• Archblock founder sues Justin Sun for secretly purchasing TUSD by using various entities and individuals to conceal his involvement.

• Sun was previously sued by SEC for engaging in unregistered securities and being involved in wash trading. 

TrueUSD (TUSD), a stablecoin that is pegged to the dollar rate corresponding to USD reserves held in escrow accounts, emerged into the crypto scene in 2018. For some time, Tron founder Justin Sun was speculated to be the secret owner of the project until he and TrueUSD separately denied the allegation. In a recent report, the founder of Archblock, a renowned blockchain technology company, has filed a lawsuit against Sun for secretly acquiring TrueUSD (TUSD) through dubious means.

According to the lawsuit filed by the Archblock founder whose identity is undisclosed, Sun concealed his involvement by using different entities and individuals to make the purchase. In addition, the lawsuit mentions that Sun used his TUSD acquisition to manipulate the crypto market. 

Some crypto community members think his credibility and integrity are at stake, especially after his previous controversies. In March, the US Securities and Exchange Commission charged the Tron founder for paying celebrities to illegally tout TRX and/or BTT without disclosing that they were paid to do so. 

SEC’s Lawsuit Against Sun Before the TUSD Alleged Acquisition

SEC Chair Gary Gensler in response spoke about the need for crypto assets to be offered with proper disclosure.

This case demonstrates again the high-risk investors face when crypto asset securities are offered and sold without proper disclosure. 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.

Sun further induced investors to purchase TRX and BTT by orchestrating a promotional campaign in which he and his celebrity promoters hid the fact that the celebrities were paid for their tweets.

Sun was previously accused of offering and selling TRX and BTT through multiple unregistered bounty programs. It was reported that between April 2018 and February 2019, he asked his employees to engage in more than 600,000 wash trades of TRX. This involves buying and selling a huge quantity of cryptos at the same time to show a heavy trading volume and also manipulate the price. This was done between two crypto trading platform account he controls. Between 4.5 million and 7.4 million TRX wash trading was reportedly facilitated daily.

Gurbir S. Grewal, Director of the SEC’s Division of Enforcement commented:

While we’re neutral about the technologies at issue, we’re anything but neutral when it comes to investor protection. As alleged in the complaint, Sun and others used an age-old playbook to mislead and harm investors by first offering securities without complying with registration and disclosure requirements and then manipulating the market for those very securities.

At the same time, Sun paid celebrities with millions of social media followers to tout the unregistered offerings, while specifically directing that they not disclose their compensation. This is the very conduct that the federal securities laws were designed to protect against regardless of the labels Sun and others used.

Tron is doing well over the week till the news emerged. In the last 24 hours, the asset has fallen by 0.36 percent. Regardless, its weekly gain is still in excess of 3 percent. 

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