TRON Foundation has vehemently demanded the shutting down of an SEC’s (United States Securities and Exchange Commission) lawsuit, claiming that the agency is overreaching its limits in regulating activities primarily carried out outside the borders of the U.S. “The SEC is not a regulator of the world,” the Foundation declared firmly on Thursday, stating their jurisdiction in the operation of the Foundation.
This conflict arose because the United States Securities and Exchange Commission (SEC) sued the crypto billionaire Justin Sun and three of his related enterprises in March 2023. The accusation involves selling TRON (TRX) and BitTorrent (BTT) native tokens, which, subsequently, the SEC classifies as unregistered security offerings. The question was raised, though, by the Singapore-based TRON Foundation as to whether the SEC’s stance aligned with the nature of foreign digital asset offerings to international buyers on a global stage – a realm they asserted came beyond the regulatory purview of the commission.
The Foundation thinks that the contested token sales were made exclusively abroad and that all the necessary measures were taken to abstain from the USA market. Furthermore, the defendants claim that the U.S. SEC did not specify whether they had initially sold or offered the tokens to the U.S. residents.
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The fundamental point of TRON Foundation’s argument is that the SEC’s claim, ‘subsequent secondary token sales on U.S.- based platforms serving global users’ does not make any sense. They described it as a very weak allegation, and in addition, the tokens need to fulfill the requirement that can make them classified as investment contracts under U.S. securities law.
The lawsuit also accuses Justin Sun of being a party to manipulative wash trading tactics and indirectly paying renowned figures like Soulja Boy and Akon for endorsing TRON-related tokens. However, the TRON Foundation denied these allegations because the SEC cannot provide clear evidence that the trading practices were done to hurt somebody. They also claimed that there is no link to the United States.
The Foundation also makes strong points against the SEC for failing to identify the victims of suspected misconduct. It considers the SEC’s case to be based on generalizations and conclusions that are too often incomprehensible and impossible to prove.
According to the TRON Foundation, the request to dismiss the case is predicated on the doctrine of primary jurisdiction, drawing from the Supreme Court’s decision that the SEC does not have such powers. This legal argument also resonates with other evasion strategies used by other crypto companies like Kraken and Coinbase in their respective motions to dismiss SEC lawsuits.
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The SEC anticipates responding to the dismissal motion of the TRON Foundation within two weeks, consequently setting the basis for a significant litigation spree that will shape the regulatory framework for the trading of digital assets and their global mobility. The case demonstrates the intricacies and complications in implementing a regulatory system that accommodates the dynamic and decentralized evolving crypto sector in traditional securities laws based on national jurisdictions.
