TRON Foundation Asserts Strongly Against SEC Lawsuit

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2 Apr 2024

TRON Foundation Asserts Strongly Against SEC Lawsuit

The Tron Foundation, the organization behind the Tron blockchain layer-1, has requested the federal court in New York to dismiss the lawsuit filed against them by the U.S. Securities and Exchange Commission (SEC).

The TRON Foundation has vigorously challenged a lawsuit filed by the Securities and Exchange Commission (SEC), stating that the agency has exceeded jurisdictional limits by intervening in activities primarily conducted outside the United States.

“The SEC is not a global regulatory body,” TRON Foundation firmly declared on Thursday, affirming its jurisdiction in its operations.

This confrontation stems from the SEC’s lawsuit filed in March 2023 against cryptocurrency billionaire Justin Sun and three related companies. The allegations concern the issuance of TRON (TRX) and BitTorrent (BTT) tokens, which the SEC deemed unregistered securities offerings.

However, TRON Foundation, based in Singapore, has questioned whether the SEC’s stance aligns with the nature of global digital asset offerings to international buyers—a realm they assert falls beyond the jurisdictional scope of the commission.

The Organization argues that the disputed token sales occurred solely abroad and took all necessary measures to avoid the U.S. market. Furthermore, the defendants contend that the SEC failed to specify whether the tokens were sold or offered to U.S. citizens initially.

TRON Foundation’s core contention is that the SEC’s allegations of “subsequent token transactions on U.S.-based platforms serving global users” are entirely baseless. They describe this as a weak accusation, and moreover, tokens must meet criteria to be classified as investment contracts under U.S. securities law.

The lawsuit also accuses Justin Sun of engaging in money laundering schemes and indirect payments to celebrities such as Soulja Boy and Akon to promote TRON-related tokens. However, TRON Foundation denies these allegations, as the SEC did not present clear evidence that such trading activities were intended to harm anyone. They also affirm no affiliation with the United States.

The Organization also presents robust arguments against the SEC for failing to identify the victims of suspected wrongdoing. They argue that the SEC’s lawsuit relies on general assessments and vague conclusions that are difficult to prove.

According to the TRON Foundation, the petition requests dismissal of the lawsuit based on primary jurisdiction principles, relying on a Supreme Court ruling that the SEC lacks such authority. This legal argument is also consonant with the legal strategies used by other cryptocurrency companies such as Kraken and Coinbase in petitions to dismiss SEC lawsuits.

The SEC is expected to respond to the TRON Foundation’s motion to dismiss within the next two weeks, thereby shaping a legal framework for a significant litigation campaign that will define the legal landscape for global digital asset transactions and their mobility. The lawsuit underscores the complexity of applying a jurisdiction-based legal management system to the decentralized and ever-evolving cryptocurrency market.

Related: What is Tron (TRX) and How Does It Work?