Tron Asks New York Federal Court To Dismiss SEC Lawsuit

Tron, the organization responsible for layer-1 blockchain technology, has asked a New York federal court to throw out a SEC lawsuit filed against them.

Tron contends that the regulatory body primarily aims to control foreign activities and does not function as a global regulator.

Tron Seeks Dismissal Of SEC Lawsuit 

Tron asked the court in New York to throw out a lawsuit filed against the company by the Securities and Exchange Commission (SEC). The company argued that since most of the alleged misconduct occurred outside the U.S., the SEC’s attempt to apply American securities laws was excessive. In simpler terms, Tron believed the SEC overstepped its bounds by trying to regulate mainly foreign activities.

“The Securities and Exchange Commission (SEC) doesn’t have global jurisdiction, and extending American security regulations to mostly foreign activities could be an overreach.”

Tron contended in its filing that the Securities and Exchange Commission’s accusation pertains to the sale of digital assets to foreign buyers on international platforms, where the commission has no jurisdiction. According to Tron, the tokens at issue were transacted outside of the US, with deliberate actions taken to exclude American markets. The SEC didn’t assert that these tokens were first offered or purchased by Americans.

SEC’s Claim Tenuous At Best 

Tron challenged the Security and Exchange Commission’s (SEC) view that secondary token sales on global platforms based in the US were unregistered American securities. In his opinion, the SEC might have had the power to make such a claim, but according to Tron, the tokens did not meet the criteria of investment contracts as defined by the Howey test.

The SEC accused Tron’s founder, Justin Sun, of engaging in deceptive practices. Specifically, he is said to have carried out manipulative trades, where a sole entity buys and sells a token to artificially boost market activity. Additionally, the SEC claimed that Sun covertly compensated celebrities such as Akon and Soulja Boy to endorse his tokens.

There is no concrete evidence suggesting that the transactions in question were “wash trades” carried out with deceitful intentions, let alone impacting any US residents. The Securities and Exchange Commission (SEC) has not identified a victim in this case.

Tron noted that the SEC did not provide specific accusations against each defendant, detailing their individual roles in every alleged offense. Instead, they made broad statements and conclusions to back up their charges.

“The SEC claims fraud, but they haven’t accused Defendants of making any significant false statements. So it’s unclear what exactly the SEC is basing their allegations on, leaving both Defendants and the court guessing.”

Tron contended that the case ought to be thrown out based on the major questions doctrine. This legal principle, established by the Supreme Court, asserts that significant regulatory decisions are typically made by Congress itself, rather than delegated to regulatory bodies. Other cryptocurrency companies, such as Kraken and Coinbase, have similarly invoked this doctrine in their attempts to dismiss similar cases.

In March 2023, the Securities and Exchange Commission filed lawsuits against Justin Sun, the Tron Foundation, BitTorrent Foundation, and their parent company, Rainberry Inc.

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2024-04-01 12:17