a case against Jeff Bezos, the chairman of Goldman Sachs, Chuck Schumer, someone in that club.

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cycrutchfield 4y ago
Got any proof there bud?
- birracerveza 4y ago
  https://www.reuters.com/business/finance/fed-officials-sell-stocks-avoid-apparent-conflict-interest-2021-09-09/ https://www.reuters.com/business/finance/fed-officials-sell-... Now look at the SPY.
- user3939382 4y ago
  [flagged]

throwaway128128 4y ago

Good. Justin Sun is a serial bullshitter, one of the most egregious self-promoting token pumpers out there. Check out this article if you want a profile on this narcissist: https://www.theverge.com/21459906/bittorrent-tron-acquisition-justin-sun-us-china https://www.theverge.com/21459906/bittorrent-tron-acquisitio...

spaceman_2020 4y ago
The biggest surprise in the crypto world wasn't the collapse of FTX or 3AC or Terra... ...it was the realization that Justin Sun is still standing. His Excellency must be coated in teflon.
- agentgumshoe 4y ago
  Or connected to the right people, as with his Tether bros

throwaway4good 4y ago

Isn't Justin Sun a diplomat from Grenada now? He would have diplomatic immunity even on travels in the US or in countries that were willing to extradite him to the US.

kenneth 4y ago
He's lost his ambassadorship (at the request of the US govt) recently. It was quite obvious that pressuring Grenada to drop their protection was the precursor to filing charges.
MomoXenosaga 4y ago
That didn't save Noriega. If America wants him a fancy passport won't save him.

amitrip 4y ago

[flagged]

FreeTrade 4y ago

This feels a bit like the Alex Jones moment. Start with the most outrageous examples... But it won't be 12 months before they're charging perfectly decent people.

nailer 4y ago

Can someone explain: > unregistered offer and sale of crypto asset securities Tronix (TRX) and BitTorrent (BTT) Was there a BitTorrent token? Was it associated with Bram Cohen or did it just use the name? Update: apparently Cohen sold bittorrent to this guy.

latchkey 4y ago
Bram moved onto Chia.

anonkogudhyfhhf 4y ago

"Crypto entrepreneur" haha most of these crypto scams and copy and paste same playbook scams