TRON Requests Dismissal of SEC Lawsuit Due to Overseas Transactions and Regulatory Uncertainty

TRON, its founder Justin Sun, and associated entity Rainberry have officially submitted a request for the dismissal of a lawsuit filed by the US Securities and Exchange Commission (SEC).

Tron Foundation Limited, BitTorrent Foundation Ltd., Justin Sun, and Rainberry, Inc., collectively known as the defendants in the document, argue that the SEC’s allegations do not demonstrate that they offered or sold digital assets to US residents. They contend that all transactions took place overseas.

Justin Sun and Tron Highlights Lack of Guidance on the Digital Asset’s Regulation

The document further underscores that the Tron Foundation and BitTorrent Foundation are “Singaporean entities that conducted their business entirely abroad, did not maintain offices in the US, and did not hire American personnel.” TRON emphasizes that the SEC’s jurisdiction is not global.

Furthermore, the Tron Foundation’s dismissal request is based on seven factual backgrounds. It particularly highlights the uncertainties surrounding the regulation of digital assets. According to TRON and its co-defendants, there is a need for more clarity to enable digital asset entities to comply with regulations.

Read more: Crypto Regulation: What Are the Benefits and Drawbacks?

“Without a clear regulatory framework that defines when a token is deemed a security, how token creators can adhere if they offer securities, and how foreign entities in the space fit into the equation, the SEC’s expansion of regulations could disrupt the entire global digital asset market,” the defendant stated.

The conflict between the SEC and TRON initially arose in March 2023. BeInCrypto reported that the SEC sued Justin Sun and the Tron Foundation for the sale of unregistered securities through their TRX token Initial Coin Offering (ICO) in 2017. Along with TRX, the SEC also deemed the offering of BTT tokens and the public sale as illegal.

In the lawsuit, the SEC accused Justin Sun of engaging in TRX trading with the Tron Foundation, BitTorrent Foundation, and Rainberry.

Additionally, the SEC mentioned that Justin Sun initiated a TRX promotional campaign involving several public figures, including Lindsay Lohan, Jake Paul, and Austin Mahone.

Read more: How To Buy TRON (TRX) and Everything You Need To Know

Cumulative Number of SEC Cryptocurrency Enforcement Actions (April 2021 – December 2023). Source Cornerstone Research

TRON and Justin Sun’s lawsuit is just one instance of the SEC’s aggressive enforcement measures in 2023. Reports by Cornerstone Research indicate that the SEC initiated 46 enforcement actions related to cryptocurrency in 2023.

This number represents the highest volume of such actions in a single year by the SEC, underscoring a notable increase in regulatory oversight.

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