SEC withdraws charges against Justin Sun, Rainberry settles for tens of millions of dollars

The Southern District Court of New York issued a final ruling on Thursday, officially dismissing all charges against Tron founder Justin Sun, the Tron Foundation, and the BitTorrent Foundation filed by the U.S. Securities and Exchange Commission (SEC) in 2023. At the same time, Rainberry, an entity affiliated with Justin Sun, agreed to pay a $10 million civil fine to the SEC.

Overview of the Original Allegations: The Three Main Focuses of the 2023 SEC Lawsuit

(Source: SEC)

In 2023, the SEC filed charges against Justin Sun and his related entities on three core counts, marking one of the largest enforcement actions in the cryptocurrency industry:

Unregistered Token Sales: Alleging Justin Sun and three affiliated companies sold TRX and BTT tokens to U.S. investors without SEC registration.

Market Manipulation: Alleging Justin Sun manipulated TRX trading volume and prices through false transactions (Wash Trading) to create a false sense of liquidity.

Undisclosed Celebrity Endorsements: Alleging Justin Sun paid celebrities like Lindsay Lohan and Jake Paul to promote tokens without disclosing compensation relationships.

Of these eight celebrities, six agreed to pay approximately $400,000 in ill-gotten gains, interest, and fines to settle the charges, without admitting fault; cases involving Soulja Boy and Austin Mahone remain unresolved.

Rainberry Settlement Terms: Fines, Cease-and-Desist Orders, and Jurisdiction Concession

According to legal documents filed Thursday, Rainberry’s settlement involves three key obligations: paying a $10 million civil fine to the SEC; agreeing not to engage in fraudulent securities market conduct in the future; and accepting SEC’s full jurisdiction.

Regarding jurisdiction, Justin Sun repeatedly challenged SEC’s authority during the lawsuit, which SEC countered. Ultimately, both parties agreed to accept SEC jurisdiction as a core condition of the settlement, meaning Justin Sun waived major defenses during the case. Sun acquired BitTorrent in June 2018, and a year later Rainberry issued the BTT token. The $10 million fine relates to enforcement actions concerning the token issuance.

Political Context: Trump Factor and Major Shift in SEC Enforcement

This settlement is closely tied to the broader shift in U.S. cryptocurrency regulation since early 2025. Under President Trump, the SEC has withdrawn lawsuits against multiple centralized exchanges, with over ten crypto cases dismissed since early 2025. In February 2025, the SEC voluntarily requested a pause in the Tron case to seek a settlement, foreshadowing this outcome.

In this context, Justin Sun’s business dealings with the Trump family have attracted significant attention. Sun has invested at least $75 million to purchase World Liberty Financial’s WLFI tokens and spent $100 million on the $TRUMP meme coin a week before Trump’s inauguration, later attending a dinner hosted by Trump. Previously, World Liberty held millions of dollars worth of TRX.

Three Democratic members of the U.S. House of Representatives criticized this, claiming the crypto industry donated at least $85 million to Trump’s re-election campaign, citing the Justin Sun case as a typical example of SEC enforcement retreat.

Frequently Asked Questions

Q: Why did the SEC withdraw all charges against Justin Sun?
The SEC’s final documents show that the charges related to Justin Sun were withdrawn as part of a settlement negotiation, not a court ruling of innocence. Since Trump took office, the SEC’s enforcement stance on crypto has shifted significantly; the Sun case is one of the largest to be dismissed.

Q: What violations are covered by Rainberry’s $10 million fine?
Rainberry (formerly BitTorrent Inc.)’s $10 million civil fine mainly covers enforcement actions related to the unregistered issuance of the BTT token and associated market conduct. Rainberry did not admit fault but agreed not to engage in any securities-related fraudulent market activities.

Q: How does this settlement affect the legal classification of TRX and BTT tokens?
The settlement was reached on a “no admission or denial” basis, and the SEC did not explicitly classify TRX or BTT as securities. This means their regulatory status remains uncertain until clarified through judicial rulings, and their legal classification is still unresolved.