Justin Sun’s Tron Seeks Court Dismissal of SEC Lawsuit

Tron Blockchain, spearheaded by entrepreneur Justin Sun, has taken a bold step by petitioning the New York Federal Court to dismiss a lawsuit brought forth by the Securities and Exchange Commission (SEC). The platform is invoking the major questions doctrine, contending that the SEC’s jurisdiction does not extend to dictating the landscape of the crypto industry.

Justin Sun

Tron’s primary contention revolves around the SEC’s encroachment into what it terms as “foreign digital asset offerings to foreign purchasers on global platforms.” The blockchain firm argues that the SEC’s endeavor to apply U.S. securities laws to activities primarily conducted abroad exceeds the bounds of its authority. Tron asserts that while the SEC holds regulatory power within the United States, it lacks the authority to govern foreign transactions, characterizing the SEC as a domestic, rather than a global, regulator.

The SEC had initiated legal action against Justin Sun and three of his affiliated companies, alleging their involvement in the “unregistered offer and sale of crypto asset securities.” The lawsuit alleges that Tron Foundation Limited, BitTorrent Foundation Ltd., and Rainberry Inc. engaged in fraudulent practices, including extensive wash trading, to manipulate the secondary market for TRX tokens.

In its recent motion, Tron contends that the tokens in question do not meet the criteria to be classified as investment contracts under the Howey test, a legal standard used to determine whether certain transactions qualify as securities. Moreover, the motion challenges the specificity of the SEC’s charges, arguing that they lack the necessary detail to substantiate the allegations.

“This action levels a series of hyperbolic “securities” claims against two foreign entities and a foreign national. Allegations relating to the sole US-based defendant, an entity acquired for its decades-old peer-to-peer data sharing technology, lack specificity and are unrelated to time.”

Additionally, Tron’s legal team asserts that the SEC’s allegations are overly broad, lacking specificity regarding each defendant’s individual involvement in the purported misconduct. The motion highlights a notable absence in the SEC’s claims: the failure to identify a single victim affected by the alleged violations. This absence of specific instances of harm raises questions about the veracity and scope of the SEC’s accusations against Tron and its affiliated entities.

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