TRON Foundation has fiercely asked that an SEC (United States Securities and Exchange Commission) lawsuit be dropped, arguing that the agency is overstepping its authority in regulating operations predominantly conducted outside of the United States. “The SEC is not a regulator of the world,” the Foundation asserted forcefully on Thursday, affirming their jurisdiction over the Foundation’s operations.
In March 2023, the United States Securities and Exchange Commission (SEC) filed a lawsuit against crypto billionaire Justin Sun and three of his connected companies, resulting in this fight. The complaint concerns selling TRON (TRX) and BitTorrent (BTT) native tokens, which the SEC later characterises as unregistered security offerings.
However, the Singapore-based TRON Foundation questioned whether the SEC’s approach was consistent with the nature of foreign digital asset offers to international buyers on a worldwide scale, which they claimed fell outside the commission’s regulatory purview.
The Foundation believes that the contested token sales were conducted entirely outside of the United States, and that all required precautions were taken to avoid the market. Furthermore, the defendants argue that the SEC did not identify whether they initially sold or offered the tokens to US residents.
The TRON Foundation’s central argument is that the SEC’s claim of’subsequent secondary token sales on U.S.-based platforms serving global customers’ is absurd. They regarded it as a very weak claim, and the tokens must meet the requirements for classification as investment contracts under US securities law.
The lawsuit also alleges Justin Sun of engaging in manipulative wash trading practices and indirectly paying well-known personalities such as Soulja Boy and Akon to endorse TRON-related coins. However, the TRON Foundation dismissed these charges since the SEC could not give strong evidence that the trading methods were intended to harm someone. They also stated there was no link to the United States.
The Foundation also criticises the SEC for neglecting to identify the victims of alleged malfeasance. It believes the SEC’s argument is based on generalisations and conclusions that are too frequently unintelligible and impossible to substantiate.
According to the TRON Foundation, the request to dismiss the case is based on the doctrine of primary jurisdiction, which stems from the Supreme Court’s finding that the SEC lacks such authority. This legal argument is consistent with previous evasion methods utilised by other cryptocurrency companies, such as Kraken and Coinbase, in their efforts to dismiss SEC lawsuits.
The SEC expects to respond to the TRON Foundation’s dismissal request within two weeks, paving the way for a huge litigation frenzy that will alter the regulatory framework for digital asset trade and global mobility. The case exemplifies the complexities and challenges of developing a regulatory structure that accommodates the dynamic and decentralised evolving crypto sector within traditional securities rules based on national jurisdictions.
