Tron Defies SEC Authority in Landmark Legal Showdown Over Digital Asset Sales

Tron has requested the dismissal of an SEC lawsuit in a New York federal court, arguing that the SEC lacks jurisdiction over transactions primarily targeting foreign buyers on global platforms. Tron counters the SEC's allegations of unregistered securities offerings by stating that the sales were intended for non-U.S. markets and that deliberate measures were taken to exclude the U.S. market.

Tron Defies SEC Authority in Landmark Legal Battle over Global Digital Asset Sales

New York, NY - April 1, 2024 - In a bold legal challenge, Tron, the esteemed blockchain organization, has formally requested a New York federal court to dismiss a lawsuit filed by the U.S. Securities and Exchange Commission (SEC). Tron contends that the SEC lacks jurisdiction over international digital asset transactions that primarily cater to foreign buyers on global platforms.

This strategic move underscores Tron's unwavering stance that the SEC is overstepping its authority by attempting to impose U.S. securities laws on activities that predominantly transpire outside the United States. Tron's defense asserts that the SEC's attempt to govern these transactions is an unwarranted encroachment on the sovereignty of other nations.

Contesting SEC Allegations

In its lawsuit, the SEC alleges that Tron's sale of Tron (TRX) and BitTorrent (BTT) tokens constituted unregistered securities offerings. However, Tron vigorously refutes these claims, emphasizing that these token sales were exclusively targeted at non-U.S. markets. Tron maintains that it meticulously implemented measures to exclude the U.S. market from these offerings.

Tron's legal motion further argues that the SEC has failed to demonstrate any initial offerings or sales of the tokens to U.S. residents. Subsequent secondary sales on U.S.-based platforms, which cater to a global user base, do not constitute unregistered U.S. securities, Tron asserts, calling the SEC's position "tenuous at best."

Challenges to SEC Authority

Tron's defense not only contests the specific allegations but also challenges the SEC's authority to classify the tokens as investment contracts under the Howey test, the legal standard used in the United States to determine the nature of investment contracts. Tron argues that the SEC's interpretation of the Howey test is overly broad and fails to account for the unique characteristics of digital assets such as TRX and BTT.

Moreover, Tron invokes the major questions doctrine, a legal principle that emphasizes that significant policy decisions should be made by Congress rather than regulatory agencies. Tron contends that the SEC's attempt to regulate global digital asset sales without clear congressional authorization is an overreach of its authority.

SEC's Lack of Specificity

Tron also criticizes the SEC for its reliance on broad generalizations and lack of specific factual allegations against each defendant. The foundation highlights that the SEC's accusations of fraud are based on vague claims and lack detailed misstatements.

Celebrities and Wash Trading

The SEC's lawsuit also accuses Tron's founder, Justin Sun, of engaging in manipulative trading practices known as "wash trading" to artificially inflate market activity for the tokens. Additionally, the regulator alleges that Sun secretly compensated celebrities for promoting the tokens, without presenting concrete evidence of victims or wrongful intentions behind these actions.

Tron vehemently denies these allegations and asserts that the SEC's claims are unfounded and lack merit. The foundation contends that the SEC has failed to demonstrate any harm caused by these alleged actions.

SEC's Response Pending

The SEC is expected to respond to Tron's dismissal motion within the next two weeks, although it has not yet publicly commented on the matter. Legal experts closely observe this case, as its outcome could have significant implications for the regulation of global digital asset sales.

About Tron

Tron is a leading blockchain platform focused on creating a decentralized internet ecosystem. Tron's mission is to empower developers to build decentralized applications and services on its blockchain. The Tron network is powered by the native TRX token, which serves as a medium of exchange and a unit of account within the ecosystem.

About the SEC

The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States government responsible for regulating the securities industry and protecting investors. The SEC's mission is to maintain fair, orderly, and efficient markets and to facilitate capital formation.