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


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.

“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.

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.

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.

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Conclusion

In conclusion, 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). They argue that the SEC’s allegations fail to prove that they offered or sold digital assets to US residents, as all transactions were conducted overseas. The lack of guidance on the regulation of digital assets is also highlighted as a key point in their defense. This case underscores the increasing regulatory scrutiny on cryptocurrency activities, with the SEC bringing a record number of enforcement actions in 2023. The outcome of this lawsuit could have significant implications for the broader digital asset market and the clarity of regulations governing it.

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