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Tron Foundation and Justin Sun Seek Dismissal of SEC Lawsuit

Tron Foundation and Justin Sun Seek Dismissal of SEC Lawsuit

Key Takeaways

  • The Tron Foundation and Justin Sun are seeking dismissal of the SEC lawsuit, arguing the US court lacks jurisdiction over them as they are foreign entities;
  • They contend that the SEC's application of US securities laws to activities primarily conducted abroad is unwarranted;
  • The defense also cites the major questions doctrine, suggesting that the SEC's expansive approach lacks clear congressional authorization, given the ongoing uncertainty around digital asset regulation.

The Tron Foundation and Justin Sun, Tron's founder, have called on the United States District Court of the Southern District of New York to dismiss a lawsuit filed by the US Securities and Exchange Commission (SEC).

According to a document filed on March 28, they argue that the SEC has not proven the court's authority over foreign defendants.

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In March 2023, the SEC accused Sun and associated companies—Tron Foundation, BitTorrent Foundation, and Rainberry—of unregistered offer and sale of crypto asset securities and using wash trading tactics to manipulate the secondary market.

The defendants asserted that the SEC's attempt to apply US securities laws to predominantly foreign activities with minimal ties to the US is unjustified. Their memorandum to the court states:

The SEC is not a worldwide regulator. Its efforts to leverage highly attenuated contacts to the United States, to extend US securities laws to cover predominantly foreign conduct, go too far and should be rejected. 

Rainberry, a California-registered entity involved in the case, did not challenge the court's authority. Instead, it sought to have the case dismissed on other grounds, including the argument that the defendants were not given proper notice.

Furthermore, the defendants also reference the major questions doctrine to argue that the SEC has overstepped its authority. They stated that Congress is still deciding on the appropriate regulations for digital assets and blockchain participants; therefore, this case is considered too early and should be dismissed.

This legal battle is one of many that the SEC has started against different crypto entities, once again raising debates about the reach of US securities laws.

The SEC has also filed a lawsuit against Coinbase, accusing it of providing trading and staking services without the required regulatory permissions. In a recent update, a New York judge decided that this lawsuit could proceed.

Aaron S., Editor-In-Chief
Having completed a Master’s degree in Economics, Politics, and Cultures of the East Asia region, Aaron has written scientific papers analyzing the differences between Western and Collective forms of capitalism in the post-World War II era.
With close to a decade of experience in the FinTech industry, Aaron understands all of the biggest issues and struggles that crypto enthusiasts face. He’s a passionate analyst who is concerned with data-driven and fact-based content, as well as that which speaks to both Web3 natives and industry newcomers.
Aaron is the go-to person for everything and anything related to digital currencies. With a huge passion for blockchain & Web3 education, Aaron strives to transform the space as we know it, and make it more approachable to complete beginners.
Aaron has been quoted by multiple established outlets, and is a published author himself. Even during his free time, he enjoys researching the market trends, and looking for the next supernova.

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