The Tron Foundation has requested a New York federal court to dismiss a lawsuit brought by the U.S. Securities and Exchange Commission (SEC).
In a significant legal battle that highlights the global nature of the cryptocurrency industry, the Tron Foundation has taken a firm stand against the United States Securities and Exchange Commission (SEC), seeking dismissal of a lawsuit in a New York federal court. The foundation's motion, filed on Mar. 28, argues that the SEC's actions represent an unjustified extension of U.S. securities laws to activities that predominantly occur outside the United States.
The SEC's lawsuit, initiated last March, targets Justin Sun, the Tron Foundation, and associates including the BitTorrent Foundation and its parent company, Rainberry Inc., acquired by Tron in 2018. The core of the SEC's allegations is that the sale of Tron (TRX) and BitTorrent (BTT) tokens constituted unregistered securities offerings, a claim that Tron vehemently denies.
The Singapore-based Tron Foundation's dismissal motion contends that the SEC lacks jurisdiction over its operations, emphasizing that the token sales in question were conducted entirely overseas, specifically designed to exclude the U.S. market. This argument raises fundamental questions about the reach of U.S. regulatory authority in an inherently global digital asset space.
Further complicating the matter is the classification of the tokens themselves. Tron argues that even if the SEC had jurisdiction, TRX and BTT tokens do not meet the criteria for investment contracts under the U.S. Howey test, a benchmark for determining what constitutes a security.
Adding to the controversy are the SEC's accusations against Justin Sun for engaging in manipulative trading practices and secretly compensating celebrities for promotional activities. The foundation rebuffs these claims, challenging the SEC to produce concrete evidence of wrongdoing, particularly any that would affect U.S. residents or markets.
