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US SEC drops Justin Sun lawsuit with $10M settlement from Rainberry

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US SEC drops Justin Sun lawsuit with $10M settlement from Rainberry

Justin has secured a $10 million settlement in a multi-year lawsuit filed by the United States Securities and Exchange Commission that accused the crypto entrepreneur of alleged fraud and securities violations.

Summary

  • Justin Sun settled the SEC’s long-running lawsuit with a $10 million payment from Rainberry, bringing an end to allegations tied to TRX and BTT token sales and trading practices.
  • The case, originally filed in 2023 under former SEC Chair Gary Gensler, accused Sun and affiliated entities of unregistered securities sales.

A letter from the SEC made public on Feb. 5 confirmed that neither Sun nor any of his companies involved in the case had admitted or denied the allegations, but the claims would be dropped following the payment of the fine.

With this, the SEC has wrapped up a three-year-long case that was filed under the leadership of former SEC Chair Gary Gensler, who was widely known for his regulation-by-enforcement approach.

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Sun, along with affiliated entities including the Tron Foundation, BitTorrent Foundation, and Rainberry, was accused of selling unregistered securities involving TRX and BTT tokens. Further, the SEC alleged that Sun engaged in “manipulative wash trading” of TRX and paid celebrities like Akon, Lindsay Lohan, and Jake Paul to promote BTT without disclosing their compensation.

Sun has reiterated that the SEC’s complaints “lacks merit.”

Rainberry has agreed to pay a $10 million fine as part of the latest settlement.

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“Today’s resolution brings closure, but I never stopped building. I will continue to focus on accelerating innovation in the United States and around the world, and look forward to working with the SEC to develop guidance and regulations for crypto going forward,” Sun wrote in a recent X post.

The dismissal comes as no surprise because under President Donald Trump’s administration, the commission has taken a markedly pro-crypto stance and has dropped multiple enforcement actions that were previously brought against major industry players like Coinbase.

However, the decision to drop Sun’s case has also drawn scrutiny from some lawmakers, who believe the move may have been motivated by Sun’s financial ties to Trump-linked crypto ventures.

Soon after Trump’s election, Sun acquired $30 million worth of tokens linked to World Liberty Financial, which has direct links to the president’s family.

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Democratic lawmakers, including Representatives Maxine Waters, Ritchie Torres, and Stephen Lynch, have argued that the circumstances surrounding the settlement warrant closer scrutiny and have requested the SEC to reopen the case.

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Crypto World

Morgan Stanley Sets Bitcoin ETF Fee at Ultra-Low 0.14%

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Morgan Stanley Sets Bitcoin ETF Fee at Ultra-Low 0.14%

Investment bank Morgan Stanley is seeking to launch its spot Bitcoin exchange-traded fund at a 0.14% fee, which would make it the cheapest in the US market and potentially force rivals to cut fees to stay competitive.

The 0.14% fee, proposed in Morgan Stanley’s latest S-1 registration statement on Friday, would be one basis point below the Grayscale Bitcoin Mini Trust ETF (BTC), currently the cheapest in the US market, and 11 basis points below the BlackRock-issued iShares Bitcoin Trust ETF (IBIT).

“Big move here. They are not messing around,” Bloomberg ETF analyst James Seyffart said, predicting that the Morgan Stanley Bitcoin Trust (MSBT) is “likely to launch in early April.”

Source: James Seyffart

Fellow Bloomberg ETF analyst Eric Balchunas said the low fee means that none of Morgan Stanley’s roughly 16,000 financial advisors — which manage $6.2 trillion in client assets — would feel conflicted in recommending the product to its clients.

Given that spot Bitcoin ETFs track the price movements of Bitcoin (BTC), Morgan Stanley’s ultra-low fee could spark a fresh fee war in the $83 billion market, putting immediate pressure on rivals to cut costs or risk losing assets.

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Regulatory approval would make Morgan Stanley the first bank to issue a spot Bitcoin ETF, expanding access to Bitcoin exposure for millions of its high-net-worth clients.

“They are the ultimate gatekeepers of rich boomer money,” Balchunas added.

Morgan Stanley previously selected Coinbase and Bank of New York Mellon as the proposed custodians for its Bitcoin ETF.

Morgan Stanley seeking suite of crypto ETFs, banking charter

Morgan Stanley, previously one of the more crypto-hesitant Wall Street firms, filed for the spot Bitcoin ETF in the first week of January, along with a Solana (SOL) ETF.

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Related: Bitcoin traders see 53% odds of sub-$66K BTC by April 24 

It then filed papers for a staked Ether (ETH) ETF later that week, and by the end of the month, the bank appointed one of Morgan Stanley’s longest-standing executives, Amy Oldenburg, to lead its digital asset team.

Source: James Seyffart

Morgan Stanley also applied for a national trust banking charter on Feb. 18, seeking to custody certain digital assets and execute purchases, sales and swaps for clients in addition to staking services.

In October, before the investment bank adopted its institutional crypto strategy, it recommended a 2% to 4% allocation to crypto portfolios for investors. It also allowed its financial advisors to recommend crypto funds to clients with individual retirement accounts (IRAs) and 401(k)s.

Magazine: Bitcoin may face hard fork over any attempt to freeze Satoshi’s coins

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