SEC Moves Toward Settlement With Justin Sun as BitTorrent Parent Faces $10M Penalty

The U.S. Securities and Exchange Commission has taken steps to resolve its long-running enforcement action against crypto entrepreneur Justin Sun and several organizations linked to his blockchain ecosystem.

According to a proposed final judgment filed Wednesday in a federal court in New York, the case could largely be settled if the court approves an agreement involving Rainberry Inc., the company responsible for developing the BitTorrent protocol.

Under the terms of the proposed settlement, Rainberry would pay a $10 million civil penalty and agree to a court order preventing it from engaging in deceptive conduct during securities offerings. In return, the SEC plans to drop its remaining claims against Sun and several affiliated organizations, including the Tron Foundation and the BitTorrent Foundation.

If approved by the court, the dismissal would be issued “with prejudice,” meaning the regulator would not be able to refile the same allegations in the future.

Sun confirmed the development publicly, saying the decision brings an end to a regulatory battle that has lasted several years. He said he intends to continue expanding his blockchain initiatives globally and expressed interest in working with regulators to help shape clearer rules for the crypto industry.

The enforcement case originally began in 2023, when the SEC accused Sun and related entities of conducting unregistered securities sales and manipulating the market for the TRON token through wash trading.

As is typical in many regulatory settlements, Rainberry agreed to resolve the matter without admitting or denying the allegations made by the agency.

The agreement still requires approval from a federal judge in the Southern District of New York before it can take effect.

The development arrives at a time when U.S. regulators appear to be reconsidering their approach to crypto oversight following the departure of former SEC Chair Gary Gensler, whose tenure was known for aggressive enforcement actions across the digital asset sector.

Sun has continued to remain active in the industry and has recently been linked to World Liberty Financial, a crypto venture connected to allies of U.S. President Donald Trump. The proposed settlement does not address those activities but could remove a major regulatory obstacle hanging over Sun and the broader TRON ecosystem.

However, the settlement has drawn criticism from some policy advocates. Amanda Fischer of the financial reform organization Better Markets argued that the agreement is too lenient given the seriousness of the original allegations. She urged the presiding judge to reject the deal and called for congressional scrutiny of the SEC’s decision.