Tron Foundation Seeks Dismissal of SEC Lawsuit, Citing Overreach in Applying U.S. Laws Globally
Summary:
The Tron Foundation has asked a New York federal court to dismiss a lawsuit from the U.S. SEC, arguing that the regulator's attempt to apply U.S. securities laws to foreign conduct is overreach. The suit initiated by SEC last year claims that Tron Foundation and its associates were trading Tron and BitTorrent tokens as unregistered securities. The Singapore-based foundation has refuted all allegations, arguing absence of any victims, lack of factual clarity, and stating that the lawsuit should be dropped under the major questions doctrine.
The Tron Foundation, the organization behind the layer-1 blockchain Tron, has implored a federal court in New York to nullify a lawsuit from the U.S. Securities and Exchange Commission (SEC), rebuffing the US regulatory body’s targeting of “predominantly non-U.S. behavior.” Tron defended its stance in a dismissal motion filed on March 28th by asserting "The SEC is not a global regulator,” and that its efforts to impose U.S. securities laws on international conduct is an overreach.
In March of last year, the SEC initiated a legal action against Sun, Tron Foundation, the BitTorrent Foundation, and its parent company, the San Francisco-based Rainberry Inc. – all were procured by Tron in 2018. The SEC's claim was that Tron's (TRX) and BitTorrent's (BTT) tokens were traded as unregistered securities.
The Tron Foundation, based in Singapore, countered the SEC's claims stating it had no jurisdiction over “international digital asset sales to overseas buyers on worldwide platforms.” Tron further claimed that the token sales took place entirely outside U.S., with measures in place to avoid the U.S. market. They further stated that the SEC didn't provide any evidence that tokens were initially offered or sold to U.S. residents.
Tron’s dismissal motion labeled the SEC’s assertion that secondary token sales conducted on a U.S.-based platform with international users, were unregulated U.S. securities to be highly questionable.
Moreover, Tron contended that even if the SEC had jurisdiction, the tokens do not meet the U.S. securities classification of investment contracts as per the Howey test.
The SEC's lawsuit also accused Sun, a Chinese-born Grenadian citizen, of engaging in dubious trade manipulations known as "wash trading" and secretly paying celebrities like Soulja Boy and Akon for promoting their tokens. Tron refuted these allegations, stating that there were no factual specifics proving these were 'wash trades' done for unethical purposes, specifically affecting anyone in the U.S.
Tron further countered the SEC's claims, stating that it failed to provide hard-hitting allegations that establish each defendant's involvement in each claim, opting instead for unfounded generalizations and assumptions.
Furthermore, Tron argued that the lawsuit should be dropped under the major questions doctrine, which states that Congress should legislate and should not delegate authority to regulators, a defense invoked by other cryptocurrency firms like Kraken and Coinbase in their attempts to dismiss lawsuits from the SEC.
The SEC is anticipated to respond to Tron's motion within the next two weeks. At present, there is no response from the SEC regarding the dismissal motion.
Published At
4/1/2024 6:37:03 AM
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