Lawmakers question SEC’s pause as TRON faces new allegations

Justin Sun, the founder of TRON, is facing new allegations from his former partner, Zeng Ying, regarding the manipulation of TRX prices. These claims have gained attention from U.S. lawmakers, who are questioning the SEC’s decision to pause enforcement actions against Sun. In response to these allegations, Sun has denied any wrongdoing, while the SEC’s investigation into the matter remains ongoing.

Ying’s accusations came to light in a post where she detailed how Sun allegedly used the identities and mobile phones of employees to operate multiple Binance accounts. Through these accounts, Sun reportedly engaged in trading activities to artificially inflate the prices of TRON (TRX) before selling into the retail demand. Ying has expressed her willingness to cooperate fully with an SEC investigation, offering to provide relevant WeChat chat records and other evidence from Sun’s employees to support her claims. Despite these allegations, there has been no official confirmation or findings from the government regarding the matter.

As a result of these accusations, TRX’s price experienced a 1.5% decrease, trading at $0.2822. Retail sentiment surrounding TRX on Stocktwits remained in ‘bullish territory’, with chatter levels staying ‘normal’. Ying’s allegations have highlighted the prevalence of anonymous “signal-calling” accounts within the Chinese crypto influencer ecosystem, which she claims worked closely with project teams to promote tokens at peak prices. This tactic allegedly resulted in retail investors suffering losses, as insiders and project teams capitalized on the surge in token prices.

Moreover, Ying asserted that Sun’s financial success in 2018 did not stem from technological advancements but from repeatedly selling controlled tokens. She detailed how employees were instructed to create KYC-verified accounts on Binance using their real names, which were then employed to slowly release TRX holdings into the market. Following Ying’s public statement, she faced online discreditation attempts from anonymous crypto accounts, leaving retail investors, whom she described as vulnerable participants, with few recourse options to recover their losses.

The scrutiny surrounding Sun’s alleged misconduct has prompted House Democrats to question the SEC’s handling of the case. Lawmakers have raised concerns over potential political interference and industry pressures affecting regulatory decisions. In a formal letter to the SEC, House Democrats Maxine Waters, Sean Casten, and Brad Sherman called for transparency regarding the agency’s decision to pause enforcement actions against Sun and other crypto-related cases. The lawmakers cautioned against the influence of political spending by crypto firms and warned of a possible “pay-to-play scheme” that could compromise regulatory integrity.

Overall, the allegations made by Zeng Ying against Justin Sun, combined with the inquiries from U.S. lawmakers regarding the SEC’s handling of the case, have intensified the spotlight on TRON’s founder and raised questions about ethical practices within the crypto industry. Despite Sun’s denial of any wrongdoing, the ongoing investigations and scrutiny underscore the importance of maintaining transparency and accountability in the cryptocurrency market.