Cinneamhain Ventures partner: Data shows that TRX may be under investigation by US regulators

According to BlockBeats, on January 5, Adam Cochran, partner of crypto investment firm Cinneamhain Ventures, tweeted that some information indicated that TRON (TRX) may be under investigation by US regulators and may be related to Bittorrent and Poloniex.

In the spring of 2020, a New York-based group filed securities fraud charges against the Tron Foundation. In December 2020, the Tron Foundation filed a motion to dismiss the case, citing a lack of jurisdiction or direct sales. As long as Tron has no substantial operations in the United States and does not make an effort to offer its tokens to U.S. customers, these charges are valid, which is where the alleged investigation and legal risk lies.

Adam Cochran mentioned that, although there is no clear evidence, the Tron Foundation does seem likely to be affected by U.S. regulatory actions. Tron previously claimed that U.S. securities laws did not apply to secondary trading on Binance when Binance accepted U.S. users, and neither Tron nor Binance made efforts to block these users while promoting TRX to them.

However, the root of the issue seems to revolve around Poloniex and BitTorrent, two US entities with ties to Justin Sun. In December 2019, Sun acquired the Poloniex exchange and launched the TRX token. Poloniex created a new "Level 1 Account" that has no KYC/AML requirements and can deposit/withdraw up to $10,000 per day without verification.

What’s worse is that Poloniex allows users to trade crypto futures with up to 50x leverage without any verification. BitMEX had the same problem when it was sued by the CFTC and SEC. Poloniex is an entity based in Seychelles, and BitMex is also registered in Seychelles. Registering an entity overseas does not solve the problem of being under US jurisdiction.

And in contrast to BitMex, Poloniex's operations are based in the US, including key members of its executive team. So the question becomes whether Poloniex intentionally has US customers (who would only use a VPN to connect). An easy way to detect this is the average hourly trading volume.

Here is third-party data for US exchanges such as Gemini:

This is the same chart, but for Asian exchanges like Bithumb, the trading trend is basically the opposite of that of the US Gemini, at 20:00 (8UTC), the US exchanges are active, while the Asian exchanges are not.

Looking at the trading activity schedule of Poloniex, it is clear that it is the same as the active hours of US platforms such as Gemini. Although this is not a clear statistical case, it has undoubtedly attracted people's attention.

Adam Cochran also mentioned that Tron has been accused of washing its trading volume, with its trading volume often many times higher than its market value. This could be considered as market manipulation (like the XRP case) and thus investigated by the authorities.

Adam Cochran believes that this accusation is crucial to Tron because Tron often promotes financial lending applications and gambling applications on its blockchain. If the blockchain is not decentralized enough, then these products may be considered illegal products in the United States.

Adam Cochran concluded that while it is unclear what exactly the SEC is investigating, based on some rumors and the information listed here, Tron's exposure in the United States seems to expose U.S. regulators to more exposure than they might imagine.

However, Adam also said that if the SEC is conducting an investigation, it will take a long time to collect evidence, and it is worth noting that not all SEC investigations end with negative actions. It is entirely possible that these problems (of the person under investigation) have been resolved before the ongoing review.

According to previous reports from Ledger, on December 29, Adam Cochran, partner of Cinneamhain Ventures, tweeted, "It looks like the SEC is much more active than we thought, and is investigating many projects and companies." He said that the SEC has currently confirmed that at least one is a big project, but it seems to be in the active investigation stage. According to previous reports from Ledger, Cochran revealed on December 26 that Coinbase has begun to consider delisting or suspending XRP. On December 29, Coinbase issued a document confirming that XRP trading will be suspended from January 20, 2021.