Tron Disputes SEC’s Global Regulatory Authority, Seeks Court Dismissal of Lawsuit

Tron Disputes SEC's Global Regulatory Authority, Seeks Court Dismissal of Lawsuit

Tron Disputes SEC's Global Regulatory Authority, Seeks Court Dismissal of Lawsuit

According to a report by Cointelegraph, the entity behind the Layer 1 blockchain Tron has requested the court to dismiss the lawsuit filed by the United States Securities and Exchange Commission (SEC), claiming that the regulatory agency has no jurisdiction over “foreign digital assets sold to foreign buyers on a global platform”.

In a motion to dismiss filed on March 28 with the New York federal court, the Tron Foundation stated that the SEC is not a global regulatory body and its application of U.S. securities laws to “primarily foreign conduct” is excessive and should be rejected.

In March of last year, the SEC sued Tron founder Justin Sun, the Tron Foundation, the BitTorrent Foundation (a file-sharing platform supported by Tron), and its parent company Rainberry (acquired by Tron in 2018), accusing them of selling unregistered securities in the form of Tron (TRX) and BitTorrent ($BTT) tokens.

Tron, headquartered in Singapore, argues in its motion that the sale of the tokens was “entirely overseas” and took measures to avoid the U.S. market, and the SEC has not alleged that these tokens were “initially offered or sold to any U.S. residents”. Tron also argues that even if the SEC has jurisdiction, these tokens cannot be classified as investment contracts under the Howey test.

In the lawsuit, the SEC also claims that Justin Sun engaged in “manipulative wash trading” and secretly paid celebrities, including Soulja Boy and Akon, to promote the tokens. Tron, however, states in its motion that “there are no specific facts showing that these transactions were actually ‘wash trades’ executed for illegal purposes (let alone affecting anyone within the United States)”, and the SEC has not accused any victims.