The Tron Foundation and other companies associated with Tron (TRX) founder Justin Sun are asking a judge to dismiss the lawsuit filed against them by the U.S. Securities and Exchange Commission (SEC).
In a motion filed late last month, attorneys for Tron say the SEC is overstepping its jurisdiction when it begins regulating foreign entities and individuals.
“The SEC is not a global regulator. Its attempts to leverage severely weakened contacts with the United States to extend U.S. securities laws to predominantly foreign conduct go too far and should be rejected.”
In March 2023, the SEC sued Tron Foundation, Justin Sun, BitTorrent Foundation, and Rainberry Inc (formerly known as BitTorrent) over allegations that the defendants offered and sold unregistered crypto securities, namely TRX and BitTorrent (BTT).
The SEC also accused Sun and his firms of fraudulently manipulating the TRX secondary market by engaging in “extensive wash trading.”
Lawyers for Sun and its firms now argue that TRX’s initial coin offering and BTT’s initial exchange offering “are outside the regulatory reach of the SEC,” but that hasn’t stopped the U.S. market regulator from prosecuting the defendants.
“Undeterred, the SEC nevertheless seeks to drag the foreign defendants before this Court, alleging that subsequent secondary sales on a US-based platform serving users worldwide, and global social media competitions and airdrops of those same digital assets were somehow “unregistered US media.” securities offerings’, even though the connection to the US forum is tenuous at best. The remaining claims suffer from similar jurisdictional deficiencies.”
According to the Tron Foundation, the SEC’s actions could have a negative impact around the world.
“Without a clear regulatory regime that details when a token is a security, how token makers can comply when offering securities, and how foreign actors in the space fit into the picture, the SEC’s regulatory expansion threatens to disrupt the entire destabilize the global digital asset market. At this point, no project and no jurisdiction is safe from the SEC’s widening campaign against digital assets. So to the extent the SEC has asserted a viable claim (and it has not), the Court should dismiss this case under the ‘big questions’ doctrine.”
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