- SEC and Justin Sun request a pause in the fraud case, hinting at a possible resolution.
- Sun’s growing role in Trump-backed crypto raises concerns over the SEC case optics.
- The SEC accused Sun of wash trading and undisclosed celebrity promotions in 2023.
The U.S. Securities and Exchange Commission appears to be moving toward resolving its civil fraud case against cryptocurrency entrepreneur Justin Sun. Sun recently became an adviser to World Liberty Financial, a crypto project backed by President Donald Trump.
As per the sources, lawyers for both Sun and the SEC jointly requested that U.S. District Judge Edgardo Ramos place the case on hold, citing mutual interests. The parties proposed submitting a status update 60 days after the stay is granted. However, they did not specify whether the resolution would involve a settlement or dismissal of charges.
The SEC started the case in March 2023 under then-Chair Gary Gensler. They accused Sun and his companies – Tron Foundation, BitTorrent Foundation, and Rainberry – of illegally distributing cryptocurrency assets Tronix and BitTorrent. The main accusation was about artificially inflating trading volumes and failing to disclose payments to celebrity promoters.
According to the SEC’s complaint, Sun allegedly orchestrated hundreds of thousands of wash trades between two accounts under his control, generating approximately $31 million in proceeds while creating a misleading impression of legitimate market activity. The regulator also claimed Sun paid celebrities including Lindsay Lohan, Akon, Ne-Yo, and Jake Paul to promote his cryptocurrencies without proper disclosure of compensation.
Related: SEC Walks Away From Gemini Case After 699 Days, No Charges
The timing of this potential resolution coincides with Sun’s growing prominence in Trump-affiliated business ventures. Sun has risen as a major investor in World Liberty Financial, reportedly spending at least $75 million on the token partially owned by Trump, according to posts on his social media accounts. This financial relationship has raised questions about potential conflicts of interest as the SEC case moves toward resolution.
Corey Frayer, a former policy adviser to Gensler, expressed concern about the optics of the SEC potentially stepping back from the case. He noted that while it “may be good for one of the president’s crypto partners, it’s bad for the industry’s already questionable reputation.”
The Trump administration has signaled a more favorable approach to cryptocurrency regulation. Trump has pledged to position the United States as a global hub for the cryptocurrency industry and nominated Paul Atkins to replace Gensler as SEC chair.
