The Security and Exchange Commission went after multiple celebrities, including Lindsay Lohan and Jake Paul, for promoting TRON ecosystem tokens.
Justin Sun and the Tron Foundation were also accused of fraudulently manipulating TRX’s secondary market.
TRON price plunged by 12.5% in the span of an hour, with the altcoin falling to $0.0587.
TRON price plummeted on March 22 after the cryptocurrency became the new target of the ongoing regulatory crackdown in the United States. The Security and Exchange Commission (SEC) is now looking into Tron founder Justin Sun’s company and related entities of the altcoin’s ecosystem.
SEC goes after Justin Sun
In a press release on March 22, the SEC announced charges against Justin Sun and his three wholly-owned companies. These included the Tron Foundation, BitTorrent Foundation and Rainberry (formerly BitTorrent). These entities were charged for offering and selling unregistered assets, which, according to the SEC, were TRON (TRX) and BitTorrent (BTT).
In addition to these charges, Justin Sun was also accused of fraudulently manipulating the secondary market for TRX through extensive wash trading. The SEC further stated that Sun orchestrated a scheme to pay celebrities to promote TRX and BTT but failed to disclose that they were being paid to promote these cryptocurrencies.
Consequently, eight celebrities also came under fire as SEC charged them for illegally promoting the TRON ecosystem tokens, including the likes of Lindsay Lohan and Jake Paul. SEC chair, Gary Gensler, in line with the charges, said,
“As alleged, Sun and his companies not only targeted U.S. investors in their unregistered offers and sales, generating millions in illegal proceeds at the expense of investors, but they also coordinated wash trading on an unregistered trading platform to create the misleading appearance of active trading in TRX.”
SEC after the crypto space
This is the second instance of the regulatory body attacking a major crypto company after Kraken. Earlier last month, the SEC charged the crypto exchange with selling unregistered crypto staking service program and penalized Kraken for $30 million.
This raised concerns in the crypto community regarding SEC’s stance on staking.
The reason behind this is that Ethereum and many other altcoins are built on the Proof of Stake (PoS) consensus method, which is considered to be superior to Bitcoin’s Proof of Work (PoW) method.
But if the SEC was to eye the staking aspect of the crypto space, many cryptocurrencies would go down. However, since the Kraken staking service takedown, the SEC has not taken any major step in this direction.
TRON price crashes by 12%
TRON price noted a strong bearish reaction to the SEC’s charges as investors rushed to sell their assets. The altcoin fell by more than 12.37%, bringing the price down to trade at $0.0587. As a result, TRX lost three major support levels, namely the 50-, 100- and 200-day Exponential Moving Averages (EMAs).
The confluence of the 100-- and 200-day EMA now stands as the critical resistance level that the TRON price needs to breach in order to mark a sustained recovery. The cryptocurrency is also vulnerable to a dip below the critical support at $0.0572Losing this base would push TRX down to 2023 lows of $0.0518, noting a 22.73% crash.
