Federal regulators on Thursday settled a fraud case against Justin Sun, the Chinese-born crypto billionaire who was one of the Trump family’s earliest and most important crypto partners.
The Securities and Exchange Commission said in a court filing that a company controlled by Mr. Sun would pay a $10 million penalty to resolve the suit.
It was the agency’s latest retreat from enforcement against the crypto industry, which has become a source of huge wealth for the president and his family. Over the past year, the S.E.C. has pulled back from more than half of the court cases against crypto industry firms it inherited from the previous administration. Some of the agency’s highest-profile cases were dropped entirely, without any penalties like the one imposed on Mr. Sun.
Representatives for Mr. Sun did not immediately respond to requests for comment. A spokesman for the S.E.C. declined to comment and referred to the public filings in the case.
The decision to settle the case against Mr. Sun is particularly striking because he was accused of a serious violation of securities laws involving self-trading. The S.E.C. said he had orchestrated hundreds of thousands of fraudulent trades in an attempt to manipulate the price of a cryptocurrency developed on his platform, TRON.
While the agency has sharply curtailed crypto enforcement since President Trump returned to the White House, its leaders have repeatedly vowed that it would continue to pursue fraud cases.
An investigation by The New York Times published in December found that the agency had eased up on more than 60 percent of the crypto cases it had inherited from the Biden administration and Mr. Trump’s first term, moving to freeze litigation, lessen penalties or dismiss the cases. The enforcement rollback disproportionately benefited firms with financial ties to Mr. Trump, The Times’s analysis found.
That included Mr. Sun, whose case was paused just weeks after Mr. Trump’s inauguration to pursue a settlement.
The S.E.C. complaint, filed in 2023, accused Mr. Sun and his employees of deliberately inflating the trading volume for a cryptocurrency in order to spur demand. Mr. Sun and one of the companies he owns reaped nearly $32 million in profits from sales of that token in 2018 and 2019, it said.
The trades were executed from various accounts, but Mr. Sun controlled the transactions and the ownership of the tokens did not actually change, the lawsuit said. During an eight-month period, Mr. Sun and his team executed an average of nearly 2,500 fake trades a day, the S.E.C. said.
The regulators also accused Mr. Sun of misleading investors by paying celebrities to tout the cryptocurrency while claiming the endorsements were unbiased and unpaid. A group of celebrities, including the actress Lindsay Lohan, agreed to pay a total of $400,000 to settle the charges.
Mr. Sun and his companies, which were also sued by the agency, described the case in court documents as “yet another salvo in the S.E.C.’s ever-widening campaign seeking dominion over digital assets whenever created, in whatever form, for whatever purpose, and wherever they may be found.”
After Mr. Trump’s re-election, Mr. Sun spent $75 million on a cryptocurrency developed by World Liberty Financial, the crypto firm co-founded by Mr. Trump and his sons. The investment made Mr. Sun one of the Trumps’ biggest crypto backers and provided a cash infusion at a time when the company was struggling.
In May, Mr. Sun attended a private dinner for buyers of the president’s memecoin, a separate cryptocurrency that Mr. Trump launched just before he was sworn into office for the second time. The same month, Mr. Sun joined Eric Trump, Mr. Trump’s second son, onstage at a crypto conference in Dubai, in the United Arab Emirates.
Zach Witkoff, a co-founder of World Liberty and the son of Steve Witkoff, one of the president’s senior advisers, singled out Mr. Sun there. “I just got to thank you for the support, Justin,” Mr. Witkoff said. “TRON is just an incredible technology, and we’re lucky to be partners with you.”
The Sun case is the second major crypto fraud case against a Trump ally that the S.E.C. has resolved. Last year, it dropped a lawsuit accusing Binance, the world’s largest crypto exchange, of fraudulently misleading customers about its efforts to prevent manipulative trading.
Just weeks before the Binance case was dismissed, that firm participated in a $2 billion business transaction using digital currency from World Liberty — a financially beneficial deal for the Trumps.
Ben Protess contributed reporting.
Sharon LaFraniere is an investigative reporter focusing on the Trump administration.
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