SEC Amends Complaint, Claims Sun's US Visits Grant Jurisdiction

The US Securities and Exchange Commission (SEC) has amended its complaint against Justin Sun and other defendants, arguing that Sun's alleged extensive visits to the US grant it jurisdiction to pursue legal action. The SEC claims that Sun spent over 380 days in the US between 2017 and 2019, making business trips to major cities and communicating with Bittrex, a now-defunct crypto exchange, to list the TRX crypto. The agency also alleges that Sun and the companies engaged in a wash trading scheme on Bittrex.

Amended SEC Complaint Claims Justin Sun's US Visits Establish Jurisdiction

On April 18, 2023, the United States Securities and Exchange Commission (SEC) filed an amended complaint in its ongoing case against Justin Sun and other defendants, asserting that Sun's alleged visits to the US provide sufficient grounds for the agency to exercise jurisdiction in pursuing legal action.

Extensive US Travel Alleged

According to the SEC's amended complaint, Sun "traveled extensively" to the US between 2017 and 2019 while he and several affiliated companies were engaged in the unregistered sale of BTT and TRX tokens. The SEC alleges that Sun spent over 380 days in the US during that period, visiting major cities such as New York City, Boston, and San Francisco. These trips were conducted on behalf of the Tron Foundation and the BitTorrent Foundation, both of which are also named as defendants in the case.

Jurisdictional Claim Based on Physical Presence

The SEC argues that Sun's alleged physical presence in the US during the relevant time period establishes the necessary connection to the country to assert personal jurisdiction over him and the associated companies. The agency contends that Sun's "continuous and substantial" presence in the US indicates that he was engaged in business activities that subjected him to the jurisdiction of US courts.

Wash Trading Allegations

The SEC's amended complaint further alleges that Sun and the companies engaged in a wash trading scheme on the now-defunct crypto exchange Bittrex. Wash trading involves buying and selling the same asset multiple times to create the illusion of trading activity and artificially inflate prices. The SEC alleges that Sun and the companies used this scheme to manipulate the price of BTT and TRX tokens.

Bittrex Involvement Detailed

Notably, the amended complaint specifically identifies Bittrex as the platform on which the alleged wash trading occurred. The SEC alleges that Sun personally communicated with Bittrex representatives and provided documents to facilitate the listing of TRX on the exchange. The complaint includes copies of emails and other correspondence between Sun and Bittrex, linking Sun to the scheme and the other defendants.

Addressing Request for Dismissal

The amended complaint directly addresses the concerns raised by Sun in his March 2023 motion to dismiss the SEC's case due to lack of personal jurisdiction. Sun argued that he is a foreign national and not "at home" in the US, and that the companies have no substantial presence in the country. However, the SEC counters these arguments by highlighting Sun's alleged extensive travel and business activities in the US.

Background of the Case

The SEC originally filed suit against Sun and the other defendants in March 2023, alleging that they conducted an unregistered securities offering of BTT and TRX tokens. The agency claimed that the defendants raised over $1 billion from investors, many of whom were based in the US. The SEC's amended complaint further strengthens its case by providing more detailed evidence of Sun's US travel and involvement in the alleged wash trading scheme.

Implications for the Case

The SEC's amended complaint has significant implications for the ongoing case against Sun and the other defendants. By establishing personal jurisdiction over Sun and the companies, the SEC has bolstered its ability to pursue legal action in US courts. The agency's allegations of wash trading and the involvement of Bittrex further solidify its claims of illegal activity. The case is expected to proceed to trial unless the parties reach a settlement agreement.