SEC v. Rainberry, Inc., Justin Sun, Tron Foundation Limited, et al. — U.S. Securities and Exchange Commission Litigation Release No. 26496, dated March 5, 2026.
The SEC settled claims against Rainberry, Inc. for wash trading TRX crypto assets, artificially inflating its trading volume. This settlement also dismisses all other claims against Rainberry and related entities, including Justin Sun, the Tron Foundation, and the BitTorrent Foundation. The settlement requires Rainberry to pay a $10 million penalty and be permanently enjoined from violating securities laws.
In Plain English
Imagine someone is selling a popular toy. To make it seem like everyone wants it, they secretly buy and sell the toy back and forth between their own accounts, over and over. This makes it look like there's a huge demand for the toy, tricking real buyers into thinking it's super popular and worth buying. The SEC found that Rainberry, Inc. did something similar with a digital currency called TRX, making it look more popular than it was. They have now agreed to pay a $10 million fine to settle this issue.
Disclaimer: all facts are drawn from the SEC's own filings; the claims described are allegations unless and until a court rules or the parties settle, and some cases end in dismissal.
How the Alleged Scheme Worked
- Creating Fake Demand Justin Sun, through companies like Rainberry, Inc., allegedly orchestrated wash trading for the crypto asset 'TRX.' This involved executing trades between accounts that Sun ultimately controlled, creating the false appearance of market activity and demand without any change in beneficial ownership.
- Artificial Inflation of Volume The wash trading, described as occurring in 2018 and 2019, was designed to artificially inflate the trading volume of TRX. This tactic aimed to mislead investors into believing there was genuine market interest and activity in the crypto asset.
- Publicity Campaign To further drive interest, Sun and his entities allegedly paid celebrities, including Austin Mahone and DeAndre Cortez Way, to promote TRX and BTT on social media. These promotions reached millions of followers.
- Failure to Disclose Payments Crucially, the celebrities who promoted TRX and BTT did not disclose that they had been paid for their endorsements. This led the public to believe the celebrities had unbiased interest in the assets.
- Misleading Statements on Disclosure In February 2021, Justin Sun allegedly made a false statement on social media, claiming, 'If any celebrities are paid to promote TRON, we require them to disclose.' This contradicted his own actions in arranging undisclosed payments.
- Unregistered Offers and Sales The Sun Defendants also allegedly offered and sold TRX and BTT as securities without registering them with the SEC, and without any available exemption from registration, violating Sections 5(a) and (c) of the Securities Act.
- Settlement Reached As part of a global resolution, the SEC filed a proposed final judgment to settle claims against Rainberry, Inc. for wash trading violations under Section 17(a)(3) of the Securities Act of 1933.
- Dismissal of Other Claims The proposed settlement would dismiss all remaining claims against Rainberry and all claims against the other Tron Defendants, including Justin Sun, Tron Foundation Limited, and BitTorrent Foundation Ltd.
- Civil Penalty Rainberry, Inc. consented to a final judgment that permanently enjoins it from violating Section 17(a)(3) and orders it to pay a civil penalty of $10 million.
- Dismissal of Remaining Claims The SEC also filed a notice of voluntary dismissal for the claim against DeAndre Cortez Way for violations of Section 17(b) of the Securities Act, indicating a discretionary decision by the SEC.
The Enforcement Action
The SEC filed a proposed settlement with Rainberry, Inc. regarding wash trading claims, which would permanently enjoin Rainberry from violating Section 17(a)(3) of the Securities Act and require a $10 million civil penalty. This settlement also dismisses all remaining claims against Rainberry and all claims against Justin Sun, Tron Foundation Limited, and BitTorrent Foundation Ltd. The SEC also voluntarily dismissed its claim against DeAndre Cortez Way for violations of Section 17(b) of the Securities Act.
Named in this action: Rainberry, Inc., Justin Sun, Tron Foundation Limited, BitTorrent Foundation Ltd., DeAndre Cortez Way.