Tron Fights SEC Lawsuit with Focus on Foreign Operations

The Tron Foundation has taken a stand against the U.S. Securities and Exchange Commission (SEC), requesting the dismissal of a lawsuit that puts the spotlight on the regulatory reach of the U.S. over international blockchain operations.

Filed on March 28 in a New York federal court, the dismissal motion by the Tron Foundation underscores a pivotal argument: the SEC’s jurisdiction does not extend globally, especially when it concerns activities predominantly carried out beyond U.S. borders.

This legal challenge stems from the SEC’s allegations last March against Justin Sun, the Tron Foundation, and associated entities, including the BitTorrent Foundation and Rainberry Inc., accusing them of conducting unregistered securities offerings through the sale of Tron (TRX) and BitTorrent (BTT) tokens. Tron’s defence pivots on the assertion that these token sales were conducted entirely outside the United States, thereby falling outside the SEC’s regulatory purview.

The Foundation’s dismissal motion criticizes the SEC’s attempt to apply U.S. securities laws to what it sees as “foreign digital asset offerings to foreign purchasers on global platforms,” highlighting a concerted effort to exclude the U.S. market from these sales. Tron’s legal stance challenges the notion that subsequent secondary sales on U.S.-based platforms transform these digital assets into unregistered U.S. securities.

Moreover, Tron rebuffs the SEC’s allegations of manipulative market practices by Justin Sun, including “wash trading” and undisclosed payments to celebrities for promotion, arguing the absence of concrete evidence or identified victims within the U.S.

Tron’s motion also critiques the SEC’s broad and generalized claims, pointing out a lack of specific factual allegations against each defendant, thereby questioning the foundation of the SEC’s fraud allegations. By invoking the major questions doctrine, Tron aligns its argument with other crypto entities like Kraken and Coinbase, challenging the extent of the regulatory authority vested in the SEC by Congress.

This legal battle underscores a broader industry struggle against the expanding reach of U.S. regulatory bodies into international crypto operations. With the SEC expected to respond to Tron’s motion within weeks, the outcome of this case could set a significant precedent for the global crypto community and the future of blockchain innovation beyond U.S. shores.

Tron’s legal challenge against the SEC not only highlights the complexities of international blockchain operations vis-à-vis U.S. securities law but also frames a crucial debate on the limits of regulatory oversight in a rapidly evolving digital asset landscape.