Defending decentralization Tron fights back at SEC lawsuit

The Tron Foundation, which manages the Tron Layer 1 blockchain network, has requested that the US Securities and Exchange Commission (SEC) drop their securities case against the platform.

In a motion to dismiss filed on March 28, the Tron Foundation argues that the SEC’s jurisdiction does not extend globally. The foundation contends that the SEC has overstepped its bounds by trying to enforce U.S. securities regulations on primarily overseas actions.

Tron’s representative has mentioned that the US securities regulators are targeting “digital asset sales to international users through a global network.” However, since the company is based in Singapore, the legal filing argues that the SEC lacks authority over such transactions.

In March 2023, the Securities and Exchange Commission (SEC) brought a legal action against the Tron Foundation, its CEO and founder Justin Sun, the BitTorrent Foundation, and Rainberry Inc., the San Francisco-based parent company of BitTorrent which was previously acquired by Tron.

The SEC, or Securities and Exchange Commission, has accused Tron’s TRX token and BitTorrent’s BTT token of being securities. Consequently, the individual in question is being prosecuted for selling these unregistered securities. This action aligns with the SEC’s previous stance on such matters.

Moving forward, Tron claimed that its token sales mainly occurred outside of the United States. The company took extra precautions to exclude the U.S. market. Furthermore, the SEC’s lawsuit doesn’t accuse that the tokens were originally provided or purchased by American residents.

The company responded by pointing out that the SEC’s accusation of an unregistered securities sale was questionable at most. Additionally, they contended that the investments did not fit the definition of investment contracts according to the Howey test.

Tron’s outfit raised concerns with the SEC regarding manipulative practices, specifically wash trading, allegedly employed by Tron founder Justin Sun. Additionally, the regulatory body accused Sun of covertly compensating celebrities such as Soulja Boy and Akon to endorse his tokens.

Tron contended during the hearing that the questioned transactions did not provide sufficient proof that they were “disguised trades” carried out with deceitful intentions and impacting US residents.

“The SEC also does not allege a single victim, Tron wrote in its motion.

The motion argued that the SEC fell short by not supplying specific information about the factual accusations against each defendant and the particular part they played in the alleged offenses. It criticized the SEC for making broad statements and reaching conclusions to fortify its weak, often unclear allegations.

Tron argues that the imprecise nature of the accusations leaves both the defendants and the court guessing at their source, raising doubts about the validity of the entire legal action.

Tron used the major questions doctrine, which is a legal concept stressing that Congress holds the primary power to make laws, not regulatory bodies, as an argument for having the case thrown out. Previously, Coinbase applied this same approach in its lawsuit against the Securities and Exchange Commission (SEC).

After Tron submitted a formal request for dismissal, the SEC is anticipated to respond within the next few weeks.

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2024-04-01 14:24