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TRON Seeks Dismissal of SEC Lawsuit Citing Overseas Transactions and Regulatory Ambiguity

2 mins
Updated by Harsh Notariya
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In Brief

  • TRON and Justin Sun request dismissal of an SEC lawsuit alleging illegal securities offerings.
  • Their defense argues that the US SEC lacks jurisdiction due to the ICO's global reach.
  • TRON highlights lack of regulatory clarity in the digital asset industry as one of key points.
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TRON, its founder Justin Sun, and associated entity Rainberry have formally requested the dismissal of a lawsuit filed by the US Securities and Exchange Commission (SEC).

Tron Foundation Limited, BitTorrent Foundation Ltd., Justin Sun, and Rainberry, Inc., collectively referred to as the defendants in the document, argue that the SEC’s allegations fail to prove that they offered or sold digital assets to the US residents. They claimed that all transactions were conducted overseas.

Justin Sun and Tron Highlights Lack of Guidance on the Digital Asset’s Regulation

The document further emphasized that the Tron Foundation and BitTorrent Foundation are “Singaporean entities that conducted their business entirely abroad, did not keep offices in the US, and did not employ American personnel.” In that sense, TRON highlights that the SEC’s jurisdiction is not worldwide.

Moreover, the Tron Foundation’s dismissal request is anchored in seven factual backgrounds. Among these, it notably emphasizes the ambiguity surrounding regulating digital assets. According to TRON and its co-defendants, there needs to be more clarity for digital asset entities to comply with regulations.

Read more: Crypto Regulation: What Are the Benefits and Drawbacks?

“Without a clear regulatory regime that details when a token is a security, how token creators can comply if they offer securities, and how foreign actors in the space fit in the picture, the SEC’s regulatory expansion risks destabilizing the entire global digital asset market,” the defendant wrote.

The tension between the SEC and TRON initially began in March 2023. BeInCrypto reported that the SEC sued Justin Sun and the Tron Foundation for selling unregistered securities through their TRX token Initial Coin Offering (ICO) in 2017. Besides TRX, the SEC also deemed the offer of BTT tokens and public sale illegal.

In its lawsuit, the SEC accused Justin Sun of trading TRX with the Tron Foundation, BitTorrent Foundation, and Rainberry.

Additionally, the SEC mentioned that Justin Sun created a TRX promotional campaign using several public figures. Names like Lindsay Lohan, Jake Paul, and Austin Mahone are included in the list of those public figures.

Read more: How To Buy TRON (TRX) and Everything You Need To Know

Cumulative Number of SEC Cryptocurrency Enforcement Actions (April 2021 - December 2023)
Cumulative Number of SEC Cryptocurrency Enforcement Actions (April 2021 – December 2023). Source Cornerstone Research

TRON and Justin Sun’s lawsuit is just one example of the SEC’s aggressive enforcement actions in 2023. According to reports by Cornerstone Research, the SEC brought 46 enforcement actions related to cryptocurrency in 2023.

The number is the highest record of such actions in a single year by the SEC, marking a significant uptick in regulatory scrutiny.

Top crypto projects in the US | June 2024

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Lynn Wang
Lynn Wang is a seasoned journalist and content creator with over eight years of experience in digital marketing and cryptocurrency journalism. Her expertise lies in SEO strategy, blockchain technology, and Web3, where she has consistently delivered impactful content initiatives and engaged audiences effectively. Since January 2022, Lynn has been at the forefront of content and community efforts for BeInCrypto Indonesia. Under her leadership, the platform has witnessed remarkable growth,...
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